pv magazine: Five strategies for battery procurement
By Cormac O’Laoire, Senior Manager of Market Intelligence, Clean Energy Associates
The worst effects of the pandemic may have passed, but supply chain disruptions continue to be felt across the world. The effects of the war in Ukraine are also evident to all of us in our daily lives, from commodities to energy, food supply chains and beyond. The disruption in the battery energy storage system (BESS) supply chain is no different, writes Cormac O’Laoire, senior manager of market intelligence at Clean Energy Associates. Indeed, as the cost of raw materials such as lithium climb, battery prices are being driven materially higher, on some accounts by 20% to 30%, rendering some projects uneconomical.
Battery energy storage system (BESS) transportation costs have been accelerating, with the price to transport a container from China to the West Coast of the United States costing an estimated 12 times as much as it did two years ago, while the time taken for the container to make that journey has nearly doubled.
These factors have helped to create a perfect storm. But there are actions that can be taken to mitigate the worst effects. For companies embarking on large-scale BESS projects over the next few years, there are several strategies that might help overcome the challenges involved:
Diverse suppliers
The pandemic served as a wake-up call for many corporations around the world to improve the resilience of their supply chains, including by building more diversified portfolios of suppliers across all tiers. Never has this been more important. While some tier 1 suppliers may be sold out for the next few years, if your purchasing volume is less than 1 GWh, you could consider a smaller tier 2 supplier. Whereas larger buyers can leverage their scale to secure batteries from tier 1 suppliers, mid-sized or smaller players need to find the right-sized supplier. Many tier 2 suppliers have high-quality products, but buyers should protect their investment with strong contract terms and an end-to-end, independent quality assurance program.