As demand for energy storage spikes, lithium remains a critical mineral powering the future

Global demand for lithium is exploding.

The world needs more lithium primarily to fuel the massive growth in electric vehicles, renewable energy storage, and emerging AI data center demands.

Current supply struggles to match surging consumption.

Global lithium demand is projected to reach around 2 million tonnes in 2026, driven by these sectors amid tightening supply balances. Without expanded production, shortages could delay the energy transition and raise prices significantly.​

Current forecasts predict a tripling of demand by 2030 due to EV sales hitting 17 million annually, as per industry estimates.

EVs account for over 80% of lithium growth, with stock surpassing 250 million vehicles by 2030.​

In addition, energy storage is also on the rise demand for lithium as battery demand for grids and renewables spike, with up to 31% of lithium use by 2026, Reuters reported.

Shipments of lithium-ion batteries for AI could exceed 300 GWh by 2030, as per Energyx.​

In December, J.P. Morgan upgraded all pure-play lithium miners to "OW" (overweight), driven by major upward demand revisions and widening market deficits.

Currently, EVs account for about 90% of lithium use.

The global EV fleet expected to quadruple to 235 million by 2030, requiring massive battery production.

But that's just the tip of the proverbial iceberg: Renewable energy storage systems, including grid-scale batteries, are expanding rapidly at 30-40% annually to support solar and wind integration.

AI data centres add pressure. Excess production from renewables means higher demand for backup power, load balancing, to counterbalance energy demand spikes.​

Sodium-ion batteries, on the other hand, have emerged as a game-changer, offering cheaper, more abundant alternatives to lithium for grid storage and mid-range EVs, slashing costs by up to 30% amid lithium price volatility.

Without ramping up mining and recycling of critical battery minerals, the green revolution stalls — supply shortages could spike prices 500% by 2027, delaying net-zero goals, according to one industry report.

Source: Researchnester

Lithium is widely regarded as the best material for energy storage today, primarily in the form of lithium-ion batteries, due to a combination of its unique physical and chemical properties that outperform alternatives in most applications.

Here's a breakdown of the key reasons:

Lithium enables batteries with exceptional energy density, typically ranging from 150-330 Wh/kg, which is significantly higher than competitors like lead-acid batteries (30-75 Wh/kg).

This means more energy can be stored in a smaller, lighter package, making it ideal for space-constrained uses like electric vehicles (EVs), portable electronics, and grid-scale storage.

Lithium's small atomic weight (the third lightest element after hydrogen and helium) and radius contribute to this, allowing for efficient ion movement and high charge storage per unit mass and volume.

Lithium-ion cells deliver a nominal voltage of around 3.6-3.7V, which is 1.5-3 times higher than many alternatives, enabling greater power delivery for demanding tasks like accelerating an EV or providing backup during grid peaks.

This high electrochemical potential also supports fast charging and discharging without significant efficiency losses.

These batteries can endure thousands of charge-discharge cycles— up to 5,000 or more for variants like LiFePO4 — while maintaining over 80% capacity.

They have no memory effect (unlike nickel-based batteries), a low self-discharge rate (1.5-2% per month), and require minimal maintenance.

This longevity reduces replacement costs and makes them suitable for long-term applications like renewable energy storage.

Lithium-ion batteries offer high round-trip efficiency (often 90%+), tolerate temperature variations well, and avoid toxic materials like lead or cadmium.

Their modularity and scalability have driven widespread adoption in EVs (e.g., Tesla Model S), grid systems, and consumer devices, with ongoing improvements pushing energy limits further.

While not perfect — issues like resource scarcity and potential thermal runaway exist — these advantages have made lithium the market leader, with massive R&D investment accelerating economies of scale.

As for the next-best energy storage solution, sodium stands out as the most promising alternative, particularly in sodium-ion batteries, which are gaining traction for their sustainability and cost benefits.

Sodium is far more abundant (23,600 ppm in Earth's crust vs. 20 ppm for lithium), cheaper to extract (e.g., from seawater), and can often eliminate the need for scarce metals like cobalt or nickel.

Sodium-ion batteries share similar chemistry with lithium, allowing compatibility with existing manufacturing lines, and offers good safety with lower reactivity.

However, sodium-ion batteries have lower energy density (150-160 Wh/kg vs. 200-300 Wh/kg for lithium-ion), making them better suited for stationary grid storage or lower-range EVs rather than high-performance applications.

Companies like CATL and Faradion are already commercialising them, with deployments in utilities and vehicles. Other contenders like zinc or aluminum show promise but are further from widespread adoption.