1. Price swings in lithium mineral affected LI-ion battery industry
2. Supply chain issues impacting key BOP equipment lead times
3. Planning and strategic partnerships crucial for successful BESS projects
The lithium-ion-based battery energy storage industry has been significantly impacted by supply chain dynamics and policy developments in the US in recent years. Price swings of lithium mineral prices, particularly lithium carbonate, have caused challenges in project economics and schedules for the stationary BESS industry. However, the industry has learned lessons and taken proactive measures to address these issues.
The surge in lithium prices in 2022 was driven by the positive sentiment around transportation electrification, especially electric vehicles. The inability of lithium supply to meet this demand quickly led to a dramatic decrease in prices in 2023 due to market factors such as a reduction in EV purchases in China and limited mobility caused by COVID-19.
To mitigate risk exposure, Li-ion battery suppliers began indexing battery prices to raw materials like lithium carbonate. Additionally, supply chain issues have affected key balance-of-plant equipment needed for BESS systems, leading to longer lead times for components like transformers and switchgears.
Smart planning is crucial for developers to navigate the competitive BESS market and achieve project goals. Strategic partnerships, domestic manufacturing considerations, and efficient procurement of equipment are essential to building projects economically and meeting target commercial operation dates.
With the energy storage industry evolving rapidly, the winners will be those best prepared to adapt to changing market dynamics and capitalize on opportunities. The upcoming Energy Storage Summit USA in March 2024 will provide industry leaders with valuable insights and discussions to accelerate the growth of energy storage across the country.