What Would It Take for the US to Become an Energy Storage Manufacturing Powerhouse?

U.S. entrepreneurs have led the world in creating new
technologies for storing grid power, but they largely rely on other
countries for their core ingredients.

Tesla’s famous car and grid batteries use cells from Japanese
manufacturer Panasonic. When companies like Fluence or
NextEra integrate large battery enclosures
, they source cells
from the likes of South Korea’s LG Chem or Samsung SDI.

And when a global supply crunch constrained those top tier
suppliers, integrators turned to a growing roster of Chinese
producers and found that they measured up.

But the Trump administration’s Department of Energy last week

proposed a different vision
, one in which the U.S. establishes
a domestic supply chain for energy storage by 2030. It’s calling
this a “Grand Challenge,” and promising millions of dollars and
considerable institutional resources to achieve it.

Increased funding for basic research, technology transfer and
workforce training has been on the storage industry’s wishlist
for years. An explicit focus on the industrial planning needed to
onshore the storage supply chain, however, adds a new flavor to the
mix.

Specifically, the DOE wants “a secure domestic manufacturing
supply chain that is independent of foreign sources of critical
materials” by 2030, which would require a marked departure from
today’s import-dependent industry. 

Global trade enables countries to obtain things they don’t
produce locally, or which can be produced more cheaply elsewhere,
something that has traditionally been deemed beneficial. But
reliance on foreign supply can cause problems.

A generous storage deployment subsidy in South Korea contributed
to a global battery supply crunch in 2018, squeezing projects in
the U.S. Sometimes domestic decisions make it hard to rely on other
countries, as when the Trump administration chose to levy tariffs
against batteries and inverters produced in China, driving up
prices for American companies.

The DOE’s goals for energy storage

In an interview with GTM, DOE Under Secretary for Science Paul
Dabbar explained that the onshoring of energy storage manufacturing
serves two goals: national security—securing access to critical
materials—and economic development—ensuring associated jobs and
value creation happens here.

But the goal isn’t to wall off the U.S. industry from the rest
of the world. “We’re very intertwined and we will always be
intertwined with the international footprint on these topics, just
like we are with oil and gas,” Dabbar said. 

Trade in oil and gas did not vanish once the U.S. became a

net exporter
; the industry continues to swap crude and refined
fuels across international borders as business imperatives
dictate.

Rather, the hope is to avoid the sort of “missed opportunity”
that transpired in the solar manufacturing space, said Dabbar,
whose prior energy career included service in the nuclear Navy and
leading energy investments at J. P. Morgan.

“A lot of the solar panel manufacturing is done overseas, but a
lot of the innovation for that was done in the United States,” he
noted.

The DOE has set the goal. Achieving it will require shifting
away from the foreign-made lithium-ion batteries that dominate
today’s grid storage industry.

Instead, the U.S. could look to double down on technologies that
utilize the American landscape, rather than manufactured
commodities. Additionally, the DOE could support up and coming
technologies that make use of locally available resources.

Whether the government has the will to deliver on a decade-long
industrial planning agenda is difficult to assess. But existing
technologies feasibly could form the basis for a more homegrown
storage industry in that timeframe.

Dependency on lithium-ion and global trade

The supply chain for today’s energy storage industry is easy
to identify. More than 99 percent of storage capacity installed in
the third quarter of 2019 used lithium-ion batteries, according to
Wood Mackenzie.

U.S. storage companies engineer the projects and install them,
but the batteries at the core of the systems almost exclusively
come from overseas factories. Tesla provides a rare exception,
because it brought a foreign partner, Panasonic, to manufacture
cells within its Nevada Gigafactory.

Securing domestic storage supplies would require a buildout of
local manufacturing, which would be hard-pressed to catch up to the
massive factory capabilities already up and running in Asia. Even
if that could happen, the newfound American producers would still
need to get their hands on the raw materials, and process them into
industrial feedstocks.

The U.S. does produce some lithium, but relatively high
production costs have kept volumes low, said James Whiteside,
principal for metals and mining consulting at WoodMac. The U.S. has
little domestic supply of the nickel, manganese and cobalt needed
for the dominant NMC lithium-ion chemistry. 

Not even extensive taxpayer investment by the DOE can change
that geology. That leaves one major pathway for energy storage
independence: The development of alternative storage technologies
that don’t rely on resources from other countries.

Opportunity in pumped hydro storage

Lithium-ion’s dominance of grid storage needn’t endure in
perpetuity. It owes much of its success to the work of other
industries, like consumer electronics and electric vehicles, which
have scaled up manufacturing and driven down costs. 

And other technologies could outperform lithium-ion on certain
metrics and in certain applications. Many startups have pitched
alternative battery designs for that reason; many have collapsed,
and those that remain are still proving their competitiveness.

Setting aside manufactured storage devices, the DOE could focus
on a class of technologies that make use of the American landscape
itself.

For all the recent excitement about batteries, the true
workhouse of the storage world relies on construction rather than
manufacturing. That would be pumped hydro storage, still the
provider of almost all the nation’s storage capacity. The problem
is, new development has long since ground to a halt due to the
complexities of environmental impacts, the limited number of viable
sites and the general difficulty of building big things on schedule
and within budget these days.

Federal efforts to accelerate the pace of pumped hydro
development—with a focus on offstream reservoirs that don’t
disrupt river ecosystems—could pay off. After all, it’s not an
industry garnering much private investment right now.

“There are certainly ways to improve the pump efficiency
factors,” Dabbar said, noting this technology is on the list for
inclusion in the Grand Challenge.

Similarly, storing electricity by compressing air in caverns has
been proven to work—yet new developments have stalled. Several
companies have tried to modernize and compartmentalize the
technique, with little success, but a few remain in play.

Canadian startup Hydrostor has
finished two demonstration projects
for an underground
technique that uses water in caverns or mine shafts to balance out
the pressure. British startup Highview Power has an aboveground,
tank-based compressed air technique; it has projects operating in
the U.K. but is also
developing plants in the U.S.

Both companies tout their use of equipment from other
industries, like mining, power plants and oil and gas, which
minimizes technology risk. That makes these concepts good
candidates for fully domestic production.

The U.S. enjoys world-class expertise in oil and gas drilling;
that industrial skillset could apply to drilling underground
reservoirs for storing clean electricity.

New energy storage chemistries

Another class of storage innovators hope to craft manufactured
battery devices that avoid lithium altogether. These hold the
possibility of using cheaper and more abundant materials than
conventional lithium-based chemistries; some of them could be
sourced locally.

Zinc stands out among this crowd. It’s cheap,
electrochemically attractive, and the U.S. ranks among its top
global producers. The Red Dog mine in Alaska extracts more zinc
than any other in the world, and has low production costs,
Whiteside said.

A smattering of companies have worked on this element for years.
Foremost among them, Fluidic Energy developed a zinc-air battery

funded in part by the DOE’s Advanced Research Projects
Agency
, ARPA-E. The company did well enough to get acquired by
billionaire Patrick Soon-Shiong, and now operates as NantEnergy. It
has installed
3,000 zinc systems
worldwide, focusing initially on remote
overseas microgrids—and a remote microgrid in North Carolina’s
Great Smoky Mountains.

Other companies pursuing zinc include Eos (zinc-hybrid cathode
battery) and Canadian newcomer e-Zn, plus the flow battery venture
ViZn Energy, which ran out of money but then
reappeared touting a pivot to China
.

Several flow battery makers prefer vanadium as the core
ingredient; the U.S. could supply itself with enough of that
material, which appears as a byproduct of uranium mining and
recycling waste material, Whiteside said.

Alternatively, startup ESS builds
flow systems using abundant iron
as a core ingredient.

The DOE believes that organic flow battery chemistries could be
manufactured in the U.S., Dabbar said. Massachusetts-based startup
Form Energy, for instance, won ARPA-E funding for an
aqueous sulfur flow
concept. The company is also working on an
undisclosed electrochemical solution for seasonal storage.

None of these technologies have reached the kind of scale that
qualifies them as rivals to lithium-ion’s technological hegemony.
They do, however, create scientifically plausible pathways for a
domestically sourced energy storage supply chain.

Recent cleantech history illustrates the dangers of betting
against the kind of mass-produced commodities that lithium-ion
batteries have become. But the U.S. can’t really get any less
self-sufficient in energy storage than it is now;.

Intentional efforts to incubate local storage manufacturing
could expand the mix of self-made resources, even if they don’t
replace foreign manufacturing altogether.

Source: FS – GreenTech Media
What Would It Take for the US to Become an Energy Storage Manufacturing Powerhouse?