As part of an economics or business degree, you learn an important difference relatively early on, i.e. that of stock data vs. flow data. A company may have a high volume of assets on its books yet can still go bankrupt if it does not manage to reconcile cash inflows and outflows during a given period of time.
The situation is similar with energy, particularly electric power. In case of sustainably generated power, supply often does not match demand. Power generation, i.e. supply, is not stable because it depends on wind and weather or the tide and often happens in remote areas – in areas where the sun is particularly intense and reliable or the wind blows very hard. The demand side is not a reliable variable either. If there is a lack of demand and the energy produced is not consumed, it is lost. In addition, a growing number of devices are not (constantly) hooked up to the grid anymore. Computers and telephones have become a part of us and are not plugged in like they used to be.
These are the reasons why batteries are so important. They constitute the bridge between power generation (supply) and power consumption (demand). Batteries ensure that power is available regardless of the time and place of production, independent of the energy grid.
In a world that does not work without energy we need storage facilities that can stock-pile enormous amounts of energy. However, every solution to this problem comes with a price tag, both literally and in terms of sustainability. For example, think of dams – they are basically giant batteries, and come with negative effects on the environment such as the relocation of inhabitants, avalanches, soil erosion, and water pollution. And resource consumption, explosions, and toxic waste are well-known issues in connection with lithium ion batteries.
The upside potential: making batteries and the structures surrounding them sustainable would result in sustainable gains to our standard of living. New technologies such as sea water batteries, where the option to recycle is already built into the process, are pioneers in the field. The hydrogen that results as by-product from the industrial production of fuel cells for example can be put to good use.
From our point of view this is reason enough for us to dedicate this ESG Letter to the issue of batteries from a sustainable perspective and to analyse how companies tackle the numerous challenges that this area posits.