Renewable energy is in the spotlight and the battery technology supply chain is key to the transition.
Wind and solar energy are forecast to supply around 48% of world electricity needs by 2050, with battery technology, gas peakers (turbines or engines that burn natural gas) and dynamic demand anticipated to drive market penetration of solar and wind by more than 80% according to BloombergNEF1 . The same report also suggests the costs of renewable energy will undercut coal and gas in most parts of the world by 2030 – a compelling reason for countries to focus on it.
While investors may be well aware of Tesla’s credentials in battery storage, the supply chain for battery technology extends far beyond one company and covers mining companies, manufacturers of battery storage and storage technology providers.
Here are 5 companies fuelling the transition.
1) SolarEdge Technologies Inc (NASDAQ: SEDQ)
SolarEdge are a US-domiciled manufacturer of energy technologies, including power optimisers, solar inverters and monitoring systems for photovoltaic arrays (solar cells which convert the light to electricity). It has a global customer base, but also has a majority market share in the US, with 60% of the residential solar inverter market2. SolarEdge have also ventured into the electric vehicle (EV) market by producing the world’s first EV charging inverter, which has the ability to charge EVs up to 2.5 times faster than current models3.
2) NGK Insulators (TYO: 5333)
NGK Insulators are a Japanese ceramics company responsible for battery systems, insulators and equipment. They were responsible for the world’s first commercialised battery storage system capable of megawatt level electrical power storage. This system is in use in more than 200 locations worldwide4. They produce lithium-ion rechargeable batteries with high heat resistance and are also researching and developing an alternative in the form of zinc rechargeable batteries.
3) LG Chem (KRX: 051910)
LG Chem is a Korean chemical company with a portfolio across petrochemicals, advanced materials and life sciences. It was the first to mass produce lithium-ion batteries in Korea and has the leading market share in automobile batteries. LG Chem also produce carbon nanotube (CNT) which is used for lithium-ion battery cathodes. It supplies some of the world’s major car manufacturers such as Renault and Volkswagen as well as supplying battery materials to companies like Hitachi.
4) Galaxy Resources (ASX: GXY)
Galaxy Resources is an Australian mining company focused on lithium. It has mines in Australia, Canada and Argentina. The mine is Argentina has the potential to be the lowest cost producer of lithium in the world through oil brine extraction. Lithium accounts for 85% of commissioned utility scale battery storage5 and Galaxy Resources is likely to benefit from the continuing demand for lithium to support battery storage.
5) EnerSys (NYSE: ENS)
EnerSys is a US based manufacturer of power storage solutions for industrial applications and has 21% worldwide market share in this field. Its products include batteries, charging and power modules, monitoring and fleet management and energy systems used in industries such as telecommunications and transportation.
Investing in battery technology
Investors can access battery technology exposure in a range of ways looking across the battery technology value chain.
This may mean focusing on components such as lithium by using mining companies like Galaxy Resources or looking at battery manufacturers like EnerSys. Investors could also look at companies with more diversified capabilities not purely restricted to battery technology such as Tesla or Panasonic.
Investors could alternatively look at a fund like the ETFS Battery Tech & Lithium ETF (ASX Code: ACDC) which offer exposure across the battery technology supply chain globally. All the companies referenced in this article are included in ACDC.