On Friday, February 24, 2023, a Nevada federal judge issued an order in Bartell Ranch LLC et al. v. McCullough et al., rejecting emergency requests for injunction by Plaintiffs, among which are Native American Tribes, various environmental groups, and a rancher to block construction of the Thacker Pass lithium mine, pending their current appeal to the 9th Circuit.[1] The Plaintiffs maintain that the Bureau of Land Management failed to acknowledge concerns about the impacts of the mine and that the permits were illegally granted. The District Court ruled in favor of the Defendants, the Bureau of Land Management and Lithium Nevada Corp., with the Court only requiring a re-approval of permits covering 1,300 of the approximately 6,000-acre mineable area. The Plaintiffs sought an injunction while their appeal to the 9th Circuit is ongoing. However, the Court ruled in favor of the Defendants, ruling that “the requisite strong showing of a likelihood of success on the merits of their appeal” had not been met, opening the door for the project to proceed.
Thacker Pass would be one of the largest lithium mines in the U.S., projected to produce upwards of 80,000 tons of battery-quality lithium carbonate annually. Proponents of the mine contend it would be a crucial boost to domestic lithium supplies and would dramatically reduce lithium supply chain issues. Opponents argue it will harm sage grouse habitat, cultural sites, and the local ranching economy, among others. Pending the appeal in the 9th Circuit, if the mine moves forward as planned one industry stands poised to benefit tremendously from the added domestic lithium supply: utility-scale battery storage projects.
Though supply chain and interconnection roadblocks contributed to a year-over-year decrease in overall development of renewable energy projects, 2022 still saw deployment of over 25 gigawatts of clean energy. Of that 25 gigawatts, new utility-scale battery storage projects made up just over 4 gigawatts—an annual record for installed battery storage capacity. This record deployment of battery storage capacity, while commendable, is unsurprising given that battery storage technologies remain an integral part of the energy transition for their ability to manage variable output from renewable generating assets like wind and solar.
The lynchpin of most utility-scale battery storage projects has been lithium-ion (“Li-ion”) technologies. In 2018, for example, Li-ion technology accounted for over 90% of all large-scale battery storage additions. Demand for Li-ion technologies remains high in the utility-scale context, with some battery manufacturers going so far as to build facilities specifically dedicated to producing Li-ion batteries for utility-scale projects. However, with the recent increase in imported Li-ion raw materials and the electric vehicle boom, the Li-ion space is becoming increasingly inundated with demand, and developers may see a lack of supply act as a bottleneck in overall deployment. While alternative battery technologies do exist, such as sodium ion batteries, zinc ion batteries, and dual carbon batteries, Li-ion batteries remain the market-dominant form of energy storage both from a technological and cost-efficiency standpoint.
The Thacker Pass controversy highlights the tensions between renewable energy expansion and environmental protection. With Li-ion technology poised to remain the kingpin of battery storage technology for the foreseeable future, the outcome of the Thacker Pass lithium mine remains critical for utility-scale battery storage developers. From a supply-chain standpoint, it holds promise for enabling another record-breaking year for utility-scale battery storage projects by boosting domestic lithium production. However, the environmental concerns presented by the plaintiffs are not without merit.
With the future of Thacker Pass still uncertain, developers should pay close attention to its conclusion. If Thacker Pass is allowed to move forward, battery storage projects will almost certainly see the benefit of a steady source of lithium. Alternatively, if Thacker Pass is hit with an injunction or required to reacquire its permits, the competitive market and supply-chain issues may take a toll on planned deployment of battery storage projects.
With a large portfolio of utility-scale battery storage projects under our belt, Husch Blackwell routinely advises clients on the complexities of the ever-evolving battery storage landscape. Whether it be integrating contingency periods into site control agreements to account for supply chain deficiencies or modifying existing site control agreements to fit the unique characteristics of Lithium-alternative technologies, our attorneys are well positioned to assist with each unique transactional need. We are always happy to assist and available to help facilitate your specific deployment goals.
[1] Bartell Ranch v. McCullough, No. 3:21-cv-00080, 2023 U.S. Dist. LEXIS 30864 (D. Nev. February 24, 2023).