Tesla’s famous car and grid batteries use cells from Japanese manufacturer Panasonic. When companies like Fluence or NextEra integrate large battery enclosures, they source cells from the likes of South Korea’s LG Chem or Samsung SDI.

And when a global supply crunch constrained those top-tier suppliers, integrators turned to a growing roster of Chinese producers and found that they measured up.

But the Trump administration’s Department of Energy last week proposed a different vision, one in which the U.S. establishes a domestic supply chain for energy storage by 2030. It’s calling this a “Grand Challenge” — and promising millions of dollars and considerable institutional resources to achieve it.

Increased funding for basic research, technology transfer and workforce training has been on the storage industry’s wishlist for years. An explicit focus on the industrial planning needed to onshore the storage supply chain, however, adds a new flavor to the mix.

Specifically, the DOE wants “a secure domestic manufacturing supply chain that is independent of foreign sources of critical materials” by 2030, which would require a marked departure from today’s import-dependent industry.

Global trade enables countries to obtain things they don’t produce locally, or which can be produced more cheaply elsewhere, something that has traditionally been deemed beneficial. But reliance on foreign supply can cause problems.

A generous storage deployment subsidy in South Korea contributed to a global battery supply crunch in 2018, squeezing projects in the U.S. Sometimes domestic decisions make it hard to rely on other countries, as when the Trump administration chose to levy tariffs against batteries and inverters produced in China, driving up prices for American companies.

The DOE’s goals for energy storage

In an interview with GTM, DOE Under Secretary for Science Paul Dabbar explained that the onshoring of energy storage manufacturing serves two goals: national security (securing access to critical materials) and economic development (ensuring associated jobs and value creation happens here).

But the goal isn’t to wall off the U.S. industry from the rest of the world. “We’re very intertwined, and we will always be intertwined, with the international footprint on these topics, just like we are with oil and gas,” Dabbar said.

Trade in oil and gas did not vanish once the U.S. became a net exporter; the industry continues to swap crude and refined fuels across international borders as business imperatives dictate.

Rather, the hope is to avoid the sort of “missed opportunity” that transpired in the solar manufacturing space, said Dabbar, whose prior energy career included service in the nuclear Navy and leading energy investments at J.P. Morgan.

“A lot of the solar panel manufacturing is done overseas, but a lot of the innovation for that was done in the United States,” he noted.

The DOE has set the goal. Achieving it will require shifting away from the foreign-made lithium-ion batteries that dominate today’s grid storage industry.

Instead, the U.S. could look to double down on technologies that leverage the American landscape, rather than manufactured commodities. Additionally, the DOE could support up-and-coming technologies that make use of locally available resources.

Whether the government has the will to deliver on a decade-long industrial planning agenda is difficult to assess. But existing technologies feasibly could form the basis for a more homegrown storage industry in that timeframe.

Dependency on lithium-ion and global trade

The supply chain for today’s energy storage industry is easy to identify. More than 99 percent of storage capacity installed in the third quarter of 2019 used lithium-ion batteries, according to Wood Mackenzie.

U.S. storage companies engineer the projects and install them, but the batteries at the core of the systems almost exclusively come from overseas factories. Tesla provides a rare exception, because it brought in a foreign partner, Panasonic, to manufacture cells within its Nevada Gigafactory.

Securing domestic storage supplies would require a buildout of local manufacturing, which would be hard-pressed to catch up to the massive factory capabilities already up and running in Asia. Even if that could happen, the newfound American producers would still need to get their hands on the raw materials and process them into industrial feedstocks.

The U.S. does produce some lithium, but relatively high production costs have kept volumes low, said James Whiteside, principal for metals and mining consulting at WoodMac. The U.S. has little domestic supply of the nickel, manganese and cobalt needed for the dominant NMC lithium-ion chemistry.

Not even extensive taxpayer investment by the DOE can change that geology. That leaves one major pathway for energy storage independence: the development of alternative storage technologies that don’t rely on resources from other countries.

Opportunity in pumped hydro storage

Lithium-ion’s dominance in grid storage needn’t endure in perpetuity. It owes much of its success to the work of other industries, like consumer electronics and electric vehicles, which have scaled up manufacturing and driven down costs.

And other technologies could outperform lithium-ion on certain metrics and in certain applications. Many startups have pitched alternative battery designs for that reason; many have collapsed, and those that remain are still proving their competitiveness.

Setting aside manufactured storage devices, the DOE could focus on a class of technologies that make use of the American landscape itself.

For all the recent excitement about batteries, the true workhouse of the storage world relies on construction rather than manufacturing. That would be pumped hydro storage, still the provider of almost all the nation’s storage capacity. The problem is, new development has long since ground to a halt due to the complexities of environmental impacts, the limited number of viable sites and the general difficulty of building big things on schedule and within budget these days.

Federal efforts to accelerate the pace of pumped hydro development — with a focus on offstream reservoirs that don’t disrupt river ecosystems — could pay off. After all, it’s not an industry garnering much private investment right now.

“There are certainly ways to improve the pump efficiency factors,” Dabbar said, noting this technology is on the list for inclusion in the Grand Challenge.

Similarly, storing electricity by compressing air in caverns has been proven to work — yet new developments have stalled. Several companies have tried to modernize and compartmentalize the technique, with little success, but a few remain in play.

Canadian startup Hydrostor has finished two demonstration projects for an underground technique that uses water in caverns or mine shafts to balance out the pressure. British startup Highview Power has an aboveground, tank-based compressed air technique; it has projects operating in the U.K. but is also developing plants in the U.S.

Both companies tout their use of equipment from other industries, like mining, power plants and oil and gas, which minimizes technology risk. That makes these concepts strong candidates for fully domestic production.

The U.S. enjoys world-class expertise in oil and gas drilling; that industrial skill set could apply to drilling underground reservoirs for storing clean electricity.

New energy storage chemistries

Another class of storage innovators hope to craft manufactured battery devices that avoid lithium altogether. These hold the possibility of using cheaper and more abundant materials than conventional lithium-based chemistries; some of them could be sourced locally.

Zinc stands out among this crowd. It’s cheap, electrochemically attractive and the U.S. ranks among its top global producers. The Red Dog mine in Alaska extracts more zinc than any other in the world and has low production costs, Whiteside said.

A smattering of companies have worked on this element for years. Foremost among them, Fluidic Energy developed a zinc-air battery funded in part by the DOE’s Advanced Research Projects Agency, ARPA-E. The company did well enough to get acquired by billionaire Patrick Soon-Shiong, and it now operates as NantEnergy. It has installed 3,000 zinc systems worldwide, focusing initially on remote overseas microgrids — and a remote microgrid in North Carolina’s Great Smoky Mountains.

Other companies pursuing zinc include Eos (zinc-hybrid cathode battery) and Canadian newcomer e-Zn, plus the flow battery venture ViZn Energy, which ran out of money but then reappeared touting a pivot to China.

Several flow battery makers prefer vanadium as the core ingredient; the U.S. could supply itself with enough of that material, which appears as a byproduct of uranium mining and recycling waste material, Whiteside said.

Alternatively, startup ESS builds flow systems using abundant iron as a core ingredient.

The DOE believes that organic flow battery chemistries could be manufactured in the U.S., Dabbar said. Massachusetts-based startup Form Energy, for instance, won ARPA-E funding for an aqueous sulfur flow concept. The company is also working on an undisclosed electrochemical solution for seasonal storage.

None of these technologies have reached the kind of scale that qualifies them as rivals to lithium-ion’s technological hegemony. They do, however, create scientifically plausible pathways for a domestically sourced energy storage supply chain.

Recent cleantech history illustrates the dangers of betting against the kind of mass-produced commodities that lithium-ion batteries have become. But the U.S. can’t really get any less self-sufficient in energy storage than it is now.

Intentional efforts to incubate local storage manufacturing could expand the mix of self-made resources, even if they don’t replace foreign manufacturing altogether.