Provisions in the Congressional stimulus bill could help jump-start a new, multibillion-dollar industry in the United States for manufacturing advanced batteries for hybrids and electric vehicles and for storing energy from the electrical grid to enable the widespread use of renewable energy. The nearly $790 billion economic stimulus legislation contains tens of billions of dollars in loans, grants, and tax incentives for advanced battery research and manufacturing, as well as incentives for plug-in hybrids and improvements to the electrical grid, which could help create a market for these batteries.
Significant advances in battery materials, including the development of new lithium-ion batteries, have been made in the United States in the past few years. But advanced battery manufacturing is almost entirely overseas, particularly in Asia. As a result, advanced battery startups in the United States typically have their batteries made outside the United States. But this need not be the case, says Prabhakar Patil, the CEO of Compact Power, a subsidiary of the South Korean company LG Chem, based in Troy, MI. Battery manufacturing is largely automated, so labor costs aren’t much of a concern, he says. Rather, the battery industry developed in Asia because countries there, particularly Japan, developed portable electronics and hybrid vehicles, creating a market for batteries.
Now, with the push to rely more on renewable energy and less on fossil fuels, a market for advanced batteries is starting to develop in the United States. This, combined with incentive for manufacturers in the United States, could allow an advanced battery industry to develop in this country. But many experts say that serious obstacles remain to getting the industry off the ground. Investors are reluctant to provide capital for battery plants because the markets are still relatively small. And the markets are still small in part because batteries are expensive, which is itself partly because they’re currently made in low volumes.
The stimulus bill could help address both problems. It sets aside $2 billion in grants for manufacturing advanced batteries, plus tax credits to cover 30 percent of the cost of a plant (up to $2.4 billion in total credits). This is in addition to $7.5 billion in loans authorized in a previous bill for manufacturing advanced technology for vehicles, which includes batteries. Employees for these factories could be trained as part of $500 million in funding for retraining workers for green jobs. There is also $16.8 billion going to energy efficiency and renewable energy, which will likely include money for battery research to bring down costs and improve performance.