Energy Storage

Tariff Threats: Energy Storage Prices Could Rise 35% or More in Trade War

Jan. 15, 2025

The rising costs could prove even higher for the Chinese-based materials such as direct current (DC) blocks, the report forecasts. The Clean Energy Associates (CEA) study used a base case of Section 301 tariffs increased to 60% on these imported battery energy storage technologies.

Rod Walton, EnergyTech Managing Editor

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Battery storage capacity has skyrocketed in the U.S. as energy transition developers seek balancing assets for renewables, but the near-term pricing dynamic may face increasing pressure on the political horizon.

If steeper tariffs are enacted on the global battery energy storage supply chain under the Trump Administration, the near-term impact could raise U.S. costs on battery technology by 35% or more, according to a new report by the group Clean Energy Associates. Whether this impedes that multi-year growth pattern remains to be seen.

“Regardless of the level of exposure, tariff-inclusive BESS prices will be above the typical prices in 2023 in the base case,” reads the executive summary of the CEA’s ESS Price Forecasting report. “While there is the possibility for lower Section 301 rates, there is also a potential for even higher tariff rates given additional avenues of trade law being pursued.”

President-elect Trump has threatened higher tariffs on foreign markets even when what has been enacted under both President Biden and the previous Trump administration. Section 301 is the tariff authorization part of the U.S. Trade Act of 1974.

Recent data reported by the National Renewable Energy Laboratory indicated that costs for battery storage averaged $477 per kWh for a 240-MWh system. The U.S. Energy Information Administration estimated that energy storage installed capacity nearly doubled last year with more than 15 GW in projects installed.

Reshoring the Rare Earth and Critical Elements Supply Chain

China currently dominates the global supply chain for lithium-ion battery technologies with a 70 to 90 percent share of the market, according to the Carnegie Endowment for World Peace website. The U.S. ranks fourth in world market share for lithium-ion, the foundation of chemistry which accounts for a sizable majority of electric vehicle and energy storage systems.

To that end, last month the U.S. Department of Energy recently awarded investments totalling $17 million for 14 projects nationwide focused on improving the domestic supply for rare earth and critical materials in the battery storage and electrification supply chain. Among the recipients were research and development projects at Texas A&M, North Dakota University, ABB, Summit Nanotech and Ames National Laboratory, among others.

The U.S. is also working on potential lithium mines inside the country, including projects in Nevada and Tennessee.

Fortunately, the CEA report noted, lithium prices fell 69%, on average, from 2023 to 2024. The three-year outlook envisions only a slight, steady rise in lithium-ion market prices regardless of the tariff issue.

Seeking sourcing diversity also can help drive basic battery cost reductions, the CEA summary noted. The U.S. lately has worked to tighten the battery technology supply chain, both by bringing manufacturing home or seeking contracts elsewhere in Asia, Australia and North America.

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About the Author

Rod Walton, EnergyTech Managing Editor | Senior Editor

For EnergyTech editorial inquiries, please contact Managing Editor Rod Walton at [email protected].

Rod Walton has spent 15 years covering the energy industry as a newspaper and trade journalist. He formerly was energy writer and business editor at the Tulsa World. Later, he spent six years covering the electricity power sector for Pennwell and Clarion Events. He joined Endeavor and EnergyTech in November 2021.

Walton earned his Bachelors degree in journalism from the University of Oklahoma. His career stops include the Moore American, Bartlesville Examiner-Enterprise, Wagoner Tribune and Tulsa World.

EnergyTech is focused on the mission critical and large-scale energy users and their sustainability and resiliency goals. These include the commercial and industrial sectors, as well as the military, universities, data centers and microgrids. The C&I sectors together account for close to 30 percent of greenhouse gas emissions in the U.S.

He was named Managing Editor for Microgrid Knowledge and EnergyTech starting July 1, 2023

Many large-scale energy users such as Fortune 500 companies, and mission-critical users such as military bases, universities, healthcare facilities, public safety and data centers, shifting their energy priorities to reach net-zero carbon goals within the coming decades. These include plans for renewable energy power purchase agreements, but also on-site resiliency projects such as microgrids, combined heat and power, rooftop solar, energy storage, digitalization and building efficiency upgrades.