CERAWEEK: Global battery supply chain now facing impacts from Russia invasion

As a global industry, batteries are not only dealing with pandemic-related supply chain issues, but now also impacts from Russia's invasion of Ukraine, making US energy independence a "ridiculous concept," a public policy professor said March 9.

"This is a global industry," Morgan Bazilian, professor of public policy at Colorado School of Mines and Payne Institute director, said during a session focused on the battery supply chain at the CERAWeek by S&P Global energy conference in Houston. "Making the problem smaller rather than larger doesn't solve anything."

Experts need to reorganize and rethink the supply chain around the world to deal with these issues, said Martín Pérez de Solay, managing director and CEO of Allkem, a leading lithium chemicals company with operations in Argentina, Australia, Canada and Japan.

"Lithium may not be the new oil, but things are changing rapidly," said George Hilton, energy storage senior analyst with S&P Global, moderator of the battery supply chain panel. "Without the lithium battery there would be no energy transition."

Supply

"There are plenty of minerals on the earth for our needs for batteries along the supply chain," Bazilian said. "That's not the constraint. There's many constraints along the supply chain."

While there are enough minerals available for battery production, permitting is the issue, Pérez de Solay said.

"There is lithium out there, but it takes us time to mine it," Pérez de Solay said, adding some remote locations can take up to 20 years. "The market today is facing the true restrictions of technology and timing."

It's very difficult to get things into development, Jonathan Evans, president and CEO of Lithium Americas, said about how the permit timing makes it difficult to get capital. Lithium Americas is focused on advancing lithium projects in Argentina and the United States to production.

"The low hanging fruit is gone," Evans said.

Lithium is one piece of the battery supply chain, but there are many other pieces, and each has different constraints, Bazilian said.

"Different parts of the supply chain are ... not getting very clear long-term price signals from the market," Bazilian said, adding there could be more significant constraints.

Demand

"I would have expected at this point larger companies to come off the sidelines," Evans said. "That's what is needed. It's a real challenge right now to get the levels of investment. ... You want the big companies to come in. That's the way to solve the issue."

Batteries are facing "unprecedented growth" in the next few years, Evans said.

"We're not going to be completely independent of anything," he said. "That's not the way things work."

The adoption of electric vehicles is far greater than anyone ever imagined, Evans said, adding governments no longer need to push EV adoption. The cost of EVs is no longer a major concern to consumers, who have also shown great interest in hybrids, which have smaller batteries.

While EVs account for a strong majority of batteries produced, US battery storage capacity for electric power generation is also expected to grow significantly.

US battery storage capacity is expected to grow by nearly 6.3 GW over the next two years, according to S&P Global Commodity Insights' North American Electricity Short-Term Forecast.

In 2021, 3.1 GW of battery storage capacity was added in the US, a 200% increase, according to the US Energy Information Administration. More than 60% of battery storage capacity coming online will be paired with solar facilities.