US ban on Chinese grid batteries risks energy storage delays
The US energy storage market is booming thanks to cheap Chinese batteries, but the Trump administration declared a national emergency in late August banning Chinese batteries from grid-scale systems. Analysts at BloombergNEF and Benchmark Mineral Intelligence warn the move will slow deployment and raise costs, with some projects facing cancellation. European policymakers face a similar dilemma between cheap Chinese tech and building domestic supply chains.
Bottom line — BloombergNEF warns projects may be cancelled as US battery supply won't meet demand until the 2030s.
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- The executive order bans installation of any foreign-produced bulk-power system equipment deemed a national security risk, specifically citing battery energy storage systems, inverters, and transformers, per MIT Technology Review.
- Import taxes on batteries rose to 25% in January, up from 7.5%, and new legislation requires 55% of material costs for new storage projects to come from outside China by 2026 to qualify for tax credits.
- Shan Tomouk of Benchmark Mineral Intelligence called the outright ban 'a bit of a surprise' that creates concern for US domestic players.
- Isshu Kikuma of BloombergNEF said projects may need to find alternative, more expensive sources for cells, and in the worst case, projects could be canceled.
- The US could have enough domestic battery capacity by around 2030, but some factories may not ramp up fully, meaning supply won't meet demand until later in the 2030s, according to BloombergNEF.
- New factories from LG Energy Solutions, Samsung SDI, Ford, and SK On are set to come online or ramp up by next year, with some EV battery plants retooling for grid storage due to a slowing EV market.
- Roland Berger notes that China's LFP chemistry is now in fifth and sixth generation, and the rest of the global industry is approximately four years behind on that development curve.
- European OEMs and suppliers face similar strategic choices: rely on cheap Chinese imports or invest in domestic production at higher cost, as highlighted by Roland Berger's analysis of China's battery dominance.