Tariffs
Impact on Costs and Project Viability:
- Cost Increases: Tariffs can significantly increase the cost of energy storage technologies, particularly if imposed on key components like lithium-ion batteries. For instance, a potential increase in Section 301 tariffs could raise U.S. costs on battery technology by 35% or more. This cost escalation can jeopardize project financial viability.
- Market Uncertainty: Tariff announcements and changes can create market uncertainty, leading to delays or cancellations of energy storage projects. This uncertainty is already causing project deals to fall through.
- Global Supply Chain Disruption: Tariffs on imported goods, especially from countries like China, can disrupt the global supply chain by impeding the flow of raw materials and intermediate goods.
Supply Chain Integrity
Ensuring Project Success:
- Forced Labor Concerns: Ensuring that supply chains are free from issues like forced labor is crucial. Products identified as at risk, such as storage batteries, may face border detentions, leading to delays unless companies can demonstrate compliance.
- Supply Chain Resilience: Building resilient supply chains helps mitigate risks associated with tariffs and other trade uncertainties. Companies must reassess their supply chain strategies to maintain cost efficiency and production flow.
- Risk Mitigation: Proactive management of supply chains can help companies navigate tariff risks more effectively. This includes identifying alternative suppliers or adjusting production strategies to avoid countries facing tariffs.
In summary, effective management of tariffs and supply chain integrity is vital for the financial viability and operational success of energy storage projects. Companies must be adaptable to changing tariff landscapes and ensure their supply chains are robust and compliant with regulatory requirements.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-role-do-tariffs-and-supply-chain-integrity-play-in-the-success-of-energy-storage-projects/
