Law tax

Climate Act tax credit boosts large-scale battery manufacturing

Electric batteries the size of window air conditioners moved quickly along an Eos Energy Enterprises assembly line near Pittsburgh last week.

Workers inserted frames into infrared welding machines to form the zinc batteries, each weighing up to 275 pounds when filled with electrolytes. A shipping container containing 144 batteries – with half a megawatt of storage capacity, enough to power about 50 homes – was destined for a solar-plus-storage project in South Carolina.

Batteries will be backed by a new 30% investment tax credit under climate and tax legislation which came into force in August. And the law’s tax incentives for sourcing batteries and materials from U.S. producers and allies are encouraging companies such as Eos, which has established its plant in the once-thriving steel valley in the Pittsburgh area that is suffering from high unemployment.

The climate law “will be a catalyst for our business,” said company CEO Joe Mastrangelo.

Demand for large-scale energy storage — and an alternative to lithium-ion batteries that can catch fire and contain toxic and hard-to-recycle substances — has boosted the company’s backlog to $457 million, compared to $5 million three years ago. , he said.

Almost the entire 264-employee operation was built this year. The company plans to double its hourly workforce over the next 18 months.

weak link

Large-scale batteries have long been a weak link in the development of renewable energy. As solar and wind farms grew, developers built batteries to store excess energy and send it to the grid when the sun isn’t shining and the wind isn’t blowing.

Batteries assembled in a container at the Eos Energy Enterprises manufacturing facility near Pittsburgh.

Photographer: Daniel Moore/Bloomberg Law

Most of these batteries distributed power for up to two to four hours, often insufficient to meet demand as intermittent renewables power more of the power grid.

The Biden administration seeks to demonstrate that longer storage is possible at lower cost. The Department of Energy is advancing a $505 million initiative established by the bipartisan Infrastructure Act (Public Law 117-58) last year to extend battery life to more than 10 hours.

Skeptics of electric battery storage point to a long way to go.

“Economically viable long-duration energy storage simply does not yet exist, nor a clear regulatory path nor a tangible level of market demand,” wrote Eric Wesoff, renewable energy analyst and editorial director at Canary Media, in a Publish Last year.

“Most of the science behind LDES products won’t be ready for pilot testing for years, with years of commercial production beyond that – and that’s hopefully with technology, costs and markets” , Wesoff wrote, pointing to 20 battery storage companies, including Eos, that are driving investors into an “irrational frenzy.”

Increase storage

Increasing the amount of storage itself in the battery “is a big key,” said Jane Montgomery, partner at ArentFox Schiff LLP.

“There are many different technologies offered for this,” she said. “Federal funds are really essential to encourage an investor to jump in and invest in these technologies.”

With this, new technologies could challenge mainstream chemistry that uses lithium and cobalt.

“A stand-alone tax credit opens the window, at least a little, for non-cobalt ion-lithium technologies because it narrows the cost differential,” said Morten Lund, partner at Stoel Rives LLP specializing in energy storage. and renewable energy projects.

A separate tax credit also frees investors from connecting batteries to solar or wind projects, potentially spurring storage projects closer to consumers and easing grid stress in some locations, partner Art Howson said. at Womble Bond Dickinson, specializing in the financing and development of renewable energies.

The credit is “important to allow batteries to integrate more effectively into existing infrastructure, because you can bring them closer to the load demand and not just place them where there is good sunlight and where it very windy,” Howson said.

Test the grid

This month’s California heat wave strained the grid, in part because renewable energy generation accounts for such a high share of power supply, said Eric Dresselhuys, CEO of ESS. Inc., an Oregon-based iron-flow battery manufacturer that can provide power for four to 12 hours.

Demand response — consumers voluntarily refusing to consume power — and existing batteries were able to keep the lights on this time around, Dresselhuys said. But from around 20% renewables, he said, “the grid finds it increasingly difficult to absorb all of those renewables.”

During the California heat wave, there was a six-hour gap of insufficient power to meet demand from 4 p.m. to 10 p.m.

“That number will continue to grow up to eight to 10 a.m.,” Dresselhuys said. “That’s the problem we need to solve the fastest.”

Non-hydroelectric renewable energy accounted for approximately 40% of the state of California’s total electricity generation in 2021, according to the Department of Energy.

Approximately 80% of ESS Inc.’s supply chain is based in the United States and its chemistry does not include critical minerals. In August, Energy Secretary Jennifer Granholm toured ESS Inc. facilities in her first public appearance after the Senate passed the climate bill (Public Law 117-169).

In the spotlight

Last week in Pittsburgh, it was the turn of the Eos plant to be in the spotlight of the energy department.

Energy ministers from around the world toured the facility while company officials explained the zinc battery and its benefits to the grid and local community. The company employs hundreds of people in Pittsburgh’s Monongahela Valley, which is now trying to seize clean energy manufacturing opportunities.

The batteries are flexible and can therefore be distributed for a different number of hours per day, up to 15 hours per day. Last week, he completed his 200th battery.

The company sees growth in wind and solar developers, but also stand-alone battery projects to reduce grid congestion, Mastrangelo said. He also applied for a loan from the Department of Energy’s Office of Loan Programs, he said, which will allow him to grow faster.

“Now that we know how to do it consistently, now we can grow,” he said.