New EV battery factory requires so much energy a coal power plant will be expanded and its closure delayed by years



A new electric vehicle battery factory in Kansas will require so much energy that a coal plant slated for closure will now remain open, plus it will be expanded.

Panasonic is building a $4 billion EV battery factory in De Soto, Kansas. The upcoming lithium-ion battery manufacturing facility is expected to start mass production of EV batteries by the end of March 2025.

Despite the massive $4 billion price tag for the 2.7 million square foot Panasonic facility, the Japanese company is "poised to get as much as $6.8 billion from provisions in last year’s federal Inflation Reduction Act," according to a July report from the Kansas City Star. The Japanese company is expected to receive state and local incentives – pushing the total financial incentives to as much as $8 billion.

This massive EV battery factory will require enormous amounts of power. So much energy, in fact, that a local coal-fired plant will be expanded and the life of the plant will be extended.

The EV battery factory will reportedly require between 200 and 250 megawatts of electricity to operate – roughly the same amount of power needed for a small city.

The plant in Lawrence is owned by Evergy – an investor-owned energy company servicing more than 1.6 million customers across Kansas and Missouri.

Evergy had reportedly planned to close its coal-fired Unit 4 at the Lawrence Energy Center in late 2023 or early 2024. However, Evergy is extending the life of the coal plant in Lawrence "until 2028 and would then transition Unit 5 to gas to provide power at times of high demand," the Kansas City Star reported.

"The demand created by the nearly 4-million-square-foot plant in Johnson County is expected to double that of Evergy’s current largest customer in the state and require two new substations, upgrades to three current substations and work on 31 miles of transmission lines," according to the outlet.

Kayla Messamore – Evergy’s vice president of strategy and long-term planning – admitted during testimony that the electric car battery plant will present "near-term challenges from a resource adequacy perspective."

"Beyond the sheer magnitude of load and load factor, Panasonic’s construction schedule, and, in turn, its energy needs, are being planned on a very aggressive schedule," Messamore said. "With energy needs starting to ramp in 2024 and full load requirements by 2026, there is urgency to procure capacity and energy to fulfill the expected energy usage schedule."

Carl Walton – Panasonic Energy of North America’s vice president of strategic initiatives and facilities – said, "Panasonic is making a significant investment in upgrading Evergy’s infrastructure to be able to serve the factory, and we will pay for all costs immediately attributable to our operations."

Panasonic is expected to receive a discounted electric rate that is offered to economic development projects.

Evergy had already filed for a rate hike for its customers with state regulators. The rate hike was largely denied by the Kansas Corporation Commission.

However, regulators allegedly agreed that Evergy "should be permitted to petition for another rate increase next year, as the utility has said those may be needed to accommodate Panasonic’s new battery plant in De Soto. In its initial rate-increase request, Evergy had said the company wanted to make adjustments to accommodate the power load for the plant."

Evergy spokesperson Gina Penzig said over 50% of the utility's power generation is carbon-free, but "the grid still needs baseload energy for times when intermittent fuels are not operating."

The factory is said to employ approximately 4,000 workers.

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The cost of lithium — a metal used to make electric car batteries — is up nearly 500% since last year: 'Supply is simply nowhere near enough to feed this demand surge'



The race to a low-carbon future via electric vehicles already comes with a hefty price tag. But that price tag may enlarge even more in the coming months if the skyrocketing cost of lithium serves as any indication.

What are the details?

The cost of lithium carbonate — a key ingredient used in the manufacturing of electric vehicle batteries and other low-carbon energy resources such as solar panels — has jumped 95% already in 2022, and is up almost 500% year-over-year.

According to Benchmark Mineral Intelligence, a leading price reporting agency, battery-grade lithium carbonate (EXW China, ≥99.5% Li2CO3) was averaging a whopping $76,700 a tonne in mid-March. During the same month last year, the metal was trading at $13,400 a tonne.

Benchmark reportedly added that based on reports out of China, things aren’t going to get any easier in the short term due to continued low inventory levels. China is a major producer of the mineral, selling nearly 20% of the world's supply.

But it's not just lithium. Nickel, another metal that serves as a key component in lithium-ion batteries used in EVs, has undergone an eye-popping price surge of late. On March 8, nickel prices more than doubled in a matter of hours, CNBC reported. While the price has come down from its apex in recent days, it still remains significantly inflated.

It should be noted the surge in the price of nickel is especially related to Russia's war in Ukraine, as Russia remains the metal's third-largest producer.

Why does it matter?

Overall, the news of soaring costs for lithium and nickel spotlights what some say is a market completely unprepared for the surging demand for electric vehicles.

"The price explosion tells you that lithium supply is simply nowhere near enough to feed this demand surge," OilPrice.com reported.

S&P Global reported earlier this year that supply stands almost no chance of catching up to demand, which has erupted over the last 18 months.

"Although the battery industry has been investing significantly in downstream battery capacity to power the surging EV demand, lithium is still getting less funding than required — and such investment could be too late to prevent a structural deficit in the coming years," S&P said.

It added the "structural deficit" could last "throughout this decade."

Yet the Biden administration continues to push EVs as a remedy not just for environmental woes but economic ones, as well.

In a press conference earlier this month, as gas prices soared as a result of the Russia-Ukraine war, Vice President Kamala Harris and Transportation Secretary Pete Buttigieg unabashedly claimed that "clean transportation can bring significant cost savings for the American people."

Perhaps they forgot that new EVs cost an average of $56,437, according to Kelley Blue Book. Prices at the pump would have to soar much higher than their current average for Americans to switch to EVs for strictly cost-saving benefits.

Now it appears the cost of manufacturing or replacing EV batteries will grow higher. Total cost of the vehicles will likely follow.