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U.S. demand for battery energy storage systems will increase six-fold by 2030, according to a recent SEIA report, but only with serious investment, coordination with experienced manufacturers, and collaboration with allies.
The recent “ Energizing American Battery Storage Manufacturing ” report from the Solar Energy Industries Association (SEIA) notes that credits offered through the Inflation Reduction Act (IRA) have spurred the adoption of electric vehicles, the energy storage and other forms of electrification. However, domestic battery manufacturing is still in an incipient phase.
A little over a year ago, in rapid response to IRA incentives, a number of manufacturers announced plans to set up shop in the U.S. And the announcements continue: Freyr announced a multi-phase project expected to lead to battery manufacturing to Georgia. Kore Power recently received a conditional loan commitment from the DOE Loan Program Office, for which it will receive $850 to manufacture battery cells for electric vehicles and grid-scale storage. LG Energy Solution quadrupled its announced investment in two manufacturing plants in Arizona.
While the announced expansion of domestic manufacturing is promising, many questions remain about whether manufacturers will be able to overcome the many obstacles on the path to meeting growing storage needs. According to the SEIA report, US manufacturing capacity for all lithium-ion battery applications is currently 60 GWh, while demand for battery energy storage systems (BESS) in the US is 60 GWh. The US will likely increase sixfold, from 18 GWh to 119 GWh in 2030.
The SEIA report predicts that the announced manufacturing facilities could increase national capacity to more than 630 GWh in the next five years. However, much of this supply could be used to meet demand from electric vehicle manufacturers, rather than non-automotive applications such as BESS.
According to SEIA, more than 25% of new factories have not publicly declared their intended markets and some (if not all) of their capacity could go to BESS, so there is still hope for steady supply.
Supply and cost of materials
Most batteries manufactured in the United States are lithium and, although this country has large reserves of lithium, other materials such as phosphorus and graphite are needed. These materials come primarily from outside the United States, so domestic manufacturers compete on a global scale and often encounter high prices and supply shortages.
The workforce challenge
As with the rest of renewable energy development, ensuring a strong, qualified workforce is a challenge. According to the SEIA report, critical functions for energy storage supply chains include mining, chemical and electrical engineers, machinery operators, and production technicians, among others. Although apprenticeship incentives are part of the IRA, long-term workforce growth requires committed collaboration between manufacturers, government agencies, training centers and other stakeholders.
Building a national renewable energy supply chain includes supporting the development of energy storage at all levels, and the report argues that this will require investment, partnerships with experienced manufacturers and collaboration with allies. |
