The Battery Decade - Renewable Energies need Stationary Storage

Dear Shareholders & Friends,

Energy storage systems (ESS) will be indispensable for electricity grids in the near future. Due to the intermittent nature of renewable energy sources, such as wind or solar, deploying ESS is the only way these renewable energy sources can be used efficiently.

Renewable energies are on the advance. In Germany, for example, the share of renewable energies is expected to have risen from 38% to 43% in 2019. With the growing importance of green electricity, frequency fluctuations in the power grid will continue to increase. This undesirable negative effect can only be solved by temporarily storing the energy.

Batteries hold the key to transitioning away from fossil fuel dependence - and are set to play a key role in the coming decade

The corresponding technology has been available for years and is constantly being improved. Laptops, smartphones, battery-powered vacuum cleaners and screwdrivers, to name just a few, have been using lithium-ion batteries for ages to operate without a power cable.

This can of course also be implemented on a larger scale. For example, Tesla's first electric car, the Roadster, bundled 6,831 cells of commercially available lithium-ion batteries, which were also used for laptops. After all, these gave it a performance that accelerated it from 0-100 kilometers per hour in 3.7 seconds. That was more than ten years ago.

In the meantime, ESS are also available for photovoltaic systems on the roofs of houses. Households can thus largely disconnect themselves from the power grids and use their private energy.

The principle also works on a very large scale and is increasingly being used in wind farms. The same storage media can be used here as in smartphones or cars, for example, i.e. above all lithium-ion batteries - you just need much more of them.

The analysts of UBS estimate that over the next ten years the energy storage market in the United States could grow to as much as $426 billion - and say there are many ways to buy into the surge.

First major projects successful

Vattenfall, one of Europe’s largest producers and retailers of electricity and heat, installed BMW batteries in wind farms in the Netherlands and Wales - the same type that is used in the i3 electric car. Gunnar Groebler, Vattenfall’s head of wind power, said, “Vattenfall is on the road to a smart, digitalised future, free from fossil fuels. I can think of few other energy installations that better demonstrate what that future looks like than this battery installation.”

Tesla has probably achieved the largest project at present in the south of Australia. The region suffers from two problems: Energy prices are high and there are frequent power cuts. This has been mitigated for around two years by a giant battery from the e-car pioneer. South Australia's 1.7 million inhabitants already obtain around half of their electricity from wind and solar parks. A further expansion of renewable energy sources will hardly be possible without storage solutions, as otherwise the fluctuations in the power grids will be too high.

Large ESS not only have the advantage that they guarantee a “green” base load, they also store electricity when it is available in abundance and therefore cheap, then releasing it when it is scarce and expensive. Finally, without the further expansion of renewable energies and their interim storage, it will not be possible to phase out coal, oil and gas.

Stationary ESS are based almost exclusively on lithium-ion batteries - other technologies are not as universally applicable. For the manufacturers of the required battery raw materials, such as nickel or lithium, this will create another rapidly growing sales market alongside electric cars.

For our German-speaking audience:

Recently, I visited Aktionar TV for an interview about electric vehicles and their impact on raw material supply chains. Please watch the video below:

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