Battery backers taking big risks
New technology may be obsolete before it’s ready
Some of the latest battery technologies may become obsolete before reaching the market because of the breakneck pace of advances in the industry. From San Francisco to Shenzhen, scientists are experimenting with ways to improve the traditional lithium-ion cell and find new ways to bottle up electricity for use at another time. Investors in those projects are starting to worry that they might have picked the wrong technology.
Investment in start-ups developing new types of batteries rose to more than US$1.5 billion (2.27b) in the first half of the year, almost twice the level in 2017, according to data from Cleantech Group.
“There is a tremendous amount of money being put into battery research right now, and eventually that will lead to evolution of technology,” says Peter Carlsson, founder and chief executive of NorthVolt, a Stockholmbased company that’s constructing a ¤4b ($6.9b) battery manufacturing facility in the Nordic region.
Not every technology is likely to succeed. There are thousands of different systems being tested across the industry, involving major manufacturing companies, start-ups and universities. Even the lithium-ion cells used in most electric cars and mobile phones have varying manufacturing processes.
“There’s different flavours of lithium-ion, different chemistries, and even within those chemistries there’s different variants on how those are made up,” says TJ Winter, a principal manager at Fluence Corp, a US-based energy storage supplier. “We spend a fair amount of time just screening developments.”
The competition is getting fiercer as carmakers electrify more of their models and energy-storage units become more prevalent in homes and businesses.
About US$16.7b has already been spent to install conventional battery factories around the world, and another US$42b of facilities are expected to be up and running by 2022, according to Bloomberg New Energy Finance.
Lithium-ion will remain dominant for electric cars and storage units for the next decade, according to the International Energy Agency. After 2025, new technologies are likely to enter the market, it says in its latest Electric Vehicle Outlook.
That leaves open the possibility of either current lithium-ion technologies falling out of favour or newer projects not measuring up to the incumbents. Either way, some investors are likely to end up with batteries that aren’t economical. Taking a battery from a laboratory to the marketplace is slow and costly. Scientists are substituting expensive metals such as manganese and nickel for more abundant substances like sulphur and oxygen as they seek to cut costs and weight in battery units.
Conamix, a start-up in New York, recently raised US$2 million to try to make batteries without cobalt, a rareearth metal that’s a key ingredient for recharging but is mined largely in the war-torn Democratic Republic of Congo.
Other technologies “may not be able to scale because of cheap lithiumion,” says Jeff McDermott, managing partner of Greentech Capital Advisors. “There will be several but not dozens of competing technologies because the costs are going to have to be down. It’s going to require scale to achieve those costs.”
Equinor, Norway’s biggest energy company, has been screening storagefocused start-ups for the past three years but hasn’t yet made an investment in any one developer.
“Storage is a prioritised thing for us,” says Bala Nagarajan, an investment director at Equinor Energy Ventures, the in-house venture capital fund. “There are still technology improvements that are necessary for the adoption of clean energy and adoption of electric vehicles.
“Is there a chance that our future investments in storage technologies could be failures? Absolutely yes.”
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Is there a chance that our future investments in storage technologies could be failures? Absolutely yes. Bala Nagarajan, Equinor Energy Ventures