- Record level of Q1 storage deployment in the US in 2021
- But questions remain about stimulating storage demand
- Pressure on Congress over tax credits for stand-alone storage
Tomorrow marks 150 days since Joe Biden was inaugurated as US president — and, so far during his presidency, energy storage has reached new heights.
The first quarter of 2021 was the biggest first quarter ever for US energy storage deployments, as new data shows.
According to a report by consultancy Wood Mackenzie, 910 MWh of new energy storage systems were brought online in the first three months of this year, which represented a massive 252% increase on the same period in 2020.
This growth shows no signs of slowing. Wood Mackenzie forecasts that nearly 12,000 MWh of new storage will be added in 2021, which is three times the amount added in 2020.
However, while the prospects for the burgeoning market in the US look good, more needs to be done to reinforce the energy storage supply chain if the sector is to truly flourish in the years to come. The challenge is to build on the sector’s momentum and create an environment of steady, stable growth.
As US Energy Storage Association interim CEO Jason Burwen puts it: “Ensuring a robust supply chain will be critical. Stimulating demand in the US for batteries and other energy storage technologies is the single most important determinant to greater investment and innovation in American battery manufacturing capabilities.”
Biden’s plan for storage
To its credit, the Biden administration has sought to tackle the issue head on. In February, the Department of Energy (DOE) kicked off a ‘100-day Battery Supply Chain Review’ and, last week, the actions and recommendations arising from the review were made public.
The administration detailed the following “immediate actions to strengthen the domestic advanced battery supply chain”:
- Strengthen US manufacturing requirements in federal grants, cooperative agreements, and research and development (R&D) contracts. This will cover the more than $8bn in climate and energy innovation funding requested in DOE’s FY22 budget, including over $200m to support battery research, development, and demonstration.
- The Federal Energy Management Program (FEMP) will launch an evaluation of opportunities for deploying battery storage at federal sites. This will leverage $13m in FEMP’s Assisting Federal Facilities with Energy Conservation Technologies grants to unlock an estimated $260m or more in project investments, including battery storage.
- Provide financing to the advanced battery supply chain for electric vehicles. The Advanced Technology Vehicles Manufacturing Loan Program, which has approximately $17bn in loan authority, can make loans to manufacturers of advanced technology vehicle battery cells and packs to strengthen manufacturing facilities.
- Release the National Blueprint for Lithium Batteries. The Federal Consortium on Advanced Batteries has codified the findings of a report into a ten-year government-wide plan to urgently develop a domestic lithium battery supply chain.
In addition, the DOE review has made a number of recommendations to Congress. These include establishing a cost-sharing grant program to support battery cell and pack manufacturing; electrifying the nation’s school bus fleet; and providing consumer rebates and tax incentives to spur consumer adoption of electric vehicles.
All of these actions and recommendations all represent a significant policy boost for storage. But it is the recommendation that the Internal Revenue Service’s investment tax credit (ITC) should include stationary storage as a stand-alone resource that could prove pivotal.
The need to drive demand
Will these actions and recommendations prove to be sufficient?
The growth of the energy storage sector in the US will rely heavily on the stimulation of demand. The provision of an ITC can help put the supply chain on a firmer footing and instil a sense of confidence in the long-term future of the sector, especially if it goes hand-in-hand with consumer rebates for electric vehicles and a policy encouraging the greater deployment of energy storage at federal government sites.
These are just recommendations though. The onus will be on Congress to follow through quickly, but given that the Democratic Party’s control of Congress, we can be confident that substantial progress will be made.
The ‘100-day’ review makes it clear that the DOE wants battery supply chain projects to be “substantially” manufactured in the US. That could prove a stumbling block, especially as the ESA has made clear it supports a “diverse, international battery supply chain”.
But this looks to be only a minor potential obstacle, the political will exists in the White House. That is the most significant change in Biden’s first 150 days, and that means a major part of the battle has already been won.