Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

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

Stock Markets Jun 09, 2022 10:16AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
3/3 © Reuters. FILE PHOTO: Solar panels are seen next to a Southern California Edison electricity station in Carson, California March 4, 2015. REUTERS/Lucy Nicholson/File Photo 2/3

By Nichola Groom

(Reuters) - U.S. renewable energy developers have delayed or scrapped several big battery projects meant to store electrical power on the grid in recent months, scuttling plans to replace fossil fuels with wind and solar energy.

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 California storage project has even wound up in court.

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 California.

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 California, Hawaii and Georgia, with battery providers including Tesla (NASDAQ:TSLA) and Fluence warning of disruptions to supply, according to a review of regulatory documents, corporate statements and interviews with project developers and power providers.

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 Jamal Burki, president of IHI Terrasun Solutions, the U.S. energy storage arm of Japanese heavy equipment maker IHI Corp.

European energy storage projects are also facing delays, but that region lags the United States in the development of grid-scale storage, making the issue less pronounced.

Ben Guest, fund manager at Gresham House Energy Storage Fund, which invests in battery projects in Britain, said he has seen two- to three-month delays in projects primarily due to component shortages and shipping challenges.

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 China, have soared as much as 20% since last year as lithium and nickel costs rise, COVID-19 lockdowns disrupt manufacturing, and transport constraints slow shipments.

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 Andy Tang, vice president of energy storage and optimization at storage developer Wartsila. "We're a difficult customer."

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 (NYSE:AMRC) Inc 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 did not respond to a request for comment.

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

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 (EPA: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 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 Gavin Newsom said in April that the state had been counting on new battery storage projects, many of which were procured following rolling blackouts in August 2020, to shore up summer reliability.

"Delays in the online dates of these projects are a very real concern," California Public Utilities Commission spokesperson Terrie Prosper said in a statement.

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 Jim Kapsis, founder of climate technology advisory firm the Ad Hoc Group.

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. 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.

Hawaiian Electric spokesperson Sharon Higa said the utility expected just 39 MW of the 378.5 MW of solar and storage it procured to be in service prior to the AES (NYSE:AES) coal plant retiring.

Innergex and Tesla did not respond to requests for comment.

Tesla Chief Executive Elon Musk acknowledged earlier this year in a conference call that the company had prioritized EV battery supplies over stationary storage.

Fluence, meanwhile, said in a conference call last month that it has issued force majeure notices on three contracts because its battery suppliers in China were not able to fulfill their obligations. It said it had also raised prices on new contracts by 15% to 25% and would price future contracts based on raw material indices to guard against volatility.

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

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Count da Money
CountdaMoney Jun 09, 2022 10:10AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
🤣🤣🤣🤡🤡🤡🤡
WESLEY WARREN
WSQUARED Jun 09, 2022 7:06AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
and power outlets , infrastructure . not even ready for 10% switch to full electric
Brad Albright
Brad Albright Jun 09, 2022 7:06AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
That's a popular falsehood. But don't worry about it, innovators and entrepreneurs will make it happen while the know-nothings whine from the sidelines.
WESLEY WARREN
WSQUARED Jun 09, 2022 7:06AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Brad Albright so they can get away from the dream desk and go where reality is , no infrastructure for it ideas are t enough it's not time
Brad Albright
Brad Albright Jun 09, 2022 7:06AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
WESLEY WARREN Luddites abound.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email