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Highlights

Threatened tariffs have no implementation date

Storage battery prices 'at a premium'

Houston — If Trump administration threats to raise to 25% US tariffs on Chinese imports of lithium-ion batteries and inverters are eventually enforced, the installed price for a four-hour duration battery would increase by about 15%, an analyst at S&P Global Platts Analytics said Thursday.

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"The lithium-ion battery accounts for 40% to 60% of the total installed cost of a standalone battery storage asset in the US," Felix Maire, clean energy and storage senior analyst at S&P Global Platts Analytics, said Thursday.

"The impact of the tariff would vary project by project, but we estimate a 25% tariff on both lithium-ion batteries and inverter could increase the installed prices for a four-hour duration battery by about 15%."

In a series of announcements by US Trade Representative Robert Lighthizer in May, the Trump administration provided a long list of items on which tariffs were planned. On May 10, Lighthizer said the US would increase the level of tariffs from 10% to 25% on $200 billion worth of Chinese imports under Section 301 of the Trade Act of 1974.

Those tariffs, however, have not been put in place and there is no date certain for them to be implemented.

The Trump administration used the proposed tariffs as a threat to bring pressure on the Chinese government to conclude talks on a broad-based trade agreement. By May 21, those talks had broken down and have not been resumed.

But in recent weeks, however, several analyst groups have worked to calculate just what the proposed tariffs might mean to the growing battery electric storage system business in the US. Numerous battery installation companies have argued over the past two years that the cost of installing a battery storage system has been on the decline.

Two key items -- lithium-ion batteries for use in storage systems and static converters also used in storage systems -- were on the May 13 list of items the USTA said it would raise tariffs on.

Yayoi Sekine, energy storage analyst at BloombergNEF, said during an Energy Storage Association webinar Wednesday that the 2019 estimated price of a stationary storage lithium-ion battery was $185/kWh. If imported from China with a 25% tariff applied, the battery itself would cost $235/kWh. If tariffs on all the components of a 20 MW/80 MW energy storage system were included, the aggregated impact would be an 18% system cost increase to $338/KWh, Sekine said.

China, South Korea big exporters

John Magnus, the president of TradeWins, a trade law and policy consulting firm headquartered in Washington, explained during the ESA webinar that all 301 tariffs are, by definition, tariffs placed on Chinese products. Asked where the tariff would actually be applied, Magnus said, "Legally, the tariff lands on the importer of record. It is a percentage of the declared customs value of the product."

According to the US International Trade Commission, in 2017 the value of US imports of lithium-ion batteries from China that were not for use in electric vehicles totaled $987 million. The value of batteries imported from China for EV use came to $54 million that same year.

US imports of lithium-ion batteries for non-EV use from South Korea totaled $519 million and from Japan $440 million in 2017.

Total global lithium cell manufacturing in 2019 is expected to reach 316 GWh, with 73% of the manufacturing capacity located in China, 12% in the US, 7% in Korea and 4% in Europe, according to Yayoi of Bloomberg's Sekine. She said that new manufacturing facilities will allow production capacity of lithium-ion batteries to more than triple by 2025, to an estimated total of 1,090 GWh.

The US' share of the higher production capacity is expected to remain at 12%, while China's is expected to be around 62%. Europe is expected to see its share of capacity increase to 12% in 2025, according to the data.

Stationary storage is not the major source for battery demand, though "stationary storage battery prices are at a premium to batteries for passenger electric vehicles," Sekine said.

She estimated that in 2030, when annual lithium-ion battery demand is expected to be 2,000 GWh, "only 7% of battery demand will be for stationary storage."

-- Jeffrey Ryser, jeffrey.ryser@spglobal.com

-- Edited by Richard Rubin, newsdesk@spglobal.com