Why 2016 is the Year of the Battery, and How You Can Profit From It
Renewable power is on the rise. U.S. wind power capacity grew by 13% in 2015, and total renewable electric power is expected to grow by 11.3% in 2016.
Utility-scale solar power capacity alone is expected to almost double from 2014 to 2017. And in Europe, renewable power generation increased by 84% from 2003 to 2013.
But the great stumbling block for solar energy, as well as wind power and electric vehicles, has always been storage. The sun doesn’t always shine, and the wind doesn’t always blow. And we don’t always need power when they do.
Batteries can bridge this gap by storing renewable power for when its needed, but conventional batteries, even the most high-tech ones, are inefficient and expensive, and don’t last more than a few years.
But in 2016, that’s all changing.
Recently, researchers at Ohio State University announced a breakthrough battery that’s 20% more efficient and 25% cheaper than anything else on the market.
That’s just one of the battery breakthroughs that could transform the energy industry… and create some of the most exciting opportunities I’ve seen.
Because whoever figures out the “holy grail” of energy storage is going to make an absolute fortune, and not just in the energy industry. The implications are far-reaching across almost every industry you can imagine (and some you can’t).
Batteries activated by water, batteries made out of dirt, and batteries fueled by the same dye used to make blue jeans blue are right behind.
Here’s the current picture of the best, the little organizations that are at the cutting edge of this opportunity, and my picks for those who want to be the earliest investors before the market catches on…
Tapping Solar Energy When the Sun isn’t Shining
Solar power has always had one major drawback: when the sun isn’t shining, the electricity stops.
Homeowners can either draw power from the local power company, which is much more expensive than the “free” energy solar panels provide, or they can store electricity in banks of lead acid or lithium-ion batteries.
Both are expensive and inefficient.
A bank of batteries with enough capacity for two days of usage, along with the electronic controls they require, can cost $5,000-15,000, and last 5-12 years. Because solar panels typically last 20 years or more, homeowners can count on replacing back-up or auxiliary power batteries two to four times during the life of their solar panels.
And in conventional set-ups, 20% of the electricity solar panels generate is “lost” before it even gets to the batteries.
A breakthrough recently published in the scholarly journal Nature Communications by Ohio State University researchers could change all that.
It sounds deceptively simple. Funded by a grant from the U.S. Department of Energy, a team led by researcher Yiying Wu, professor of chemistry and biochemistry, has combined a solar panel and rechargeable battery into one unit.
“The state of the art is to use a solar panel to capture the light, and then use a battery to store the energy,” Wu said. By combining the two, Wu’s team can produce a battery that eliminates the usual 20% efficiency loss between panel and battery, at a cost that’s 25% less than existing technology.
The battery has one other high-tech wrinkle. To boost efficiency, Wu noted, “Basically, it’s a breathing battery. It breathes in air when it discharges, and breathes out when it charges.”
To the industry, this breakthrough in battery technology is potentially huge.
“For many companies, energy storage is seen as the holy grail,” said Logan Goldie-Scot, an analyst at the data provider Bloomberg New Energy Finance. Added Dean Middleton, of the California-based Trojan Battery Company, “Ten or 15 years ago the battery was an afterthought because the photovoltaic module was the new, exciting technology. Today, there’s much more of a focus on the battery.”
New battery technology is timely. According to a recently updated global energy plan by the International Energy Agency (IEA), solar energy will be needed to supply 27% of the world’s energy by 2050. The IEA expects current solar energy capacity to quadruple by 2040, and continue rising. To keep the lights on in 2050, the IEA says, would require solar energy to provide the equivalent of 200 new Hoover Dams, one of the largest hydroelectric power plants in the world, each year.
Right now, Ohio State University’s new technology is the leading candidate to making that possible. The university plans to license its technology to industry.
More Potential Battery Breakthroughs
With batteries so critical to the future of solar energy, a number of scientists and researchers are chasing the double prize of greater efficiency at lower cost.
In a closed Sony TV factory in Pittsburgh, start-up Aquion Energy, partially funded by Bill Gates, is developing a saltwater battery. Led by Carnegie Mellon professor Jay Whitacre, the company says its Aqueous Hybrid Ion (AHI) battery will cost the same as the cheapest batteries on the market, last twice as long, and is made of materials so safe they can be eaten (though they’d taste terrible).
At the same time, researchers at the Massachusetts Institute of Technology (MIT) are testing lithium-air batteries that are lighter and smaller than conventional batteries, yet offer three times the energy density.
24M, an MIT spinoff, has developed a new manufacturing approach that will cut the production costs of lithium-ion batteries in half, the production time by 80%, while boosting battery performance.
None of these battery developers is publicly held. One stock for investors to keep an eye on is SolarCity Corp. (SCTY), the country’s leading solar energy installer.
What makes SolarCity intriguing is its chairman, Elon Musk, head of both Tesla Motors Inc. and SpaceX. Tesla, whose all-electric cars are considered the most advanced of any on the road, has deep expertise in battery technology. The company is currently building a $5 billion gigafactory in conjunction with Panasonic to produce advanced batteries in Nevada, with rumors that the factory might be expanded before it even finishes.
Tesla’s technology, which gives its cars a range two to three times greater than its competitors, could also provide the same performance boost to home solar energy systems through the Powerwall battery pack which will store the energy produced by solar for use when the sun doesn’t shine. SolarCity has already deployed hundreds of these units in California.
The key for investors will be to monitor who develops or licenses new battery technology, and how quickly they bring products to market. With 784,000-plus homes and businesses now using solar energy, and solar panel installations up 49% in 2013, solar energy use is skyrocketing in the U.S. The first company to market with an efficient, cost-effective storage solution will see its business skyrocket as well. Whether this will be Tesla or a competitor remains to be seen.
Instant Battery (Just Add Water)
It sounds like science fiction, but it isn’t: a battery that can sit on a shelf for years, then be activated to full power just by adding water.
Several manufacturers make water-activated batteries. Some can be filled and used once, while others can be “topped off” and used for months.
Aquacell makes plastic AA and AAA size batteries that sell for about $1. To activate the battery, users unscrew one end and soak the battery in water for a few minutes. These plastic batteries weigh half as much as a metal battery, last indefinitely without activation, and provide roughly the same amount of power as an alkaline AA or AAA cell. They can be used only once.
NoPoPo (No Pollution Power), a Japanese company, also makes water-activated AA batteries. Those batteries can be activated by soda, beer, sake, or even urine, and can be recharged up to six times. A pack of six is $25.
Magnevolt, which was founded in North Carolina in 1986, makes batteries that can be activated by salt water, as well as fresh water. They primarily serve the Department of Defense, and their products are custom designed for each contract. They also make Survival Locator Lights that attach to life vests, and are activated by seawater to provide eight hours of light.
Investing in Water-Activated Batteries
Only one water-activated battery manufacturer is publicly held: Furukawa. The company trades on the Tokyo Stock Exchange. Sales have increased by 23% over the past five years, though net income and return on total assets have been flat.
The company’s American Depositary Receipt (ADR) is available over the counter under the symbol (OTC:FUWAY). It has stayed flat this year, is trading at very low volumes and is down 38.71% since it began trading in the U.S. The Mg Box is only a fraction of its total sales, and the company’s performance to date doesn’t make it an attractive investment.
Electricity From Dirt
The final frontier for battery researchers is right beneath their feet.
Inventor and MIT professor Donald Sadoway believes batteries can be made, in his words, “dirt cheap” by starting with… dirt.
Harvard scientists agree.
Sadoway, who teaches materials chemistry, was chosen as one of Time Magazine’s 100 Most Influential People in 2012 for his work on energy storage.
His latest project uses the minerals found virtually everywhere on earth in local dirt and inexpensive manufacturing techniques to produce what he calls a “liquid metal battery.”
The liquid metal battery uses earth-abundant liquid metals, such as an antimony-lead alloy and molten salt, and is cheap to produce. Sadoway and his team have made working batteries in the lab, and are currently exploring ways to commercialize the product.
They’ve formed a company, Ambri, which is working to bring a product to market, possibly as early as next year. The privately held company has backing from Bill Gates and a number of venture capitalists, as well as the U.S. Department of Energy, and recently cut the ribbon on its new manufacturing facility in Marlborough, Massachusetts. The company predicts that its batteries will cost one-third the amount of conventional lithium-ion batteries.
Prototype batteries are being produced, and will be tested at a wind farm in Hawaii and a Cape Cod military base.
Meanwhile, at Harvard, a group of students and their professor took the challenge of creating a battery from dirt more literally. In 2007, four African undergraduate students met in the How to Create Things & Have Them Matter course taught by Professor David Edwards.
Their challenge was to invent a power source that would help citizens in the poorest countries, who had no access to electricity, generate power.
They came up with a battery that uses the microbial activity in dirt to generate electricity.
The microbial fuel cell (MCF) battery is easy to make. Named one of Popular Mechanics’ 10 Most Brilliant Innovations in 2009, the technique is simple: take a five-pound bucket, fill it with a graphite-cloth anode, chicken-wire cathode, mud with manure, a layer of sand, and salt water. Add a cheap electronic power-management board, and the MFC has enough juice to charge a cell phone or power LED lights.
In sub-Saharan Africa, where 80% of the population depends on cell phones but only 30% has access to electricity, that kind of battery is a lifesaver.
The Harvard team has formed a company called Lebone and distributed 100 MFCs in Namibia as a pilot project in conjunction with the World Bank. By burying the buckets in dirt, Namibian families have a power source that lasts for months.
The Best Way to Bet on Batteries
It’s not as if conventional battery technology is standing still. Elon Musk’s Tesla Motors Inc. (TSLA) and Panasonic Corp. (PCRFY) are building a “gigafactory” with the goal of driving down the cost of widely-used lithium-ion batteries by 80% within 10 years. That would make electric vehicles cost competitive with conventional cars and trucks, according to the U.S. Department of Energy, and could make home solar energy battery packs affordable.
Meanwhile, Sony Corp. (SNE), the company that introduced the first commercial lithium-ion battery back in 1991, is planning to bring lithium-sulfur batteries – which promise 40% better capacity – to market in 2020.
Other would-be battery manufacturers are experimenting with everything from nanotechnology to Prussian Blue dye (used to color blue jeans, crayons, and paint) in an effort to make cheaper, more powerful, longer lasting batteries.
There’s no question that many industries are hungry for them.
Market research firm Frost & Sullivan predicts the lithium battery market will grow from $17.5 billion in 2013 to $76.4 billion in 2020, a 23% compound annual growth rate.
That prediction has driven venture capital funding and government grants to support at least 13 battery technology start-ups, many of them founded by professors and students at MIT, Harvard, Stanford and other top research universities. Major automobile manufacturers, including Toyota and GM, are also funding battery research.
Since many of those start-ups aren’t publicly traded, investors have few options other than Elon Musk’s Tesla Motors Inc. (TSLA) and SolarCity Corp. (SCTY), Panasonic Corp. (PCRFY), or Sony Corp. (SNE). Unfortunately, these are diversified companies whose fortunes will depend on more than just their advances in battery technology…
And of course, the real battery of the future may be made from dirt. Or water activated. Or solid state. Or use a technology that hasn’t been invented yet.
But with energy storage, the key that unlocks the potential of wind power, solar power, electric vehicles, and energy self-sufficiency, there’s more research and more incentive than ever to bring new battery technologies to the market.
I’ll be keeping an eye on any developments in energy storage technology and will keep you posted.