How a Battery Shortage Is Hindering America’s Shift to Wind and Solar Power


June 9 (Reuters) – U.S. renewable energy developers have delayed or scrapped several major battery projects to store electric power on the grid in recent months, scuttling plans to replace fossil fuels with energy wind and solar.

At least a dozen storage projects to support growing renewable energy supplies have been postponed, canceled or renegotiated due to labor and transportation bottlenecks, soaring mineral prices and competition from the electric vehicle industry.

A previously unreported dispute over a delayed storage project in California even ended in a lawsuit.

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The slowdown in large-scale battery installations threatens the pace of America’s transition away from fossil fuels as the Biden administration seeks to decarbonize the grid by 2035. The delays could threaten power reliability in states that already rely heavily on renewables like California.

Energy storage is seen as vital for the expansion of solar and wind power because it allows electricity generated when the sun is shining or the wind is blowing to be used at the end of the day when consumers are in most need.

Delays span states including California, Hawaii and Georgia, with battery suppliers such as Tesla (TSLA.O) and Fluence (FLC.AX) warning of supply disruptions, a review of documents shows. regulations, company statements and interviews with project developers and electricity suppliers.

The delays, some of which have not been previously reported, range from several months to a year, according to Reuters information.

“I have never seen a fledgling industry challenged on so many fronts,” said Jamal Burki, president of IHI Terrasun Solutions, the U.S. energy storage arm of Japanese heavy equipment maker IHI Corp (7013.T ).

European energy storage projects are also facing delays, but this region lags behind the United States in developing grid-scale storage, making the problem less pronounced.

Ben Guest, fund manager at the Gresham House Energy Storage Fund (GRID.L), which invests in battery projects in Britain, said he has seen two to three month delays in projects mainly due to battery shortages. components and shipping issues.

Energy storage accounts for approximately 3% of the United States’ clean energy operating capacity and is growing rapidly. Installations soared 170% in the first quarter to 758 megawatts, according to the American Clean Power Association, about enough capacity to power 144,000 homes.

But the pace is below expectations. Energy research firm Wood Mackenzie told Reuters it may revise its current outlook for U.S. storage facilities down to 5.9GW this year due to increasing evidence of market disruptions, after 2021 installations came in at around two-thirds of what it had originally forecast.

Prices for lithium-ion batteries, three-quarters of which are produced in China, have soared as much as 20% since last year as lithium and nickel costs rise, COVID-19 lockdowns disrupt manufacturing and transportation constraints are slowing shipments.

Strong demand from electric vehicle producers for the batteries has also been a headwind, industry players told Reuters. Battery makers favor the electric vehicle market because their orders are more predictable than lumpy, project-based orders from energy storage developers.

“When the pullback happens, it’s felt worse by the storage industry than the EV industry,” said Andy Tang, vice president of energy storage and optimization at the developer. Wartsila storage (WRT1V.HE). “We are a difficult customer.”

Recent unrest in the solar industry, caused by uncertainty over potential tariffs on Asian imports, has also impacted storage development. Building storage alongside solar allows facilities to claim a federal tax credit that does not exist for stand-alone batteries. The Biden administration announced this week that it would remove tariffs for two years on panels from countries affected by a Commerce Department investigation, an attempt to revitalize solar installations. Read more


Those obstacles have raised questions about the fate of some 14.7 gigawatts of battery storage in the developing United States, which some state officials hoped would be in place to prevent outages as early as this summer.

Among the recent delays is 535 MW of storage that Ameresco Inc (AMRC.N) is developing for Southern California Edison, one of the state’s largest utilities. It expects only part of the project – around 300 MW – to be online by its August target.

Ameresco did not respond to a request for comment.

Central Coast Community Energy (CCCE), which buys power on behalf of 430,000 customers in five California counties, is also facing delays to six clean energy projects, including 122 MW of storage, needed to meet state-mandated clean energy requirements, according to the spokesperson. Catherine Stedman.

Developers of the projects, originally supposed to go live this year and next, have warned of delays between six and 12 months, Stedman said.

The CCCE and the Silicon Valley Clean Energy Authority, its partner in several projects, have meanwhile sued developer EDF Renewables (EDF.PA) over the termination of contracts for the Big Beau solar and storage project which has started producing electricity. electricity last year.

EDF had asked in March to increase the price of the still unfinished energy storage component of the project by $76.8 million, an increase of 233%, according to the complaint filed on May 9 in the court of the State of California in Santa Clara County.

EDF did not respond to a request for comment.

The disruptions have concerned state officials, who already face perennial power shortages during peak summer demand. Gov. Gavin Newsom said in April that the state is counting on new battery storage projects, many purchased following power outages in August 2020, to bolster summer reliability.

“Delays in the dates these projects come online are a very real concern,” California Public Utilities Commission spokeswoman Terrie Prosper said in a statement.


Energy research firm Rystad said that given the large appetite for batteries from a booming electric vehicle market, global procurement for utility storage projects is unlikely to be able to meet medium-term demand.

That’s a problem, according to the International Energy Agency. Battery storage must reach 585 GW by 2030 to decarbonize the global power sector, a 35-fold increase from 2020.

“If you can’t reliably manufacture and deliver the batteries at a falling price…you’re going to slow down the ability of the batteries to accelerate the transition,” said Jim Kapsis, founder of the climate technology consultancy. the ad hoc group.

In Hawaii, utility Hawaiian Electric (HE.N) is seeing delays to solar and storage projects it contracted to help replace the state’s only coal-fired power plant, which is set to retire in September . The developer of four projects, Canada-based Innergex Renewable Energy (INE.TO), revealed on a conference call last month that it was seeking to renegotiate the terms of the deals – including price and timing – after received force majeure notices from its battery supplier, Tesla.

Hawaiian Electric spokeswoman Sharon Higa said the utility expected only 39MW of the 378.5MW of solar and storage it purchased would be in service before the pullback. of the AES coal-fired power plant.

Innergex and Tesla did not respond to requests for comment.

Tesla Chief Executive Elon Musk acknowledged earlier this year on a conference call that the company has prioritized the supply of electric vehicle batteries over stationary storage.

Fluence, meanwhile, said on a conference call last month that it had issued force majeure notices on three contracts because its battery suppliers in China were unable to meet their obligations. He said he had also raised prices for new contracts by 15% to 25% and would price future contracts based on commodity indices to hedge against volatility.

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Reporting by Nichola Groom in Los Angeles; Additional reporting by Susanna Twidale in London; Editing by Richard Valdmanis and Lisa Shumaker

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