SEIA report probes barriers to building energy storage manufacturing sector
A new report that examines the barriers to building a robust energy storage manufacturing sector in the United States, was released last week by the Solar Energy Industries Association (SEIA).
The report, called Energizing American Battery Storage Manufacturing, is one of the first comprehensive examinations of the challenges and opportunities facing domestic energy storage production following the passage of the Inflation Reduction Act (IRA). While the IRA is strengthening energy storage manufacturing, domestic production is still expected to fall short of demand as early as 2025 without strategic action.
“America’s ability to lead the global clean energy transition and boost grid reliability depends on how quickly we scale domestic production and deploy battery storage technology,” SEIA President and CEO Abigail Ross Hopper said. “This report illustrates the competitive landscape of energy storage manufacturing and articulates the challenges the U.S. must address in order to reduce our reliance on battery imports and enhance energy security.”
The lithium-ion battery is the main form of energy storage for renewable energy and over the next decade, there will be a surge in global demand for it. Globally, total demand for batteries in all applications, including solar and electric vehicles, will grow from roughly 670 GWh in 2022 to over 4,000 GWh by 2030. Also, U.S. demand for battery energy storage systems (BESS) is likely to increase over six-fold from 18 GWh to 119 GWh by 2030, according to the report. U.S. manufacturing capacity for all lithium-ion battery applications is currently at 60 GWh.
The research found that cost and availability of raw materials are the biggest barriers to spurring energy storage manufacturing. Also, while phosphorus and lithium from the United States and its trading partners are available in sufficient quantities, the availability of graphite and other processed materials, like cathode and anode active materials, could create a shortfall.
The U.S. broadened its incentive program to include domestic manufacturing through new tax credits, grants, low-cost loans, government procurement, research and development support, and public-private partnerships. Further, the IRA offers incentives to produce electrode active materials, battery cells, and battery modules for energy storage.
These incentives could reduce energy storage costs by 40 percent or more. And If factories can access raw materials at reasonable costs and improve their production yields to 90 percent, the IRA incentives could make U.S. batteries cost competitive with products produced in China.
However, manufacturers will face challenges like longer development times and training and recruitment to address workforce shortfalls. In addition, production elements including siting, permitting, constructing, and commissioning new factories influence how quickly domestic manufacturing can scale.
Further, effective state regulations and industrial policies can provide early-stage support for mining and refining of materials to ensure manufacturers can meet demand.
“Smart and strategic investments across the supply chain are needed because building a domestic energy storage base is a strategic imperative for U.S. energy security,” Hopper added.
