Issue 22: Despite setback, BHE Renewables seeks more federal funding

The Biden administration rescinded BHE Renewables’ grant for lithium extraction earlier this year but this month it could get a much larger check.

Oct 07, 2022

Fresh this Week

Lithium Draft Report Spurs Spirited Debate

A draft report from California’s blue-ribbon committee on lithium has drawn disagreement and debate among the very members of the panel tasked with investigating the impacts and potential of the mineral in the southern state region.

At its most recent meeting, the Lithium Valley Commission discussed some of the most key recommendations it made in its draft report. The Desert Sun’s Janet Wilson published a great summary of that meeting.

A few takeaways:

Public comment for the draft report closes on Oct. 28. A Spanish version of the draft report is now available.
Two commissioners on the panel say "many questions remain about the environmental and health impacts of separating lithium" from the Salton Sea brine.
IID president Jim Hanks says those concerns are exaggerated and not supported by evidence, and that trying to address those issues beyond CEQA requirements would add "unnecessary expense and be a detriment to lithium development."
Those in Riverside County want their county to be represented in the report as well, but Imperial County supervisor Ryan Kelley says the majority of the development and benefits should remain in Imperial County.

There is cautious speculation that battery manufacturing — without naming Statevolt — could occur elsewhere, possibly across the border in Mexicali. So far, the new company and its potential partner, Controlled Thermal Resources, have remained silent on any developments of their plans.

A final draft of the report is expected due on December 1 and those on the committee have said that the public will have an opportunity to also have a say at that time.

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Between the Lines

Federally Funding the Lithium Valley

A new Reuters report this week splashed some cold water on the yet-to-be-proven Lithium Valley’s potential with the revelation that BHE Renewables had one of its lithium-related grants rescinded by the Biden administration earlier this year.

The loss of the federal $15 million grant had not been previously reported and neither BHE Renewables or local leaders disclosed it to the public despite having knowledge of it. Outside critics say the Reuters’ findings are proof that lithium extraction from the Salton Sea’s brine remains a difficult challenge to overcome.

BHE Renewables is one of three companies seeking to extract lithium from underground brine near the Salton Sea to satisfy the skyrocketing demand for the mineral essential to electric vehicle batteries. For years, it has operated 10 geothermal plants under the CalEnergy name near the Salton Sea, and most recently it has tested direct lithium extraction technology at one of its sites.

The company, which is owned by billionaire Warren Buffet, has set plans to build a second-stage plant in 2023 with the help of yet a much bigger federal grant that could be approved as soon as this month, sources tell me.

In July, Imperial County leaders lended their support for BHE Renewables’ grant application seeking $50 million from the recently approved Bipartisan Infrastructure Law. BHE Renewables is said to match the grant with $50 million of its own money to build a second, one-tenth scale demonstration plant to produce lithium carbonate.

Imperial County Supervisor Ryan Kelley said he knew BHE Renewables had its $15 million federal grant rescinded earlier this year but didn’t make much of it. He said he was confident that the company would remain committed to its lithium endeavors despite the setback.

Asm. Eduardo Garcia, D-Coachella, earlier this year touted BHE Renewables’ $15 million grant saying that it was “exciting to see momentum build for lithium projects in Imperial Valley.”

In an interview with Lithium Valle, Garcia said he found out several months later that the grant had actually been rescinded.

“What we didn’t know was the exact details of why the Energy Department decided to rescind that grant,” Garcia added. “BHE told us about a month or two after that.”

Garcia said he had no opinion on whether that information should have been disclosed to the public earlier.

Reuters reported that the $15 million federal grant was rescinded after the company changed the scope of its proposal, which the Energy Department described as a “substantial departure” from the original proposal.

Originally, BHE Renewables had proposed to make lithium hydroxide, a far more valuable form of lithium for battery manufacturers. But the process to make lithium hydroxide is far more difficult because it requires extra processing. So the company changed the scope to make lithium carbonate instead, leading to the grant application being rejected.

A spokesman for BHE Renewables did not respond to emails seeking comment.

"I think Berkshire has an unsolvable problem," Reuters quoted one unnamed source in its story, echoing what other critics have repeated before.

After the story was published, lithium experts and outside observers of the developments in the Lithium Valley weighed in on the challenges in taming the brine from the Salton Sea.

“This is not a black mark on #DLE. It is another example of a government entity out of their depth. In addition, @GM & others fell prey to geothermal hype,” lithium expert Joe Lowery tweeted.

“Sounds like a shit show is unfolding with one of the Salton Sea lithium projects, per new reporting from @ErnestScheyder @Reuters. @BHEnergyCo is prioritizing quick and easy returns for shareholders over fighting climate change. Typical,” desert activist Patrick Donnelly tweeted.

A Department of Energy spokesman would not comment on whether BHE Renewables or any of the other two lithium-seeking companies, Controlled Thermal Resources and EnergySource, had any grant applications pending.

But the department this week reiterated its commitment to support research on the extraction and conversion of lithium from geothermal brines for use of lithium batteries in electric vehicles and clean energy storage.

The Energy Department said it has committed $12 million in federal grant funding to two specific areas related to lithium: Field Validation of Lithium Hydroxide Production from Geothermal Brines and Applied Research & Development for Direct Lithium Extraction from Geothermal Brines.

With direct lithium extraction technology in the Salton Sea yet to be proven at a much larger commercial scale, it’s unclear how things will play out for the Lithium Valley. Already there are at least three other lithium-rich sites in the U.S. that are promising results — Lithium America’s project in the Thacker Pass in Nevada, Standard Lithium’s Arkansas Smackover Project, and Compass Minerals’ project in Utah.

For Lithium Valley companies, growing competition in the domestic lithium extraction field spells even more competition for federal grants and private funding — a pot of money that is finite and rivaled by much bigger ambitions elsewhere around the world.

Movements to Watch

The Lithium Valley Commission is holding a series of tribal and community workshops to discuss its draft report this month:

Tuesday, October 18, from 6 - 8 p.m. in Niland (in-person only)
Wednesday, October 19, from 6 - 8 p.m. in North Shore (in-person only)
Thursday, October 20, from 6 - 8 p.m. in Salton City (in-person only)
Monday, October 24, from 6 - 8 p.m. via Zoom