Erste Asset Management

The issue of storing energy (Investment Board)

The issue of storing energy (Investment Board)
The issue of storing energy (Investment Board)
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The Erste AM Investment Board gives a structured form to the ongoing and responsive dialogue with and among sustainability research agencies. The Board offers the chance to integrate in-house and external research. It also discusses rating details, the ESG‘s assessment of the IPOs of new issuers and sustainability issues in general.

Power comes from the socket. Hidden behind it, lies a reality that is a tightrope walk. Power requires a constant balance of production (i.e. supply) and demand, otherwise the grid breaks down. In contrast to traditional energy carriers, renewable sources of energy come with enormous fluctuations.

The solution are energy storage devices. In the past energy has been stored in large pumped storage hydro power stations, which store unused power by pumping water up the mountain and releasing it in times of great demand for it to flow back down through the turbines. In Europe, however, there are hardly any valleys left where new power plants could be built.

Will batteries be able to do that tightrope walk?

Batteries are one of the solutions. They come with the advantage of being capable of also storing peripherally produced power efficiently, such as for example power from solar cells. In addition, they make power mobile and can thus replace petrol and diesel in our vehicles. The progress in the development of batteries has not only caused capacities to increase but has also led many environmental risks to decrease. The lithium ion batteries dominating today are non-toxic. At the same time, costs are rapidly falling, which allows for an ever-broader range of applications.

The experts of our research partners expect technological progress on the back of improved use scenarios. One example are electric buses that can be easily recharged at every station. This is in contrast to buses that have to last an entire day with one charge like a smartphone.

The resource issue remains unsolved

One crucial issue remains unsolved though: that of resources. At this point, lithium is still a relatively inexpensive commodity, but the rising production comes with severe environmental effects. One reason for this is the very high water consumption involved in production.

From a social point of view, the battery industry is lagging behind. Today’s batteries require graphite and cobalt. Graphite is mainly produced in China under often dubious conditions, and cobalt from Congo is also a potential conflict material. Whereas the IT sector has developed control systems a while ago in order to avoid conflict materials, we cannot see this sort of effort being made in the battery industry. The recycling process for batteries is still in its infancy, and it lacks governmental regulation.

While not all experts are optimistic with regard to the future of the battery, a transitional technology, or a sustainable solution, all of them point out the possibilities that energy storage technology offers. The solutions include synthetic methane from wind turbines, which is supposed to store renewable energy throughout entire seasons and distribute it via gas networks as well as electrochemical photosynthesis. Hydrogen has also not been disavowed yet. In fact, some experts regard it as the only really long-term solution.

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