While institutional real estate investors are primarily concerned with the development of construction costs and material prices, infrastructure investors are concentrating more on the costs and characteristics of the plant technologies used. In the case of large-scale battery storage systems (BESS), technological progress in cell chemistry plays a much greater role – especially in the interplay of costs, performance and service life.
It is therefore worthwhile to look at the technological specifications when making investment decisions.
Why LFP is (still) state of the art from an operator’s and investor’s point of view
Lithium iron phosphate (LFP) cells have established themselves as the leading cell chemistry for both large-scale BESS plants and battery-electric vehicles. The decisive factor for this is a combination of:
- high security,
- favourable raw material basis,
- a stable, globally widely available supply chain,
- as well as technological maturity.
Market analysis by BloombergNEF shows that the increasing share of LFP has been instrumental in massively lowering battery prices despite volatile commodity markets. While battery cells cost around $136/kWh in 2022, they were already at just $74/kWh in 2025. A major driver is the strong overcapacity of Chinese cell manufacturers, which leads to intense competition and a corresponding drop in prices.
Another advantage is that LFP-Chemie does not use nickel and cobalt – two raw materials whose price development was highly volatile between 2021 and 2026 and whose supply chains are sometimes considered critical. This significantly reduces dependence on geopolitically sensitive markets.
In addition, there is the exceptional thermal stability of LFP cells. They are significantly less susceptible to thermal runaway than classic nickel-manganese-cobalt oxide (NMC) and are therefore particularly suitable for stationary applications where fire risks and service life are key parameters.
Example: If a 200 MWh BESS is charged and discharged quickly to provide balancing energy, high temperatures are generated. Cooling management systems therefore reliably keep the cell temperature in the range of 35-55 °C to prevent critical values above 60 °C.
LFP also convinces in key performance indicators:
Round Trip Efficiency (RTE)
The RTE – the ratio of emitted to absorbed energy – is typically 90-95% and thus meets the requirements of modern BESS marketing models.
Cycle stability
This means the ability of a battery to be charged and discharged repeatedly without losing significant performance or capacity (<20%) over its economic lifetime. LFP cells are known for their high robustness. Today, for example, manufacturers give warranties of about 6,200 full cycles, which corresponds to around 1.7 cycles per day over ten years. The long-term use in BEV fleets helps to empirically substantiate these assumptions.
What alternative battery chemistries are there?
From today’s perspective, sodium ions (Na-ion) are the only technology with realistic potential to become a broadly scaling alternative to mass-market LFP in the next few years. Their advantages lie primarily in:
- Cost potential due to sodium-based raw materials,
- Excellent cooling performance: Na-ion cells still reach around 90% of their capacity even at −20 to −40 °C (for comparison: LFP is around 70 to 80% at −20 °C).
Several major Chinese manufacturers – including CATL and BYD – are already planning or operating GWh-scale production lines. It is not yet possible to say with certainty whether the use of Na-ion technology will be cheaper than LFP in the medium term.
Bankability issues are currently particularly open, as field data from real long-term applications are still missing. Warranty conditions (e.g. state-of-health limits or replacement rules) are therefore often more difficult to negotiate than with LFP.
Availability: No bottleneck – despite global demand
Today, the market for LFP cells is strongly dominated by China: over 80% of global production for utility-scale BESS is accounted for by manufacturers such as CATL, BYD, Hithium, Narada or Hyperstrong.
Delivery times for battery cells are around 6 to 9 months and can be easily integrated into typical construction schedules for BESS plants, including foundation construction, cable tray system, transformer installation and grid connections.
Result
LFP will remain the dominant reference technology in the global BESS sector in 2026 – thanks to safety, cost leadership and strong supply chains.
At the same time, alternative cell chemistries such as sodium ions are approaching an industrial breakthrough and could open up new fields of application in the medium term.
The rapid price reduction for LFP will weaken, but continue. At the same time, global overcapacity improves availability and shortens delivery times, which means that BESS – at least from this perspective – could play an increasingly central role in the energy transition worldwide.
