By Nichola Groom

(Reuters) – In recent months, U.S. developers of renewable energy have put off or cancelled several large battery projects that were meant to store electricity on the grid. This has scuttled plans to substitute fossil fuels by wind and solar 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 affect the speed at which the transition from fossil fuels is taking place. This could threaten power reliability in some states which heavily depend on renewable energy, like California.

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 are affecting states such as California, Hawaii, Georgia. According to an analysis of regulatory documents and corporate statements, Fluence and Fluence have warned of supply disruptions. Interviews with developers of power and providers were conducted to determine the extent of these issues.

According to Reuters reports, delays that have never been reported before can vary from several months to a whole year.

Jamal Burki is president of IHI Terrasun Solutions in the U.S., which serves as IHI Corp’s energy storage unit.

European projects for energy storage are facing delay as well, however, the United States lags Europe in developing grid-scale storage. This makes the problem less severe.

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.

The U.S. has an energy storage sector that makes up nearly 3% of its clean energy assets and is growing quickly. The American Clean Power Association reports that installations rose 170% to 758 megawatts in the first quarter. This is roughly enough to supply power for 144,000 homes.

However, the pace of change is slower than expected. Wood Mackenzie, an energy research company, told Reuters that it might revise its outlook for U.S. storage installation of 5.9 GW in this year’s US due to rising evidence of market disruptions. This comes after the 2021 installations were about half of what Wood Mackenzie initially anticipated.

Three-quarters of all lithium-ion batteries are made in China. Prices have shot up as high as 20% over last year due to increased nickel and lithium costs, COVID-19 Lockdowns that disrupt manufacturing, transport restrictions, and rising shipping costs.

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, Wartsila’s vice president for energy storage optimization and storage development, said that when the pullback occurs, the impact on the storage industry is worse than the effect it has on the electric car industry. “We’re a difficult customer.”

The recent uncertainty surrounding potential tariffs in Asia has also affected storage development. 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 tariffs would be waived for two years for panels from countries subject to a Commerce Department investigation. This is an attempt at revitalizing solar installations. SUMMER CRUNCHER

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.

535-MW in storage Ameresco Inc has been delayed for Southern California Edison (NYSE:) Inc. The company expects that only a small portion — approximately 300 MW — will be available by August’s target.

Ameresco didn’t respond to our request for comment.

According to Catherine Stedman (spokesperson), Central Coast Community Energy is facing delays in six clean-energy projects. Among them, 122 MWs of storage are needed for state mandated clean power 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, Silicon Valley Clean Energy Authority and its partner in many projects have filed a lawsuit against developer EDF (EPA) Renewables for terminating contracts for Big Beau’s solar and storage project, which began generating electricity last year.

EDF requested in March that the price of the still unfinished component of the energy storage system be raised by $76.8million — an increase of 233%, according the complaint filed in Santa Clara County’s state court.

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. In April, Governor Gavin Newsom stated that the state was counting on battery storage projects to provide summer reliability. Many of these were purchased following rolling blackouts in Aug 2020.

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

Rystad, an energy research company, stated that due to the high demand for batteries in a surging EV marketplace global supply for utility storage projects is not likely to be able meet the medium-term.

The International Energy Agency states that this problem is serious. To decarbonize the world’s power sector, battery storage must reach 585 gigawatts by 2030. This is a 35-fold rise from 2020.

Jim Kapsis (founder of the Ad Hoc Group climate 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.”

Hawaiian Electric has been experiencing delays in the solar and storage contracts it signed to support its state’s last coal-fired power station, which will be retiring in September. The 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 from Hawaiian Electric stated that the utility only expected 39 MW out of 378.5 MWs of solar storage and solar power it purchased to serve the AES(NYSE:) coal plants retiring.

Innergex, Tesla and others did not reply to our requests for comment.

Elon Musk, Tesla CEO and Chief Executive acknowledged this year during a conference phone call that Tesla has prioritized stationary storage over EV battery supply.

Fluence said last month in a conference phone that force majeure notices had been issued on three contracts by it because China’s battery suppliers were unable to meet their obligations. Fluence also stated that it raised the prices of new contracts by 15 to 25%, and will price future contracts using raw material indexes in order to protect against volatility.