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Experts participating in the upcoming NetZero Milan Expo-Summit 2025 have told pv magazine that the growing competitiveness of lithium is putting pressure on emerging technologies such as sodium-ion batteries, as the market evolves toward larger cells that could redefine storage system designs. The growing dominance of lithium iron phosphate (LFP) chemistry in stationary energy storage systems (ESS) has been the most significant development in the storage sector over the past two years, according to experts participating in the NetZero conference in Italy this week. “LFP batteries have gained traction due to their improved safety, longer lifespan, lower cost, and stable performance,” said Daniel Fuchs, client director at EUPD Research. “Furthermore, the emergence of more utility-scale storage projects is driving rapid innovation in storage technology, improving energy density, scalability, and integration with renewable energy sources,” added Fuchs in preparation for his keynote address at NetZero Milan Expo-Summit 2025, organized by FieraMilano and taking place from May 14-16 in Milan, Italy. Giuseppe Artizzu, CEO of NHOA Energy, highlighted that in recent years, LFP chemistry has gained dominance in the battery sector, with standardized cell formats and interlocking designs that have enabled significant economies of scale, performance improvements, frequency advances, and cost reductions. This wave of incremental innovation has now leveled off, and were seeing the introduction of larger cells, which in turn could drive new concepts in interlock design, Artizzu explained. The incredible competitiveness of LFP batteries is raising the bar for promising alternative chemistries like sodium-ion. Rosa Milano, director of energy storage sales at Fluence, noted that lithium-ion remains the most mature and commercially viable energy storage technology. Current innovations focus on three key areas. First, in the area of ??optimized grid integration: Advances such as grid-forming capabilities, synthetic inertia, and dynamic frequency response improve stability, thereby increasing energy security, while enabling deeper integration of renewable energy sources, Milano explained. The other two factors are adaptive deployment—such as noise-reduction technologies and accelerated construction timelines—and improved financial performance, driven by operational reliability exceeding 20 years. Orazio Sallemi, CEO of BayWa re Energy Trading, cautioned against overlooking other technological innovations outside of electrochemical systems. Were talking specifically about physical storage systems, such as compressible fluid storage and gravitational storage, Sallemi said. Furthermore, the development of optimization software, based on AI logic, can significantly contribute to the efficient use of the storage system. Geopolitical risks Several experts participating in the second vertical event pv magazine is organizing as part of Net Zero pointed out that geopolitical factors—particularly the availability of critical raw materials such as lithium, nickel, and cobalt—could impact growth in the BESS market, as well as in the manufacturing sector in general. “The current geopolitical landscape, particularly trade tensions between the U.S. and China, could significantly impact the global battery supply chain. For example, in 2024, approximately 25% of China’s lithium-ion battery exports were directed to the United States,” Fuchs explained. “Any disruption in trade relations or the imposition of tariffs could create supply bottlenecks, increase costs, and slow deployment in U.S. storage markets. Different segments of the storage industry could be impacted to varying degrees, with lithium-ion battery technologies being the most adversely affected due to their heavy dependence on Chinese manufacturing.” Lithium-ion batteries, particularly those involving the Chinese supply chain, will likely bear the greatest geopolitical impact due to their critical role in both electric vehicles and stationary storage applications, Fuchs added. Naomi Di Meo, communications officer for the Global Solar Council, noted that the storage situation is not as dire as that of photovoltaic modules, thanks to greater diversification. Fuchs also mentioned other geopolitical risks putting pressure on the battery market. Developments in the conflict in Ukraine could impact the storage market, depending on how the situation develops in the coming months. One example is the recent blackout in Spain and Portugal, Fuchs added. The reason is still unclear, but once the market is affected by rumors (sabotage, hacking), this could affect other European markets approach to storage, similarly, though on a smaller scale, to what we saw with the boom in photovoltaic installations following the Russian invasion of Ukraine in February 2022. Milano noted that cybersecurity has become a critical aspect of battery storage technology, especially as digital infrastructure becomes more integrated into energy systems. “With rising geopolitical tensions, we are seeing several key risks emerge that could significantly impact the sector. First, operational risk. Cyberattacks on energy storage systems can cause outages, preventing companies from accessing their systems,” Milano explained. “This, in turn, translates into revenue losses for suppliers and consumers who rely on these technologies. Second, regulatory challenges are becoming more prominent. Governments around the world are beginning to tighten cybersecurity laws for critical energy infrastructure, such as energy storage, and noncompliance can result in severe fines, sometimes amounting to millions of euros or a percentage of global revenue. This places a heavy burden on companies to ensure their systems are robust and secure.” Risk mitigation Geopolitical complexities could also have long-term consequences, noted Orazio Sallemi, managing director of BayWa re Energy Trading. “Traders truly appreciate price volatility because it translates into arbitrage opportunities with potential profit optimization. But if you try to look a little beyond the short-term horizon, what might seem like a strong upward push can later turn into a general slowdown in initiatives and, consequently, in buying and selling opportunities,” Sallemi explained. “For this reason, the trader must always be ready to take advantage of the opportunities that the contingent moment can offer, but we must always keep in mind that up and down the value chain are our partners, producers, and end customers, who in turn need certainty and rationality, both in sales and purchases.” Sallemi noted that it is necessary to consider industrial and commercial resilience, anticipating potential shocks to both supply availability and the demand and supply of energy commodities. Issues such as geographic and technological diversification, the growing use of AI applications, and finally, the role of recycling and recovery of critical materials are cause for reflection and increased investment in the near future, he added. NHOA Energys Artizzu noted that the lack of a competitive battery industry in Europe should be a primary concern and an absolute priority for the continents industrial policy. “Swift action should be taken to prevent reliance on battery technology from spilling over into grid control, e-mobility, and industrial automation. These are all well-established sectors in Europe, with advanced technology and industrial capabilities,” Artizzu added. “European market access rules should be actively managed to prevent aggressive price-based penetration strategies from displacing existing strategic value chains on the continent. The Net Zero Industry Act and the Clean Industrial Deal are critical steps in this direction, and broad consensus around their core objectives is needed to improve their design and implementation in Brussels.” Production costs Sallemi said the learning curve for battery pack production costs has decreased from over $1,000/kWh initially to less than $140/kWh by 2023, with some large-scale solutions reaching even lower values. “Analysts predict an oversupply situation for the 2025-27 period, with further price declines expected to soon reach and surpass the psychological threshold of $100/kWh. This could also be achieved thanks to the development of new chemistries such as lithium iron phosphate (LFP), the advancement of solid-state batteries, and, finally, the consolidation of more efficient production chains,” Sallemi said. “Issues such as geographic and technological diversification, the growing use of AI applications, and, finally, the role of recycling and recovery of critical materials are cause for reflection and greater investment in the near future.” |
