Supply chain experts said that because of the IRA’s strong pulling power, manufacturers from all around the world have formed relationships. This is also true in Taiwan, where companies like TSMC, Lite-On, Formosa Plastics, Taiwan Cement, Yulon, and Foxconn are active in the market. Suppliers and experts in module assembly and battery packs are also present in Taiwan. International businesses travel to Taiwan to learn about the market’s potential as well as to locate a partner with whom to make joint investments in the US.

Due to several bonuses from the IRA, the energy storage business is thought to be the one that will make money the fastest out of the more established renewable energy and electric vehicle sectors. The demand side receives a double bonus from both federal and local government subsidies, and both the supply and demand sides are responsible for tax refunds. The IRA may double the market prospects in the US, which already has the largest energy storage market in the world.

According to early industry estimates, the IRA may raise energy storage system suppliers’ profit margins by 300%. The investment capital might be recovered in just a few years after the systems go online by meeting demand in regions with a wide range of electricity prices, and the leftover amount would be pure profit.

By 2023, the total energy storage system must have a 40% self-production rate, according to the IRA. Despite the low self-production rate of lithium batteries, local advantages including familiarity with power plants and electricity rates are advantageous for US storage vendors. Due to the commercial potential the IRA capitalized on, organizing the local lithium battery industry chain is essentially a need.

The US lithium battery manufacturing market is still in its infancy, with a natural oligopoly formed by the South Korean companies LGES, SK On, and Samsung SDI. Even though their projected manufacturing capacity is nearly entirely for EVs, the majority of which use ternary lithium batteries, the industry leader in electric vehicles, Tesla, and its longtime partner, Japan’s Panasonic, are both producing lithium batteries.

The US energy industry now seems to be “isolated” as a result of this. Due to environmental considerations, energy storage has fast changed to utilising lithium iron phosphate (LFP). However, 99% of the market share for LFP worldwide is held by Chinese suppliers. The energy storage industry is in a difficult position now that EV manufacturers are competing with them.

The demand for energy storage is, however, being aggressively planned for by suppliers from Europe, Australia, and Japan. For instance, to meet the need for storage, Taiwanese LFP battery material maker Aleees has partnered with Europe’s Freyr and Israel Chemicals (ICL) to establish lithium battery operations in the US.

While the IRA has led some Chinese lithium battery manufacturers to consider whether they may manufacture in the US, some people are worried about the rivalry between the US and China in the semiconductor industry. Industry suppliers acknowledge that they are still unsure and question if the tug of battle would also impact the lithium battery market.


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