Battery storage to drive lithium demand growth globally

Metals Market Movers 2026: Metals markets are increasingly being shaped by policy as much as by fundamentals. This is the fourth of our 6-part series that explores how climate regulation, industrial policy, trade policy, and strategic investments are influencing supply, demand and price across steel, iron ore, and critical minerals.

Grid-scale battery energy storage systems will become a growing part of lithium consumption in 2026, underpinned by an increasing emphasis on grid stability amid the transition to renewable energy sources and expanding electrification, analysts and lithium producers said.

Energy storage serves as a crucial link between variability and reliability by storing surplus renewable energy during periods of overproduction and delivering when demand peaks. Batteries enable intermittent renewable energy sources such as solar and wind to be integrated more effectively and practically at scale, enhancing overall grid resiliency and sustainability.

While electric vehicles will remain the largest consumers of lithium, grid-scale storage is set to grow. Lithium producers, including Albemarle Corp. and Liontown Resources, said they believe the rapid rise in data centers will stimulate growth in their energy storage business.

"We expect battery energy storage systems will see mid-double-digit growth in 2026 and continue to be the fastest growing lithium demand source," Seth Goldstein, a senior equity analyst at Morningstar, told Platts, part of S&P Global Energy on Dec. 5.

"We also see global EV sales growing, which will raise lithium demand," Goldstein said. "Due to demand growing faster than supply in 2026, we see the market moving from oversupply closer to balance by the end of the year."

Storage boost

The cost of battery storage has benefited from a significant drop in global lithium prices from the 2022–23 highs. Lithium carbonate and lithium hydroxide CIF Asia, critical precursors for lithium-iron-phosphate (LFP) cathodes, have recorded dramatic price swings.

The Platts-assessed price for battery-grade lithium carbonate CIF Asia dropped from a record high of $78,200 per metric ton on Nov. 28, 2022, to about $44,000/mt by mid-2023 and down to about $8,000/mt by mid-2025.

Lithium prices staged a modest recovery in the second half of 2025, catching some market participants off guard as rapid expansion in AI computing and data centers favored technologies such as LFP to stabilize a grid stressed from an unprecedented surge in power demand.

The Platts-assessed lithium carbonate CIF North Asia price climbed to $11,000/mt as of Dec. 8, 2025, rallying 37.5% from the 2025 low of $8,000/mt recorded on June 26, 2025.

Producers see a boom

Lithium consumption for energy storage is forecast to increase by as much as 90% year over year to 380,000 mt in 2025, according to an estimate by Albemarle, the world's largest lithium producer.

In the US alone, energy storage growth increased 145% year over year in the year to date through September, the US-based producer said, highlighting regional variations in adoption rates.

"We expect lithium demand for stationary storage applications to increase more than 2.5 times by 2030," Kent Masters, chairman, president, and CEO of Albemarle, said on a Nov. 6 earnings call.

North America has emerged as the fastest-growing region for stationary storage, up almost 150% in the year to date, as "rising data center and AI investment in the United States increases the demand for electricity and grid stability," Masters said.

Even lithium producers are uncertain about the exact size of the anticipated demand boost from energy storage.

The spread between high and low estimates of lithium demand from battery energy storage systems spans over 765,000 mt of lithium carbonate equivalent, which is about half of the size of the lithium market in 2025, Liontown's Chief Commercial Officer Grant Donald said Oct. 28, 2025, during the company's fiscal first-quarter earnings call.

Short-term dip

Global lithium consumption from energy storage will grow 45.6% to 312,934 mt in 2030 from a 2025 estimate, S&P Global Energy CERA analysts said.

However, they forecast a 3.0% year-over-year drop in the sector's lithium demand in 2026 to 209,000 mt, citing expectations of fewer energy storage installations worldwide.

Global battery storage installations are expected to decline 2.7% to 296,617 MWh in 2026 from 304,978 MWh in 2025, according to S&P Global EnergyHorizons data.

"The decline is really driven by the Chinese market, which accounts for over 60% of global [energy storage] installations in 2025, and will decline in 2026 due to the removal of the mandate to pair energy storage with new large-scale solar installations," Sam Wilkinson, head of renewables markets at Horizons, told Platts.

On Jan. 1, 2025, China removed a requirement for new renewable energy plants to include energy storage systems for development rights and grid connection, according to an official document released by China's National Development and Reform Commission in February 2025.Previously, mandates introduced in 2022 and adopted by over 20 provinces drove rapid energy storage deployment, which reduced renewable curtailment but increased project costs, leading to low storage utilization rates.

The new policy, introduced June 1, 2025, shifts compensation for renewables to a market-driven model using contracts-for-difference auctions, with payments capped at coal generation prices. This change rationalizes renewable compensation and eliminates the energy storage mandate.

Horizons estimates that the storage mandate has driven between 50% and 75% of domestic demand. With China accounting for about 56% of global energy storage demand in 2024, the impact of such a policy change is likely to be significant.

"China was on track to install over 60% of all utility-scale storage globally in 2025, and so in the absence of further policy changes, about 45% of global demand has just been wiped away," said George Hilton, a senior analyst covering batteries and energy storage at S&P Global Energy.

Read the first story in the Metals Market Movers 2026 series here.

Read the second story in the Metals Market Movers 2026 series here.

Read the third story in the Metals Market Movers 2026 series here.