3 Reasons Why LFP Is the Best Choice for BESS

In recent years, LFP (lithium iron phosphate) has become the dominant choice for cathode material in lithium-ion batteries in battery energy storage systems (BESS). There are several reasons why LFP has risen to the top among different lithium-ion battery cell chemistries. 

Here’s a look at the top three reasons why LFP is superior for BESS:

1. Lower cost per unit of energy

Perhaps the most compelling advantage that makes LFP the dominant cathode material is its cost-effectiveness: LFP offers significantly lower cost per unit of energy than its competitors. 

LFP cells deliver this lower cost by using materials like iron phosphate, which is more abundant, cheaper, and less constrained by supply chain challenges than competing cathode materials, such as nickel, cobalt, and manganese. 

For example, China has established a strong domestic supply chain for LFP and earns a cost advantage with economies of scale in manufacturing. Conversely, 70% of cobalt (which is necessary for NMC and NCA cathodes) is mined in the Democratic Republic of the Congo under exploitative conditions. 

Another reason LFP can evade the common supply chain constraints its competitors are subject to is the fact that LFP technology has simply existed longer. As a result, several key patents related to LFP technology have already expired, reducing the barrier to entry for new manufacturers and creating more opportunities for innovation.

2. Longer lifetime

LFP cells offer a significantly longer lifetime than do its competitors. This is a keen benefit, as it plays a large role  in the lifetime cost of the asset—another financial advantage of choosing LFP for BESS.

Additionally, longer lifetime of assets translates to fewer capacity augmentations, where additional storage units are added to a site to maintain its grid-rated capacity and power rating to compensate for legacy assets’ degraded power and capacity. These augmentations add cost, increase system complexity, and can potentially lead to site downtime. In this way, LFP’s longer lifetime further optimizes BESS finances.

3. Better operational safety 

Finally, LFP cells in BESS also contribute to better operational safety than do competing nickel-based cathode materials. 

This is primarily due to LFP’s thermal runaway temperature. Because LFP has a significantly higher thermal runaway temperature and a substantially slower release of energy during a thermal runaway event, it is much less likely to result in battery fires that can spread to additional units.

What about LFP’s lower energy density? 

Although LFP boasts lower cost per unit of energy, longer lifetime, and better operational safety than nickel-based cathode materials, objections remain about its energy density. 

While it's true that LFP has lower energy density than nickel-based cells, this is considered a rather tolerable tradeoff in stationary BESS, where additional physical space is relatively cheap. 

Conversely, higher energy density cells (like NMC) are better suited for physically-constrained applications, such as electric vehicles, where higher cost is tolerated to maximize driving range.

Are there alternatives to LFP for BESS? 

With the ability to drive more financial benefits and great operational safety for BESS applications, it’s clear that LFP cells are the superior choice compared to nickel-based cathode material. Still, manufacturers continue to search for better options. 

For example, in the longer term, it’s possible that sodium-ion may dethrone LFP as a low-cost, low-energy-density option for BESS. However, it’s unclear if sodium-ion will be able to offer the same lengthy lifetime and financial benefits as LFP. 

Meanwhile, solid-state batteries are also being evaluated as a possible LFP alternative due to their opportunities for higher energy density, longer lifetime, and improved safety. That said, solid-state batteries’ manufacturing costs make this option prohibitively expensive—at least for now. 

Conclusion: LFP is the clear winner, now and into the future

Despite possible alternatives, LFP remains the clearly superior choice for BESS due to its low costs, long lifetimes, and ability to support operational safety. 

In fact, the future seems even more promising for LFP. In the short term, manufacturers expect LFP cells to become even lower cost, longer lasting, and operationally safe. For example, CATL’s 2024 system release claims zero degradation for the first five years and a 30% improvement in energy density.

Read more about all things battery and BESS on the Zitara blog.