Clean Energy Superpower: The Energy Storage Solution
Wind farms and solar panels are a common sight these days. Originally criticised for blemishing unspoilt landscapes, they are now welcomed as signs of greener times.
And as fossil-fuel energy gradually gives way to clean energy, wind and solar will likely take over as the dominant energy source. Especially in the UK and other less mountainous countries that do not benefit from an abundance of hydropower, currently the world’s most utilised renewable energy source.
Actually, over the course of the last two years, the UK managed several months without coal-based power generation at all.
The clean energy conundrum
Water might always flow, but what happens when the sun does not shine and the wind does not blow? How do you maintain a consistently sufficient supply of power when the weather isn’t playing ball?
Clean energy: the missing solution
The answer, we believe, is energy storage. Combining solar, wind and battery storage technology (known as SWB) cannot only, in our view, help bring the cost of green energy contracts down but also balance intermittent energy supply for grid operators.
Think tank, RethinkX, believes that when SWB technology is finally fully integrated in power systems and running at optimal conditions, it will generate 3x-5x as much energy as today’s grid whilst energy can be stored on the less windy days.
If anything, clean energy sources are capable of excessive amounts of surplus electricity generation, produced at near-zero marginal cost, coined ‘Clean Energy Superpower’.
An idyllic thought but a few hoops we feel need to be jumped-through first.
Automotive industry – a source of inspiration
Battery storage size (the number of kWh that a battery can hold as opposed to the physical size) and output remains a challenge for the adoption of electric vehicles.
Thankfully the race to find solutions to these challenges is drawing closer; the magic figure of $100/kWh is widely seen as the threshold beyond which batteries will become mainstream. This is mostly driven by the Electric Vehicle (EV) industry’s need for batteries that last longer, hold more energy, and weigh less.
As of this month StoreDot, a startup battery manufacturer working in the automotive marketplace, released a battery that it says can fully charge in just five minutes; a notable step change brought about by highly-targeted industrial innovation.
We all want an electric car but where can we get power when we want it? The concept of ‘range anxiety’ is key; when people try to keep their battery charged 100pc even when they do not need it.
Some clean energy companies such as Vestas, a wind turbine manufacturer, are latching onto the innovative sprint and deep pockets of the automotive industries and forming partnerships with leading EV companies like Tesla to help accelerate the process further.
Capturing the clean energy superpower
Many energy suppliers are taking storage issues into their own hands.
Ørsted, originally a Scandinavian oil and gas company and now the world’s largest offshore wind power developer, has recently installed one of the first stand-alone, large-scale battery energy storage units near their wind turbine site off Liverpool, UK.
Ørsted can now, we understand, capture 90MW of energy directly from their turbines, helping existing local grid services to meet peak demands when required.
Flattening out peak demand
Factories have, in our opinion, had this nailed for decades; running their machinery overnight when energy is abundant and prices are low.
However, despite the availability of smart home technology on the market, adoption levels are still low; the cost savings are often not understood, or not enough to outweigh the timing convenience on a per-household basis.
Studies also reveal that perceived usefulness, ease of use, trust and compatibility are inherently affecting uptake levels. More research needs to be done, in our opinion, to enable companies to break down entry level barriers.
Elephant in the room or The inconvenient truth
Transitioning to a green economy, we believe, is going to need substantial resources; starting with all the raw materials needed to meet the growing battery and wind turbine demands. Wind turbines alone need 5.5Mt of copper to meet 2028 targets, regardless of all other metals required in their construction.
Sadly, the long-term ill-effects of most current mining operations are considerable. Mining these materials also has a detrimental effect on the environment. Most notably from air and water pollution, to land damage and loss of biodiversity.
Climate change deniers, in our experience, repeatedly raise this as part of their argument against the green transition. We must carefully explore this point while we look for alternative solutions.
Mark Carney, ex- Governor of the Bank of Canada and Bank of England, as well as Financial Advisor to Boris Johnson for COP26, has stated that the net-zero transition is the ‘greatest commercial opportunity of our time’. Many companies worldwide also share this opinion and are jumping on board to find solutions. The race is on to turn abundant amounts of clean energy into an abundance of money.
Companies are already jumping on the bandwagon. They are focusing on technologies that aim to minimise mining for virgin materials. Amazon’s Climate Pledge Fund recently put a sizable portion of its $2 billion pot into Redwood Materials, a company founded by Tesla’s former Chief Technology Officer. It focuses on solving the battery recycling challenge.
Whilst Vestas has teamed up with Aarhus University and the Danish Technology Institute to build a circular economic model. This retains and reuses everything, including the wind turbine blades, which to this day has been a sore sticking point for the industry.
The topic is hugely complex but in our view, if solved, comes with an equally huge reward. And we may not have solved the challenge yet.
But with so many countries and companies worldwide striving for a solution, one can’t help but feel optimistic that positive change is on the horizon.
The big question is – will it be too late? We think not, but it will require huge investment in the right companies to find answers fast.
With investing your capital is at risk. This information is for illustrative purposes only and does not constitute investment advice.