“Choosing the right suppliers for energy procurement is crucial in navigating the complex world of renewable energy. By vetting supply chain diversity, aligning with partners who share decarbonization goals, and capitalizing on incentives, businesses can mitigate risks, prioritize sustainability, and drive clean energy projects to success.”
-Renee Leong, Stem’s VP of Strategic Sourcing and Supply
Renee Leong, Vice President of Strategic Sourcing and Supply at Stem, has over 20 years of experience in the supply chain and manufacturing industry. In this blog post, Renee shares insights and expertise with business development, program & project development, and supply chain professionals looking to navigate the complex world of renewable energy procurement.
The State of the Global Battery Supply Chain
A key factor shaping the renewable energy landscape today is the global battery supply chain. As the world increasingly shifts toward clean energy solutions, it’s essential to understand the complexities of this supply chain. While investments in battery gigafactories are on the rise, it’s worth noting that China still dominates global battery manufacturing capacity, accounting for 77% in 2020.1 This concentration poses both opportunities and challenges for businesses seeking to source renewable technology.
Procurement Considerations for Clean Energy Projects
The success of clean energy projects, whether behind-the-meter C&I or front-of-the-meter utility-scale, depends on many factors. Drawing from my manufacturing experience, I emphasize the importance of vetting supply chain diversity. Diversifying your supplier base can mitigate risks, ensuring a smoother procurement process. Additionally, navigating resource constraints with suppliers is crucial, particularly during global supply chain disruptions. By aligning with partners who share your decarbonization goals, you can build sustainable international partnerships that yield mutually beneficial results.
Capitalizing on the Inflation Reduction Act
Under the Inflation Reduction Act, domestic content refers to the percentage of equipment and components used in clean energy projects that are manufactured domestically. The act incentivizes businesses to source domestically produced goods to stimulate local manufacturing and job creation. Compliance with domestic content requirements is crucial for projects to maximize federal tax credits, elective pay, and other incentives, ensuring financial viability.
For example, in solar projects, a certain percentage of products and related components must be manufactured within the United States. Similarly, for energy storage projects, a certain portion of the battery systems and related components should be of domestic origin.
Stem can fulfill these domestic content requirements by leveraging its comprehensive network of top-tier OEM partners worldwide, including those with domestic manufacturing capabilities. This enables Stem to ensure that the equipment used in clean energy projects meets the necessary domestic content thresholds. By partnering with Stem, businesses can confidently pursue clean energy initiatives, knowing that they are complying with domestic content requirements, maximizing incentives, and contributing to local economic growth.
Aligning and Mitigating Risk in Global Sourcing
As the world moves toward decarbonization, creating a global sourcing strategy is paramount. I encourage businesses to seek international partners who share their commitment to decarbonization. This alignment not only ensures a sustainable supply chain but also mitigates risks associated with global sourcing, such as geopolitical challenges and changing regulatory landscapes.
The Power of Top-Tier OEM Partnerships
At Stem, we prioritize our partners and value long-term relationships. Our customer-centric approach focuses on understanding your specific needs and offering tailored solutions to address your challenges, including enhancing supply chain resilience. We recognize the importance of working with a trusted partner like Stem, who manages demand forecasting, inventory management, and proactive communication with suppliers on your behalf. With Stem, you can maintain a resilient supply chain while benefiting from our expertise in clean energy and sustainable supply chain practices. Partnering with top-tier OEMs worldwide further reinforces our commitment to reliability and quality. Let’s work together to drive your clean energy projects to success.
Disclaimer: This content is preliminary and is provided for informational and planning purposes only regarding the Inflation Reduction Act. This does not constitute legal, tax, regulatory, policy, or other advice or guidance. The provisions in legislative bill text require further clarification and guidance by executive branch, regulatory, and other agencies.