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Solar seen as 'cautionary tale' for Biden battery ambitions

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An engineer inspects lithium-ion batteries at a major new energy storage plant in Moss Landing, Calif.
As batteries proliferate, it remains uncertain how much the U.S. will import or produce.
Source: Vistra Corp.

To support President Joe Biden's ambitious goal of purging carbon-dioxide emissions from the U.S. power sector by 2035, the White House is reaching out to the fast-growing energy storage industry as a critical constituent for meeting that challenge.

"Storage ... will be a big part of achieving the outcomes that we need to [decarbonize the grid]," White House adviser Phil Giudice, the president's special assistant for climate policy and former CEO at Massachusetts-based battery startup Ambri Inc., said March 10.

Speaking during a U.S. Energy Storage Association webinar on building up a domestic supply chain for advanced batteries, Giudice highlighted Biden's recent executive order for federal agencies to review potential risks within semiconductor and battery supply chains.

Chief among them is that the U.S. could lose out on a significant share of the booming lithium-ion battery business for electric vehicles, consumer electronics and peak power demand. With Asia, especially China, already out front on manufacturing lithium-ion batteries and their components and Europe positioning to quickly ramp up its production capabilities, America has no time to waste, according to one clean energy veteran.

"Over the next 24 months, we will determine what the United States' share and breadth of the global battery manufacturing supply chain is going to look like," Julie Blunden, a board member at California-based nonprofit group New Energy Nexus, which funds clean energy entrepreneurs, said at the energy storage event. "We're making fundamental decisions right now about how to de-risk our battery supply chain. That has implications for everything from our Defense Department to our power grid to our transportation sector."

While decisions around where to locate battery manufacturing will pivot on the location of electric vehicle production, "stationary storage will benefit from transportation electrification radically because the cost reduction associated with economies of scale will benefit not only the [electric vehicle] effort but also stationary storage," Blunden added.

'Fundamentally ... the US is behind'

A former executive at SunPower Corp. and several other U.S. clean energy companies, Blunden pointed to the advent of solar photovoltaic, or PV, mass production in the mid-2000s as an example to avoid as the country seeks to build a significant domestic battery manufacturing base.

"If you look at what happened in solar, it's a cautionary tale," Blunden said. "What we did was open up the U.S. capital markets, and we funded the scaling-up of the photovoltaic industry manufacturing supply chains in China, not exclusively but heavily."

That capital, along with support from the Chinese government, helped to propel China into a leadership position by 2010 and soon thereafter into the dominant position it still holds across the entire PV supply chain. After playing a leading role in PV research and development as well as early manufacturing, the U.S. is now largely reliant on solar panel imports.

"That's not a terrible thing," Blunden said, pointing to the cost reduction that Chinese PV manufacturing unlocked. "But what we did is we made a default decision to not invest in the United States in a complete way so that we could de-risk our solar supply chain. And during the last year, we suffered for it."

In 2020, allegations of human rights abuses in China's autonomous Xinjiang region exposed the risks associated with the U.S. solar industry's growing dependence on polysilicon feedstock from the area. Chinese solar supply chains now are under intense scrutiny and pose considerable risks for the industry, including from potential trade disruptions, according to analysts.

Outside of Tesla Inc., which partners with Japan's Panasonic Corp. at a factory in Nevada, U.S. lithium-ion battery manufacturing is in the "seed stage" while China is advancing about 100 battery "gigafactories," according to Blunden. Further upstream into battery metals, now developed mostly in Asia, Africa and South America, the U.S. also has enormous untapped opportunities.

The country is "really well endowed with lithium," Blunden said, noting resources in Arkansas, California, Nevada and North Carolina.

"And that's why President Biden a month ago said, 'If we don't get moving, they're going to eat our lunch,'" Blunden said. "Fundamentally the message here is, the U.S. is behind."