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A battery shortage is hampering the U.S. switch to wind, solar power


Siemens wind turbines are used on an Iowa wind farm at Marshalltown.

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U.S. Renewable Energy Developers have delayed or abandoned several major battery projects to store electric power on the grid. These actions are preventing plans to replace fossil fuels like oil and gas with renewable energy.

A minimum of 12 storage facilities that are meant to grow renewable energy supply have been delayed or cancelled, or renegotiated, as transportation and labor bottlenecks, high prices for minerals, and increased competition from the electric car industry limit supply.

A dispute over California’s delayed storage project was previously unknown and ended up in court.

As the Biden administration aims to decarbonize America’s grid by 2035, the slowdown in the installation of utility-scale batteries could impact the U.S. pace of its transition from fossil fuels. California and other states heavily dependent on renewable energy could be at risk from the delays.

Storing power can be vital in the expansion of wind and solar energy. It allows electricity to be generated during the peak hours of sunlight or wind to reach consumers when they are most need.

These delays have occurred in states like California, Hawaii, and Georgia. The battery suppliers included were also affected. Tesla and Fluence warning of disruptions to supply, according to a review of regulatory documents, corporate statementsAnd interviews with project developers and power providers.

According to Reuters, the delays can range anywhere from several months up to a whole year.

Jamal Burki (president of IHI Terrasun Solutions), the U.S. arm of Japanese heavy machinery maker, stated that “I have never seen a new industry so challenged on so many levels.” IHI Corp.

European energy storage projects also face delays. However, this region is behind the United States when it comes to grid-scale storage development, which makes the problem more subtle.

Gresham House Energy Storage Fund fund manager Ben Guest said that he’s seen delays of two to three months in his projects due to shipping problems and component shortages.

About 3% U.S. clean energy capacity is stored in energy storage and this number has been increasing rapidly. According to the American Clean Power Association (roughly enough power to power 144,000 homes), installations grew 170% during the first quarter, to 758 megawatts.

However, the pace of change is slower than expected. Wood Mackenzie Energy Research said to Reuters that its U.S. Storage installations outlook of 5.9 GW is being revised this year due to increasing evidence of market disruptions. Its 2021 installation numbers were only about two-thirds what Wood Mackenzie had initially predicted.

The prices of lithium-ion battery batteries have increased by as high as 20% in the past year. This is because lithium and nickel cost rises, Covid-19 lockdowns interrupt manufacturing and transportation constraints slow down shipments.

According to industry experts, strong demand for EV batteries from producers has been a major headwind. Because EV manufacturers have more predictability than the project-based orders of power storage developers, they are preferred to the EV market.

Andy Tang, vice-president of energy storage optimization and storage developer, stated that “when the pullback occurs, it’s felt worse than by the electric car industry.” Wartsila. “We’re a difficult customer.”

Storage development has been affected by recent turmoil in the industry due to uncertainty about potential tariffs for Asian imports. Facilities that construct storage with solar can be eligible for a federal tax credit, which does not apply to standalone batteries. Biden’s administration declared this week that it will waive tariffs on solar panels from countries subject to a Commerce Department investigation. This is an attempt at revitalizing existing solar installations.

Summer crunch

These problems have raised concerns about 14.7 gigawatts U.S. battery storage currently in development. Some of these state officials had hoped that they would be in place in time to stop blackouts this summer.

Recent delays include 535-MW storage AmerescoSouthern California Edison, the largest utility in California, is currently developing. It expects just a portion of the project — about 300 MW — to be online by its August target.

Ameresco didn’t respond to our request for comment.

Central Coast Community Energy purchases electricity for 430,000 California customers. Six clean energy projects are also in delays, including storage of 122 MW to fulfill state-mandated clean energies requirements.

Stedman noted that developers of the project, initially intended to go online in this and next year, warned of delays up to six months.

CCCE and Silicon Valley Clean Energy Authority, its partner in several projects, meanwhile, have sued developer EDF Renewables over its termination of contracts for the Big Beau solar and storage project that started generating power last year.

EDF in March had asked to increase the price for the project’s still unfinished energy storage component by $76.8 million — a 233% increase, according to the complaint filed May 9 in California state court in Santa Clara County.

EDF has not responded to my request for comment.

Officials in the state, which already faces power shortages at peak summer times due to constant disruptions, are worried about these disturbances. Gavin Newsom, the Governor, stated in April that state officials had relied on new battery storage facilities to boost summer reliability.

Terrie Prosper, spokesperson for California Public Utilities Commission stated that “delays in the online dates these projects are very real concern.”

Unsolved problem

Rystad Energy Research said that because of the huge demand for battery storage systems from the EV market, there is no way to ensure sufficient supply.

The International Energy Agency states that this problem is serious. For the global energy sector to be decarbonized, it will require battery storage to grow to 585 GW by 2030. That’s a 35 percent increase over 2020.

Jim Kapsis (founder of the Ad Hoc Group climate technology advisory firm) stated that “if you cannot get the batteries manufactured and reliably shipped at a cost point that is dropping… then you will slow the ability to transition to batteries.”

In Hawaii, utility Hawaiian Electric is seeing delays in solar and storage projects it contracted to help replace the state’s only coal-fired power plant, set to retire in September. Canada’s Developer of Four Projects, Canada’s Innergex Renewable Energy, revealed on a conference call last month that it was seeking to renegotiate the terms of the deals — including price and timing — after receiving force majeure notices from its battery supplier, Tesla.

Sharon Higa, spokesperson for Hawaiian Electric, stated that only 39MW were expected to come from the 378.5MW solar and storage the utility acquired before the AES coal plant closed.

Innergex was not able to respond to my requests.

Elon Musk, Tesla’s Chief Executive Officer, acknowledged in an earlier conference call this year that Tesla had prioritised EV batteries over stationary storage.

Fluence said that three of its contracts had become force majeure after China’s battery supplier failed to fulfil their obligations. To guard against volatility, Fluence stated it also increased prices for new contracts by between 15% and 25%.