Preparing for a conference on hydrogen, so going to mix it up - quick thread about batteries and the US industrial strategy to date!

The US Government ultimately wants "energy security" for its batteries - autos, military, grid resilience, electronics; its a critical tech!

The Biden admin began the legislative process with two major reports: the 100-day supply chain report from the White House, along with a DOE specific report on each key energy technology:

www.whitehouse.gov/wp-content/uploads/2021/06/100-day-supply-chain-review-report.pdf

www.energy.gov/policy/securing-americas-clean-energy-supply-chain

The Biden admin wanted to do a major push on vehicle and grid electrification, but had their eye on the ball in terms of the challenges. The US currently could barely support its current demand for batteries, let alone 10x it! The "under development" resources were alarming!

You can break the supply chain into three parts:

Upsteam- mining and concentrating metals
Midstream - making battery grade materials
Downstream - putting together the lego pieces, building the products

US does ok on the downstream, but had essentially no midstream

The administration's goal was to build a US supply chain.

This would give the US the capability to recycle batteries, without sending them abroad.

It makes sense - if your whole transpo system runs on batteries, it'd be risky and expensive to fully offshore reprocessing.

Congress passed three types of legislation to get this done:

1. Demand: storage and EV credits
2. Direct industrial policy: $6B in strategic mfg grants and $30B in loan authority
3. Manufacturing credits: for every step from refining (10%) to battery materials to cells (45X)

The manufacturing tax credits in particular are interesting.

At the time of design in 2021, BNEF was reporting a $44/kWh battery pack gap between the US and China.

The IRA gave US batteries a $45/kWh credit:

about.bnef.com/blog/battery-pack-prices-fall-to-an-average-of-132-kwh-but-rising-commodity-prices-sta...

That number is also interesting because the current price of US battery packs fluctuates from $140 to $150/kWh. The $45/kW drops US prices down to $100/kWh, which is a bit of a magic number. Why?

That's the price where EVs are competitive up front with gas vehicles.

So batteries are incentivized and competitive. We have significant demand pull. It is with that baseline that the federal government is playing a direct role.

The goal is to 8x the supply chain, and we have missing chunks.

The DOE with grants and loans are targeting them.

So the invisible hand of the market and the strategic hand of the federal government are now both building a US industry. The future of batteries was never in doubt. America's role certainly was.

And the "battery belt" was no accident.

/done

PS, the major champion and critic here was @Sen_JoeManchin. There are some great hearings that demonstrate his fairly-cohesive logic that influenced these bills!

www.energy.senate.gov/hearings/2022/3/full-committee-hearing-to-examine-the-use-of-energy-as-a-tool-a...

www.energy.senate.gov/hearings/2022/4/full-committee-hearing-on-the-scope-and-scale-of-critical-miner...

www.energy.senate.gov/hearings/2022/9/full-committee-hearing-on-opportunities-and-challenges-in-deplo...

@Sen_JoeManchin PSS I think he's off on his critique of Chinese companies building in the US. They lead in battery technology, if they want to build in the US and pay American workers, go ahead?

The US is strong enough to feel secure within our own borders.