Trade policies significantly impact energy storage system costs through tariff increases and supply chain enforcement actions:
Tariff Escalation
- Section 301 tariffs on Chinese-origin lithium-ion batteries (25% as of September 2024) and future increases (to 25% for non-EV batteries by 2026) directly raise import costs.
- Proposed Trump-era policies could hike Section 301 tariffs to 60%, increasing battery storage system costs by 35% or more in the near term, especially for DC blocks sourced from China.
- Shifting supply chains may redirect procurement to Korean/Japanese suppliers or domestic manufacturers, but initial cost spikes are likely due to limited U.S. production capacity.
Forced Labor Compliance
- UFLPA enforcement against Xinjiang-linked materials has led to border detentions of batteries, requiring importers to provide detailed supply chain documentation. Delays in customs clearance can extend months, disrupting project timelines and increasing administrative costs.
- Supplier scrutiny forces developers to audit upstream suppliers, adding due diligence expenses and contractual safeguards to mitigate forced labor risks.
Market Adaptation
- Domestic manufacturing incentives (e.g., Inflation Reduction Act credits) could offset tariffs long-term, but near-term price volatility remains a challenge.
- Cost benchmarks: Current battery storage costs average $477/kWh (2024), but tariffs threaten to reverse years of price declines driven by economies of scale.
In summary, tariffs and compliance burdens introduce short-term cost increases and operational complexity, while domestic production incentives aim to stabilize prices over time.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-trade-policies-impact-the-cost-of-energy-storage-systems/
