That makes battery storage facility operators another investment opportunity. McPadden predicts they will base their business case on an ability to arbitrage the cost of electricity: buying it when it’s cheap because renewables are producing more than can be consumed and selling it back when the reverse is true.
She highlights Neoen as being a leader in the field. Last year it switched on Australia’s biggest grid-connected battery. It’s primed to play a vital role in helping the state of Victoria reach its 50 per cent renewable energy generation target by 2030.
“The issue with infrastructure owners and developers, however, is that they are very labour intensive and can’t scale quickly,” McPadden adds.
“So the equipment suppliers might be more interesting in a sense – battery makers like CATL, LG Energy and Northvolt.”
Hydrogen power
‘Green hydrogen’ production is another emerging energy storage solution. It involves using renewable energy to produce fuel from water via electrolysis.
The fuel could serve industries such as steelmaking, which require extremely high temperatures to manufacture their products and cannot simply switch from coal and other fossil fuels to electricity.
Hydrogen also has a role to play in long-distance, heavy-duty transport.
“Cargo ships, for instance, have massive energy demands,” says McPadden. “You can produce green hydrogen, turn it into ammonia and then use that as a fuel source. Freight trucking is another example.”
Two companies set to capitalise on this are ITM Power and Nel. Both make advanced electrolysers and are pioneers in hydrogen refuelling stations.
Many of the solutions mentioned above are capital intensive and won’t reach their full potential for years. So they require investors willing to think along longer time horizons than the norm.
However, the payoffs in tackling climate change and delivering strong returns should prove that patience has its rewards.
[1]https://css.umich.edu/publications/factsheets/energy/wind-energy-factsheet
[2]https://www.nature.com/articles/ncomms13728#ref-CR1
[3]https://www.synchrosolar.com/solar-prices-drop-what-is-swansons-law-with-graphic.html
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