In December 2023, the U.S Congress passed a rule under the National Defence Authorization Act banning the Department of Defense from purchasing batteries from six of China’s biggest manufacturers, Contemporary Amperex Technology Ltd (CATL), BYD, Envision Energy Ltd, Even Energy Co, Gotion High Technology Co and Hithium Energy Technology Co from 2027 onwards.
While this move does not affect commercial transactions in the U.S, it illustrates the web of geopolitical tensions and supply chain vulnerabilities the renewable energy sector faces.
With an increasing reliance on international suppliers for essential components like batteries, disruptions or restrictions in the supply chain can ripple across the industry – leading to project delays, cost escalations, and supply shortages. These issues are compounded by the dominance of certain markets or countries over critical components or materials. For instance, China’s significant role in supplying key components like batteries or Indonesia’s production of nickel highlights the concentration of manufacturing capabilities in specific regions.
Addressing these issues becomes paramount in navigating the energy trilemma of sustainability, affordability, and security, as they critically shape the industry’s ability to meet energy demands and net-zero targets while balancing economic, environmental, and security considerations.
We will be exploring these issues further in our upcoming New Energy Quarterly. To view our past New Energy publications, click here.
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The Hamilton Locke team advises across the energy project life cycle – from project development, grid connection, financing, and construction, including the buying and selling of development and operating projects.
To stay informed on the evolving challenges and opportunities in the renewable energy sector, please reach out to our experts Matt Baumgurtel or our New Energy team.
