Join the Battery Boom in the US
The United States is experiencing an unprecedented rise in battery installations, mainly driven by strong demand in sectors like grid storage, electric vehicles, and built environment. This surge is fueled by the Inflation Reduction Act and Infrastructure bills, creating a golden era for energy storage. There were record-breaking utility storage deployments in recent times, with California and Texas leading the way. Battery producers of all sizes can capitalise on this thriving industry and seize lucrative opportunities in the US market.
The IRA substantially lowers the production cost of batteries. Almost 50% of the CaPex for a battery manufacturing plant can be covered by new tax credits, grants and loans. Additionally, a "Built in America" movement, which emphasizes locally produced batteries, presents an opportunity for international producers to set up shop in the US and to capture the high demand for American-made batteries.
Tax Incentives and Government Loans
There are novel tax incentives throughout the battery production process. For instance, battery cells can qualify for a tax credit of $35 per kilowatt hour of capacity, and battery modules can receive a credit of $10 per kilowatt hour or $45 for modules not using battery cells. These credits can be monetized, providing direct payments to producers and reducing capital expenditure. Small-scale energy storage for homeowners also benefits from IRA support, expanding the potential market for battery producers.
The US Department of Energy's Loan Programs Office (LPO) has just announced a deal to provide $9.2 billion in financing to support domestic lithium-ion battery production for electric vehicles. Note: such LPO loans are available for large corporations and small and medium-sized enterprises (SMEs). US federal loans enable producers to secure funding to scale up operations, improve competitiveness, and contribute to clean energy goals.
The surge in battery demand within the United States significantly alters the landscape for battery manufacturers, impacting companies of all scales. With favourable regulation, tax incentives and government support, now is the perfect time to capture the exploding market for batteries in grid storage, electric vehicles, commercial fleets and home applications. Embracing this boom can position you as a key player in the US market while, at the same time, contributing to the ongoing clean energy transition.
