LG Energy Solution recently signed six-year off-take a contract with lithium supplier, Sigma Lithium.

To discuss this major deal, Energy Storage News’ Andy Colthorpe interviewed CEA’s Director of Energy Storage, Shawn Shaw. In the interview, the team discuss the recent lithium supply deal and the implications and impacts on the energy storage supply chain.

Transparency and Traceability in Energy Storage

Discussing the importance of the deal for LG, Shawn said, ‘“The deal covers an amount of battery-grade lithium concentrate that could supply the majority of LGES’ lithium needs over the next few years.” The agreement also establishes a “transparent and consolidated supply chain,” which gives investors in the market a “strong signal” on the company’s sourcing, planning and ESG considerations. 

“With all the recent uncertainties around international supply chains, shipping, and the COVID-19 pandemic, this type of supply chain certainty may be a strong benefit to LGES.

Transparency in materials sourcing is one of the major barriers in demonstrating compliance with sustainable sourcing requirements.

Given the recent activity in the solar PV market around supply chain traceability, asset owners and investors are increasingly pushing for more transparency in the sourcing of materials related to new energy storage projects.

Lithium is only one of hundreds of materials required to build a typical containerised energy storage system today but, along with cobalt, it is often raised as an issue for energy storage traceability.”’

The Importance of ESG in Energy Storage

Shawn also discussed the growing importance of ESG in the energy storage space, stating, “’This move, by one of the major ESS equipment suppliers, signals the importance of securing lithium supply and the importance of ESG.

Energy storage has drawn fire in some circles for the potential impacts of lithium extraction and the growing concern by investment funds with ESG mandates is clearly being taken seriously. 

The energy storage industry, in short order, must learn from the PV industry and address supply chain needs by bringing transparency and an ESG-friendly product to the market.”’

Read the entire article in full on Energy-Storage News - LG Energy Solution’s six-year deal ‘signals importance of securing lithium supply’ for ESS industry