HK Summit: ‘Energy storage is the next big opportunity’

A sharp drop in battery costs and the nascent sector’s ability to solve renewables’ intermittency issues could create a $1.2trn investment opportunity over the next two decades, according to a panel at the Infrastructure Investor Summit.

The nascent energy storage market is the next big opportunity in the renewables space, a panel of experts stressed at the Infrastructure Investor Summit in Hong Kong, which kicked off today.

Christophe Bongars, chief executive of SustainAsia, reminded attendees that a sharp drop in battery costs will lead to nearly 1,000GW of cumulative storage capacity and will draw $1.2 trillion in investments into the sector by 2040, according to some estimates.

Alex O’Cinneide, chief executive of Gore Street Capital, a fund manager focused on renewable energy and energy storage, explained that auto makers are scaling up to replace any combustion engine in a car with batteries.

“That overflow of capacity has driven down prices dramatically. We have seen a 40 percent decline in capex in this year alone in the systems that we buy and own in the UK,” O’Cinneide said.

He noted that his firm sells storage facilities access to grid operators, and that a single energy storage facility can have up to four or five different contracts.

“Maximisation [of the assets] has allowed us to achieve 10 to 12 percent average returns – a very good return considering the risk of an infrastructure market like the UK,” he said.

Asked about future opportunities, O’Cinneide said Germany could be the next big market for energy storage. “They offer week-to-week contracts [for storage facilities access]. But the underlying dynamic, including its reliance on wind, or nuclear and carbon power being decommissioned, allows you to have some certainty that you’ll be able to sell your access for the right price,” he said.

Brandon Ng, chief executive and co-founder of Ampd, a start-up focused on energy storage solutions, underlined the opportunities that will arise in back-up electricity systems, and in providing power in difficult-to-reach regions. “We see that there is a very strong uptake in both applications we are focusing on,” he said.

Solar plants are also strong candidates for energy storage solutions, as are remote power systems used by mining companies operating in isolated parts of the world, according to Vish Iyer, head of global business development at engineering company Sterling and Wilson.

“During the last three years, communities like the mining firms, that are high absorbers of power, started transitioning to the renewable age,” he said.