Geothermal and battery storage firm Ormat Technologies and lithium-ion manufacturer Gotion have agreed a multi-year supply deal totalling up to 750MWh.
The deal will see Gotion provide Ormat with batteries with a total capacity of up to 750MWh for the latter’s energy storage project pipeline. Ormat’s work has historically focused on geothermal energy but has in recent years expanded into energy storage.
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The deal with Gotion has a variable pricing structure, partly linked to lithium carbonate prices, though most deals of any scale will have similar provisions.
Partially indexing the purchase price of lithium-ion batteries to hedge against fluctuations has been done for many years, but became particularly relevant after lithium’s price spikes in 2021/2022. Energy storage system (ESS) integrators themselves started to bring in similar variable pricing structures in their customer contracts to pass on some of the risk.
In addition to the signed agreement, Ormat and Gotion are discussing additional supply contracts and expansions to the existing signed agreement to provide Ormat with US domestic manufactured batteries from Gotion’s planned gigafactory in Illinois, which it announced last week.
This could enable Ormat to benefit from the 10% domestic content adder to the investment tax credit for energy storage projects, although some have cast doubt on whether the adder is viable in its current proposed form.
The company is targeting 600-700MW of ESS deployments by the end of 2025, up from a 500-530MW target last communicated in June this year, when it announced the commercial operation of two projects in Texas totalling 43MW/43MWh.
Doron Blachar, CEO of Ormat Technologies, said: “We are excited to partner with Gotion and sign this new multi-year battery supply contract. We have been encouraged by the long-term trends we’re seeing in the storage segment, and securing a critical battery supply while solidifying our supply chains gives us confidence in our ability to successfully advance our projects currently in development and achieve our long-term capacity goals.”