By Tom Winnifrith | Thursday 11 January 2018
Belatedly back at his desk after a long Christmas and New Year break, Andrew Monk of VSA Resources continues his sector reviews with a look at what he calls Batteries and Energy but, as he notes, it covers a multitude of sins really as there aren’t that many stocks that really fit this. Over to Monkey
The Big Issue (nothing to do with the guy flogging you a magazine outside the station) is the lack of stocks and ways to play which I touched on on Monday. But this is the future and you need to understand and also try to play where you can. I do believe that we are moving to a New Energy world quicker than most people think and I recommend if you can watching Toby Sheba on Youtube below
Now quite how the New energy World pans out I don t know exactly but the major energy source will be renewable and the major use of energy will be for electric proposes and so the main point that people follow is that instead of Oil in Combustion engines stored and refilled at Petrol stations , we move to solar in EV’s recharged by Energy storage solutions. The renewable bit is fairly simple as solar and wind are now becoming pretty mature and conventional and producing at lower and lower prices
EV’s are becoming increasingly common and will be followed by hybrid electric aircraft and electric everything’s…….EV’s have a few challenges still such as where and how to charge but batteries will improve and electric motors will improve to give much greater mileage – think how combustion engines have improved in our lifetime- the same will happen with EV’s . I imagine in 20 years an EV will be able to go probably over 1000 miles without charging and require only 5 minutes to charge and that is a conservative view – I actually wonder if the car body doesn’t become solar panel and you don’t need to charge ever !!China is totally leading the way forward in EV’s and don’t look at the West for what is happening
China is racing into what it calls its “new energy” future, the country’s term for electric-powered vehicles, and last week Shenzhen completed its transition to all-electric buses. The city’s electric fleet now dwarfs the number of buses, both conventional or electric, in top US metropolitan areas. Shenzhen’s transport commission said on Dec. 27 that it had transitioned its 16,359 buses to all-electric models. The city’s 17,000 taxis are next (63% of them are already electric). China chose the city as a pilot for electric transit in 2009, now intends to expand the effort nationwide. YES China will be the first to go all EV !!
Cities and fleet operators are going all electric fast because the economics become more attractive the bigger the fleet. A typical passenger car in the US might burn a few hundred gallons of fuel per year, but buses, garbage trucks, and cargo trucks consume thousands of gallons of diesel and incur heavy maintenance schedules. Higher upfront costs from batteries are typically offset within a few years by lower maintenance (fewer moving parts, no internal combustion engine) and lower fuel costs.
Energy Storage is the real conundrum and what changes everything –Coal Oil and Gas are so easy to store but Energy , that’s different………There will probably be more than one solution depending upon how much energy you want to store , ie houses may have one method , businesses another , traders another , energy stations if they replace petrol stations another and major major storage plants another
Currently the choices seem to be Lithium , Vanadium or Hydrogen ……..crikey taking me back to my chemistry days at Oxford and the bloody periodic table ……….well we all can remember that the first column was Hydrogen , Lithium , Sodium and Potassium……….and we can all remember back to school days little experiments that showed how they can give off a lot of energy !!!................Vanadium is in the middle of the table so not sure how that slipped in but it works !!
The lithium Ion battery is now over 25 years old and pretty outdated as we know it degrades , we know it is unstable and you can’t even put in your suitcase when flying so we will see this being replaced by Lithium Sulphur which is much more stable and also fast charging Lithium Tantalite But it is Vanadium Redox flow Batteries (VRB’s) that I believe can really start to change things
Now we all hear about Elon Musk building his Li Ion battery in Adelaide built in under 100 days – very eye catching !!..........but the announcement to watch last year was in China
“BEIJING and VANCOUVER, British Columbia, Nov. 01, 2017 (GLOBE NEWSWIRE) -- Pu Neng, the leading provider of vanadium flow battery technology in the world, has been awarded a contract for a 3-megawatt (MW) 12-megawatt-hour (MWh) VRB as Phase 1 of the Hubei Zaoyang 10MW 40MWh Storage Integration Demonstration Project. This first phase will be installed in Zaoyang, Hubei to integrate a large solar photovoltaic system into the grid. Following this 10MW 40MWh project, there will be a larger 100MW 500MWh energy storage project that will be the cornerstone of a new smart energy grid in Hubei Province. This large project will serve as a critical peak power plant, delivering reliability and emissions reductions.”
This type of project is a glimpse of the future of the Chinese electricity grid as the country is halting construction of many coal-fired power plants and pushing the integration of renewable energy with energy storage. This is the way forward in Chinese thinking and they are right and note who the Chairman of Pu Neng is – its Robert Friedland who is not Chinese at all but one of the World’s most successful mining entrepreneurs ever
So VRB’s are going to happen , the final hurdle before mass roll out in my view is showing they are totally economic to the end customer and today we are at that tipping point – this is no longer a cost to go green , but a profit by going green. And of course the good news is that in this space we have a UK Quoted company and a leader in its space – RedT
RedT had quite a tough year last year as things just took a little longer than expected and so the market got disappointed and also not helped by a major shareholder/director becoming seriously ill and so having to resign and sell some stock, but that is out of the way now and that was last year, this year the orders should come through thick and thin and start to gather momentum - when the happens the share price should rocket as who knows what a market leader in this space is worth – but I know plenty of Chinese groups to start with who would pay a fortune to acquire this Company !!
The other play in the sector is probably ITM power who are playing with Hydrogen – I don’t know it well enough to really comment but I think the chart says it all
Now there are Solar stocks you can buy – but they tend to trade at premiums ……….so Bluefield Solar Income fund, but I can’t face as it has too big a premium
And you could play through Battery Materials as I discussed yesterday and the ETF there would be Global X lithium and Battery technology
I actually think you can include 2 FTSE stocks which are SSE and Johnson Matthey. SSE has a lot of renewable energy but also has the local network that will be required a s we move to Energy Storage. Johnson Matthey is rapidly building its own battery technology division
But that also brings me to one of my other favourite hot topics and a very newsowrthy one right now – Waste to Energy. The news in 2018 has been full in 2018 about how China has said No to importing plastic and other waste
But we have a huge Waste problem in the UK – and it isnt just China that is going to say No – Europe where we also dump a vast amount on will also say NO , Non , Nein !! So we have to sort out our own waste and it can be used for energy
This will be a very hot area for 2018 – We did IPO Eqtec at the back of last year , I wont deny it was complicated and still has a technology to prove and so we need to see some proof before it becomes Instituional …………..but they are totally in the right space and so why I was banging on about them and will keep you all informed
Anyway this whole space/sector whatever you want to call it is rapidly developing and you will see new exciting opportunities coming up as they year progresses.
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