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Our thesis on the future of energy storage and why we think that one won’t rule them all.

May 5, 2020

FROM FINITE TO INFINITE AND HOW TO ENGAGE THE MARKET

In the coming decades, fossil fuels will become history and electrical drive trains together with renewable energy sources will take their place. As an effect of this, we see opportunities in two fields of innovation within the energy storage space. The first is related to the need for energy storage devices to support the electrification of vehicles; and the second to the need for grid-level storage devices and smart systems to balance supply and demand between the unreliable generation of energy from sun and wind on the one hand and the increasingly complex grid architecture on the other. However, we believe that the parameters that will drive success in these two fields are quite different. Within mobile storage, improving energy density, charging speed and convenience, and the ability to scale supply will be important factors. For grid-storage, decreasing the cost of energy storage will likely be the greatest driver.

ON GRID

Today, renewable grid-level energy storage devices are dominated by battery technologies. Even though the cost of storage has decreased faster than expected over the years, further development is needed to compete with the burning of natural gas as a back-up to wind and solar. And in a future where lithium-ion battery shortage might be reality, there is a risk for stagnation of the downward trend of battery prices. As alternative, we see great potential in solutions leveraging thermal (e.g. our investment SaltX) or kinetic energy for grid-level energy storage, as such solutions could provide a cheap way of storing energy. Furthermore, for long-term storage, we believe hydrogen is a viable medium. And of course, at the nano- and microgrid level, the growing EV battery capacity is an excellent buffer capacity for solar generated energy. As car-to-grid compatibility is built in to modern EVs, we believe it’s time to look for smart grid infrastructure and software companies that add the missing link.

OFF GRID

The EV industry will likely also experience the lithium-ion battery shortage as an obstacle against growth. Big-time players like Tesla, Samsung, Panasonic and newcomers like Northvolt aim to secure future battery supply by building huge factories to upscale battery production capacity. While these initiatives are needed, we’re not sure pushing scale on old technologies is a sustainable way to go.

On the battery side, we believe that improving energy density is key to improving the range of EVs and to bring diversity to the raw materials that are needed. A currently limiting factor is the anode material and one possible way forward is to replace today’s state-of-the-art (graphite) with e.g. nanostructured silicon that is capable of holding a lot of charge without swelling and cracking (which silicon does when used in its bulk form). As an example, our previous portfolio company SolVoltaics developed a continuous aerotaxy process for manufacturing of nanowires that could have been one solution, but there are many more projects ongoing worldwide that are looking at other structures. Given the attention the anode is getting, we also see great opportunities in improvements on the cathode side and on electrolyte level. Altogether, we sincerely believe that modifications of battery chemistries will be a game changer, not just in terms of energy density but also in terms of the industry’s current use of rare earth metals.

WHERE THE TWO MEET

Another way of addressing the EV battery challenge could come from the infrastructure side. If the charging situation was sorted out, range anxiety would decrease and EV manufactures wouldn’t see larger battery capacity as the only way forward. However, this can’t be done by merely scaling the number of charging stations, but must be done by also adding back-end support at the grid level, as well as by developing systems (including battery components) that can handle faster and more convenient charging.

SEARCHING BROADER FOR THE SPECIFIC

With this complexity in mind, we do not believe that more lithium-ion is the solution for all – instead we believe that thinking broader is essential to enable the mega-trending electrification of our society. That is why we will scout from software to hardware, and from chemistry to physics, to find scalable and specific solutions that addresses the bottlenecks of today’s state-of-the-art. Only by doing so can we enable new paradigms that bring us past the pressing challenge of sustainable energy storage.

/by Per Anell & Alex Basu

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