In last week’s issue of Energy Transition Today, we discussed the significant drop in solar capture prices in California over the past five years. This decline presents a valuable opportunity for solar projects to utilize co-located battery storage, charging them with affordable solar power during daylight hours and discharging the stored energy in the evening to capitalize on higher peak pricing. From co-located battery storage to electric vehicles, we see rising demand for battery production and battery metals like lithium, and by 2035 we anticipate lithium demand to increase by 350,000 tonnes from 2019 levels.
Currently, 95% of the global lithium supply is mined in just four countries: Australia, Chile, China and Argentina. The U.S. only contributes 1%, illustrating the need to secure local production as demand increases. Recent government policy changes offer hope, with the Defense Production Act allocating up to $1 billion per year to boost domestic mineral development and the Inflation Reduction Act introducing a 10% critical minerals tax credit on mining and refining.
However, bringing new mines online can take decades and evaporative salars have geographical limitations due to their need for extremely dry environments. This is where direct lithium extraction (DLE) comes into play. Currently being tested for commercial viability, DLE has the potential to extract lithium from large volumes of low-concentration lithium brines. If successful, DLE could unlock almost limitless domestic lithium production, either from dedicated brine resources or from the approximately 3 billion barrels of oilfield wastewater produced monthly in North America.
FIGURE 1 | Yearly Lithium Production and Revenue Potential
Figure 1 shows the potential for lithium extraction and revenue from wastewater for five operators in the Delaware Basin. With a total of 29,000 tonnes/year, generating $600 million in additional revenue at a $20,000/tonne spot price, the implications are clear. If DLE proves successful, it could not only meet domestic lithium demands but also generate significant revenue in the process.
Highlights from Energy Transition Research
A Simple Guide to Energy Transition Metals
This report presents a supply and demand outlook for metals that will be crucial in supporting the decarbonization of the energy system.
A Simple Guide to Synthetic Fuels
What will it take for synthetic fuels to play a significant role in the replacement of hydrocarbons in the transportation sector?
The Inflation Reduction Act – Impact on CCUS
This report explores the impacts of the Inflation Reduction Act on the development of CCUS projects in the United States.
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Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters. Click here to learn more.
