INSIGHT-How a battery shortage is hampering the U.S. switch to wind, solar power
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At least a dozen storage projects meant to support growing renewable energy supplies have been postponed, canceled or renegotiated as labor and transport bottlenecks, soaring minerals prices, and competition from the electric vehicle industry crimp supply.
One previously unreported dispute over a delayed
The slowdown in utility-scale battery installations
threatens the pace of the U.S. transition away from fossil fuels
as the Biden administration seeks to decarbonize the grid by
2035. The delays could pose a threat to power reliability in
states that already depend heavily on renewable energy like
Storing power is considered vital to the expansion of solar and wind energy because it allows electricity generated when the sun is shining or wind is blowing to be used at the end of the day when consumers need it most.
The delays span states including
The delays, some of which have not been previously reported, range from several months to a year, according to the Reuters reporting.
"I have not seen a nascent industry challenged on so many
fronts," said
European energy storage projects are also facing delays, but
that region lags
Energy storage makes up about 3% of U.S. operating clean energy capacity and has been growing rapidly. Installations soared 170% in the first quarter to 758 megawatts, according to the American Clean Power Association, roughly enough capacity to power 144,000 homes.
But the pace is dipping below forecasts. Energy research firm Wood Mackenzie told Reuters it may revise down its current outlook for U.S. storage installations of 5.9 GW this year because of the rising evidence of market disruptions, after 2021 installations came in at about two-thirds of what it initially expected.
Prices for lithium-ion batteries, three-quarters of which
are produced in
Robust demand from EV producers for batteries has also been a headwind, industry players told Reuters. Battery manufacturers are favoring the EV market because their orders are more predictable compared to the lumpy, project-based orders from power storage developers.
"When the pullback happens, it's felt worse by the storage
industry than it is by the electric vehicle industry," said
Recent turmoil in the solar industry, caused by uncertainty over potential tariffs on Asian imports, has also impacted storage development. Constructing storage alongside solar allows facilities to claim a federal tax credit that does not exist for standalone batteries. The Biden administration this week announced it would waive tariffs for two years on panels from countries impacted by a Commerce Department investigation, an attempt to revitalize solar installations.
SUMMER CRUNCH
These obstacles have raised questions about the fate of some 14.7 gigawatts of U.S. battery storage in development, some of which state authorities had hoped would be in place to prevent blackouts as early as this summer.
Among recent delays is 535-MW of storage Ameresco Inc (AMRC) is developing for Southern California Edison, one of the state's biggest utilities. It expects just a portion of the project -- about 300 MW -- to be online by its August target.
Ameresco (AMRC) did not respond to a request for comment.
Central Coast Community Energy (CCCE), which purchases power
on behalf of 430,000 customers in five
The developers of the projects, originally meant to come online this year and next, have warned of delays between six and 12 months, Stedman said.
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
EDF did not respond to a request for comment.
The disruptions have concerned state officials, already
dealing with perennial power shortages during peak summer
demand. Governor
"Delays in the online dates of these projects are a very
real concern," California Public Utilities Commission
spokesperson
OPEN-ENDED PROBLEM
Energy research firm Rystad said that given the large appetite for batteries from a surging EV market, global supplies for utility storage projects are not expected to be able to meet demand in the medium-term.
That's a problem, the International Energy Agency says. Battery storage needs to reach 585 GW by 2030 to decarbonize the global power sector, a 35-fold increase from 2020.
"If you can't get the batteries manufactured and reliably
delivered at a price point that is coming down... you're going
to slow the ability of batteries to accelerate the transition,"
said
In
Hawaiian Electric spokesperson
Innergex and Tesla did not respond to requests for comment.
Tesla Chief Executive
Fluence, meanwhile, said in a conference call last month
that it has issued force majeure notices on three contracts
because its battery suppliers in
(Reporting by