This 1 Residential Energy story out of Germany will change Cobalt demand forever
Previously we’ve talked about how the demand for renewables, energy storage and electric vehicle batteries are driving demand for Cobalt and particularly ethical cobalt. Cobalt is a key component of the batteries that go in vehicles and the batteries that go in your home to ensure a steady stream of power when using renewable energy such as solar in your home. In Germany, they’ve recently announced they will use a network of residential energy batteries as a way to balance the network, allowing the utility to reduce or even remove its need for power sources such as nuclear or coal that are currently used as stabilizers. If this were to be copied by other utilities around the world, global demand forecasts would need to rapidly increase by as much as 300% or more!
Using Residential Energy Storage solves a key renewables challenge
A key challenge of renewable energy is that they are not ideal for using to balance energy demand in the network. A key challenge for any utility is how to make sure it has enough power to distribute to meet peak demand without transmitting that amount all of the time. There are various techniques that a utility can use but in traditional techniques this requires steady stream power sources such as nuclear, coal and gas. The intermittent nature of solar (it’s not always sunny) and wind (it’s not always windy) means that renewables can’t provide this solution on its own. This is exactly the challenge that residential energy storage batteries solve for homes that adopt renewable energy and they can solve the challenge for utilities too!
Transmission system operator TenneT is using residential energy storage to balance its German grid
TenneT is a major transmission system operator in the Netherlands and Germany. It recently announced that it has prequalified two vendors to begin providing energy balancing services through a large network of residential energy storage systems. While the initial system will cover just 1 MW, it is projected to grow by 10,000% to 100MW, through its total network of 30,000 residential energy storage batteries. This initial network, while important, represents a very small slice of the total German market, and an even smaller slice of the world market. When the rest of the German and world market switches to using residential energy storage battery networks to balance the grid, this will lead to the sale of many millions of residential energy storage batteries!
One Nuclear power plant has more energy capacity than the entire US installed base of residential energy storage
To put this in perspective, a typical nuclear power plant has 1 Gigawatt or more of power. The entire installed base of energy storage batteries (residential, industrial and front-of-meter) was 338 Megawatts, or about 1/3 of a Gigawatt. That shows just how big the growth in residential energy storage batteries will be when all the grids of the world shift to using them as a means to balance their grids!
Cobalt-based residential energy storage batteries solve a key challenge for meeting renewable energy goals in developed countries
Countries in the the developed world are actively measuring what percentage of their total power delivery and consumption comes from renewables. Many have a target of between 50% and 100% renewables. They can’t do that without cobalt-based residential energy storage batteries providing the energy balancing solution that allows them to no longer require steady-source power such as coal.
If other utilities rely on Residential Energy Storage for energy balancing, demand forecasts for Ethical Cobalt could increase 300% or much more
The global demand for energy is about 200 petawatts or 200,000,000 Gigawatts. Assuming 10% of that would be needed in Residential Energy Storage capacity to balance the network, that would require 20,000,000 Gigawatts of capacity. Using the German example of 30,000 batteries to provide 100 MW of capacity, this would require 200,000,000 new Residential Energy Storage batteries. At 10kg of cobalt per battery, this would require 2,000,000,000 kgs of cobalt, or 2 million metric tonnes. To put that in perspective, forecasts for 2020 demand are currently at 120,000 metric tonnes, or just 6% of that total!
Cobalt prices could increase to $100,000 per tonne or higher by end of 2019
It appears that Residential Energy Storage energy balancing demand has yet to be factored into demand and prices as these are very recent announcements. Based on the current prices of cobalt at $35,000 per tonne would seem to be woefully underpriced. It would take only a few other utilities to jump on this bandwagon to starting putting a strong upward pressure on prices as these commitments or long multi-term commitments and so large purchases will need to be locked-in!
This one trend could be the biggest hidden growth story of 2019
The absolute recency of this announcement coming out of Germany, as well as its massive impact if picked up by first a few and then many other utilties, and the fact that it solves so many of the current challenges to the political will of more utilization of renewable energy, means this could be the breakout story of technology and resources for the year. Cobalt-based Residential Energy Storage for balancing energy in the utility grids could be the most profitable investment trend to jump upon before its obvious to everyone else!