Because the US Uyghur Compelled Labor Prevention Act reveals, corporations prepared to spend huge on batteries danger being blindsided by supply-chain-related legal guidelines. Listed below are some recommendations on how US builders can anticipate coverage curveballs.
Lithium-ion batteries can retailer power from distributed sources similar to photo voltaic and wind era, including important flexibility to an more and more dynamic electrical grid. However as the way forward for the storage trade brightens with the brand new freestanding tax credit introduced by the Inflation Discount Act, so does the highlight on world battery provide chains.
The expertise of the PV trade presents a cautionary story: A latest report from the US commerce physique the Photo voltaic Power Industries Affiliation discovered tightening commerce rules, designed to handle the labor considerations within the PV provide chain, contributed to a 23% decline in US photo voltaic installations final yr in comparison with the earlier yr. with 2021.
Coverage switch
An trade can adapt to such shifting insurance policies, however it takes time, particularly with so many transferring elements. Anticipating and getting ready for the longer term coverage panorama, together with the environmental, social, and company administration necessities of finish clients, shall be important to realizing the total potential of the storage trade.
Whereas commerce insurance policies within the photo voltaic provide chain focus on one ingredient – silicon – navigating the upstream lithium-ion battery provide chain is an order of magnitude extra sophisticated. In North America, electrical car batteries sometimes use nickel-manganese-cobalt (NMC) chemistry, whereas stationary storage functions sometimes use the much less energy-dense lithium iron phosphate (LFP) chemistry.
NMC and LFP cells encompass a number of sub-components, such because the cathode, anode, and electrolyte, every of which has its personal a number of materials provide chains. Vital supplies similar to graphite, lithium carbonate, copper, and aluminum all require various ranges of mining and processing and should go by way of a number of nations earlier than ending up in a utility scale storage facility or electrical car. Given the complexity, what can consumers do to arrange for larger scrutiny of their provide chain and to enhance accountability?
Code of conduct
Potential regulation and rising client consciousness put extra accountability on battery sellers and consumers to determine transparency in how, and with whom, they do enterprise. Step one as a purchaser is to obviously outline the insurance policies of company social accountability by creating a code of conduct. It ought to set clear requirements for subjects similar to labor practices, stakeholder engagement, and environmental impression mitigation. A corresponding code of conduct also needs to be developed for suppliers. By codifying the corporate’s values and mission up entrance, the suitable tone for conversations with suppliers could be set.
Companies that would not have a company accountability program to tell the creation of codes of conduct ought to create one. This ensures that their authorized vendor checklist is proscribed to suppliers that align with their group’s values. Two good sources for this are the ISO 26000 steering on social accountability, and the accountable sourcing guidebook drafted in 2021 by commerce physique the US Power Storage Affiliation.
As soon as a code of conduct is developed, applicable language must be included in provide agreements. The phrases of the availability offers ought to make sure that the code of conduct applies to the provider in addition to to the whole provide chain, for all parts. The language used must be binding and supply clear cures if sub-suppliers don’t comply. Further language, guaranteeing cooperation with different supply-chain associated requests – similar to entry to amenities and provide chain mapping – also needs to be included.
Provide chain mapping
Mapping a battery provide chain is important to determine potential dangers, as monitoring supplies on the mine degree clearly identifies all collaborating suppliers. This degree of visibility permits consumers to determine which sub-suppliers could also be at larger danger of not complying with their code of conduct.
The complexity of the battery provide chain and the potential resistance of sub-suppliers to sharing this data made mapping difficult. To facilitate identification, it’s useful to first concentrate on sub-components with larger danger or with restricted manufacturing areas, and to pay much less consideration to supplies which are produced worldwide in giant portions, for instance copper and aluminum.
The significance of audits
After negotiating for extra transparency and entry, and mapping the availability chain, you will need to confirm that suppliers are literally following their contractual obligations. Processes in place and provider qualification procedures must be reviewed and validated to make sure that the customer’s code of conduct is applied in apply, slightly than simply on paper.
Earlier than the search turns into extra sophisticated, there’s a golden alternative now to include larger accountability into battery provide chains. Taking proactive steps to align buying with firm values can pay dividends when new insurance policies inevitably take form.
This may current distinctive challenges relying on the scale of the companies. A small firm might discover it harder to vary suppliers’ practices than a big one. In reality, the coordination of uniform practices will finally use the trade’s collective bargaining energy to push suppliers towards larger transparency. The easy steps outlined above, in the meantime, can construct resilience to potential coverage modifications and meet client demand for accountable merchandise.
In regards to the authors: Raiene Santana an affiliate engineer at CEA. Santana has six years of expertise within the photo voltaic trade, and helps CEA purchasers in provide chain monitoring and ESG. He beforehand held roles in power engineering and worldwide affairs at ENG3 and the Photo voltaic Power Industries Affiliation (SEIA), respectively. He holds a grasp’s diploma in power effectivity from the Federal College of Espirito Santo.
Andreas Savva is an utility engineer, power storage, with CEA. Savva has 5 years of expertise in battery analysis and improvement, together with in depth expertise in lithium-ion and alkaline zinc battery chemical compounds. He holds an MS in supplies science and engineering from Boise State College and a BS in chemical engineering from NJIT.
The views and opinions expressed on this article are these of the writer, and don’t essentially mirror these held by pv journal.
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