ENERGY STORAGE

5 ways the US can boost battery storage manufacturing

US storage manufacturing’s over-reliance on imports makes it ‘economically vulnerable’, according to a recent report – the nation needs to develop a well-trained domestic workforce, while being cautious about introducing trade tariffs

BEN COOK

December 12, 2023

  • US storage manufacturing’s over-reliance on imports makes the nation vulnerable from an ‘economic and national security’ perspective
  • To boost battery storage manufacturing, the US needs to address the issue of graphite supply, while being cautious about introducing trade tariffs
  • The development of a well-trained US battery storage manufacturing workforce is imperative

The US will continue to face barriers in meeting its full solar and energy storage potential without a robust domestic manufacturing base, and the country’s over-reliance on imports is an “economic and national security vulnerability”. These were among the key conclusions of a recent report by the Solar Energy Industries Association (SEIA), which also said that it was essential for the US’ continued economic health, global competitiveness and energy security to quickly address the nation’s “over-dependence on solar and energy storage component imports”. As a result, the SEIA’s recommendation was that the US should lay the foundations for a robust solar and energy storage manufacturing base on home soil.

So what steps does the US need to take to achieve this objective? Here, Tamarindo’s Energy Storage Report highlights five ways in which the US can boost battery storage manufacturing:

1. The White House needs to be cautious about introducing trade tariffs

As the SEIA highlighted in its report, past experience has shown that tariffs, in general, have not had the desired effect of increasing US manufacturing capacity. For example, tariffs on photovoltaic modules and cells have limited the deployment of solar in the US, with the result that the likelihood of investments in domestic manufacturing has reduced. Tariffs can also blunt domestic manufacturing – for example, the Section 301 tariffs apply to most products coming from China, including manufacturing equipment and various inputs that “cannot be readily sourced outside of the country”, according to the SEIA. To illustrate the point, in 2012 the US hit Chinese solar companies with “punitive import tariffs” of 30 per cent or more, ruling they had dumped cut-price solar panels into the US market – however, according to one study, the tariffs caused US demand for solar to decline by 17 per cent during the 2012 to 2018 period.

2. Address the issue of graphite supply

The SEIA has highlighted graphite supply as a “potential chokepoint” for the US battery industry. Graphite is a key component of lithium-ion batteries, but it is estimated that around 60-65 per cent of global graphite mining takes place in China (see chart below) and, as already stated, there is a view that the US is over-reliant on such imports. There are no current natural graphite production sites in the US and while it has been suggested that Canadian and Australian sources could supply a large percentage of the current demand in the US, they will be insufficient to meet projected US demand in 2030. Consequently, the SEIA has recommended that the US should explore “sources of synthetic carbon products” – graphite is a mineral composed of stacked sheets of carbon atoms – as well as “foreign sources for natural graphite, and importing anodes”.

Major countries in worldwide graphite mine production in 2022 (in 1,000 metric tons) – Source: Statista

 

3. US storage manufacturing industry needs to focus on the development of a well-trained workforce

A well-trained workforce will be vital if the US battery storage manufacturing industry is to be successful. New entrants into the battery manufacturing sector may experience yields as low as 50 per cent, according to the SEIA, so it will be vital to train workers effectively in order to bring about process improvements. The industry will need to be highly focussed on not only recruiting workers, but also training and retaining them because manufacturing provides permanent and high wage jobs, as well as the ability to help offset job losses in traditional energy and manufacturing communities and “bring opportunities to historically underserved and marginalized communities”, the SEIA says. In the short term, commissioning new factories and training US workers will require collaboration with foreign-based experts to help the US create cutting-edge technologies, according to the SEIA. Longer term, growing the manufacturing workforce depends on collaboration between manufacturers, government agencies, education institutions (including secondary schools), and other stakeholders. Providing workers with the necessary technical skills may require a combination of classroom and on-the-job training. Apprenticeships may also offer a useful pathway for training the next generation of manufacturing workers, the SEIA concluded. The extent of the workforce challenge faced by US companies in the battery industry is demonstrated by data from the Volta Foundation that shows the extent to which US battery industry companies are dependent on foreign workers (see chart below).

Source: Volta Foundation’s Annual Battery Report 2022

 

4. Focus on diversity, equity, inclusion and justice (DEJI) to maximise the potential talent pool

To build the battery storage manufacturing industry of the future, it is vital that the industry strives to draw from as wide a talent pool as possible and engages all communities. This includes developing and advancing scholarship, curriculum and internship programmes with institutions serving black, Latino and indigenous communities, according to the SEIA. It’s also important that workforce development should address gender imbalance, which is a particular priority given that manufacturing and engineering roles are traditionally male- dominated. As has been documented, the shortage of women in the energy storage industry means the sector is less innovative than it could be and missing out on opportunities to pursue new pathways for technology deployment. In addition, the lack of women in storage means the industry is missing out on fresh perspectives that could drive far-reaching change in economies and societies that could help to foster the wider adoption of energy storage.

5. Partner with state economic development offices

State economic development offices provide critical incentive packages, reducing upfront costs and expediating timelines, the SEIA says. Engaging with state economic development offices also offers “tie-in opportunities” for other goals such as workforce development, the association argues. The three main categories of incentives categories are: (i) tax incentives; (ii) workforce development; and (iii) siting and permitting support. “State-level industrial policy provides critical early-stage support for the supply chain buildout from mining and refining to factories and R&D activities”, the SEIA report concluded. “Partnering with economic development offices generates mutual benefits for all involved.”