September 23, 2011 — Smart grids — adaptable and better-managed electricity systems — will proliferate over the next decade. In turn, smart grids will generate nearly $6 billion demand for lithium-ion (Li-ion) batteries by 2020, to fulfill energy storage needs, according to the IHS iSuppli Rechargeable Batteries Special Report.

Energy storage stabilizes the grid between peak and low energy usage times, and can back-up power sources or store energy from intermittent sources like wind and solar power. The rechargable batteries in a smart grid system optimize electric power delivery.

The Li-ion battery market for smart grids will experience rapid growth from 2012 onward (see the figure), surging from $72 million in 2012 to $5.98 billion in worldwide revenue by 2020. Demand sources include single-home systems, residential clusters or buildings, uninterruptible power power systems for corporate information technology (IT) operations, through large-scale systems used by grid operators.

Lithium-ion batteries demonstrate "inherent advantages compared to alternative technologies," said Satoru Oyama, principal analyst for Japan electronics research for IHS. Because Li-ion technology is "uniquely suited for use in smart grids," the batteries will take over as the dominant rechargable energy storage systems on smart grids, Oyama said. Li-ion batteries maintain full capacity even after a partial recharge, and are considered to be more environmentally safe than other battery technologies.

Smart grids are developing with various government initiatives globally: the US has $4.5 billion set aside for smart grid deployment, and China could be the largest smart grid market in the world with $586 billion for investment during the next 10 years.

To learn more about this topic, see Strong Growth to Drive Lithium-ion Battery Market to $54 Billion by 2020: http://www.isuppli.com/semiconductor-value-chain/pages/strong-growth-to-drive-lithium-ion-battery-market-to-61-billion-by-2020.aspx?PRX. IHS (NYSE: IHS) is the leading source of information and insight in critical areas that shape today’s business landscape, including energy and power; design and supply chain; defense, risk and security; environmental, health and safety (EHS) and sustainability; country and industry forecasting; and commodities, pricing and cost.

Also read: Energy Storage Trends from chief editor Peter Singer