By Justin Reynolds
Time for a slice of Pineapple?
“…As one of very few prospective operators in this space Pineapple Power is worth investigation by those seeking exposure to the development of a technology that has the potential to perform a key role in the energy transition…”
When we think of the batteries that will help power the transition to renewable energy we tend to imagine something like the sleek rectangles in our phones and laptops, or the gleaming lithium-ion panels that slide into the latest Tesla e-car. We don’t picture rows of grey storage containers that look rather like traditional electricity generators.
But those workmanlike tanks offer the revolutionary promise of electricity grids powered wholly through non-carbon energy sources, allowing surplus power generated by solar and wind to be stored when the sun is shining and the wind blowing, and released when the clouds roll over and the air is still.
The technology for grids powered by these ‘flow batteries’ is already here: the Pineapple Power Corporation hopes to be one of the companies that will make it mainstream.
Jump-starting the renewable batteries sector
Pineapple is a proposed new Special Purpose Acquisition Company (SPAC) currently raising money to list on the Main Market of the London Stock Exchange. A SPAC is an enterprise that joins the markets with nothing but cash and the aspiration to acquire one or more private companies. These ‘cash shells’ offer opportunities for companies seeking capital to secure investment without having to go through the lengthy and costly IPO process.
It’s a mechanism that has proved effective in getting other battery startups off the ground, the best known, perhaps, being Nikola – the hydrogen fuel cell company named with playful reference to Tesla – which was fast tracked onto the NASDAQ through support from a SPAC. This month another lithium battery vehicle company, QuantumScape, drew on SPAC investment to join the New York Stock Exchange.
SPACs typically try to complete a significant acquisition within 24 months of listing to retain credibility. Once the purchase is made, they usually change their name and listing code, and evolve into conventional listed companies, valued according to the performance of the business in which they have invested.
Pineapple, founded by Clive de Larrabeiti, argues that the Board of Directors experience of the international capital markets makes it well equipped to acquire at least one suitable venture in the emergent battery flow space. Pineapple says it expects to raise up to £2m through the issue of shares priced at £0.03.
Batteries that flow and flow
Flow batteries are less well known than the lithium-ion batteries that power the electronic devices and vehicles with which we are so familiar, but offer complementary strengths. Whereas lithium-ion batteries are light and portable, and able to deliver concentrated bursts of high energy, making them ideal for electronic devices and smaller vehicles, flow batteries are large, durable workhorses.
They function by storing energy in tanks of liquid electrolyte – usually derived from the metal vanadium – which is then pumped through a stack of cells, causing an electrochemical reaction that generates electricity. Vanadium electrolyte can reliably charge and discharge for thousands of cycles without degrading. The batteries have a very long life, able to perform reliably for at least 30 years, and to be recycled to last longer still. Their robust longevity means they can be relied on to store sufficient reserves of energy to keep power grids running through shifting patterns of demand.
The implications are exciting for all who care about a sustainable economy: vanadium flow batteries promise to provide a green solution to the most obvious shortcoming of solar and wind power – their dependence on the weather. Even as solar and wind energies make ever greater contributions to the grid as their price falls, gas turbines have been necessary to provide reliable backup power. But flow batteries can provide this function, storing reserves of solar and wind energy to ensure a steady power supply. They can also provide the backbone for standalone energy systems in regions or countries with poorly developed energy infrastructures. In Africa flow batteries hooked up to solar panels are already helping provide green power for communities and factories without access to a grid.
As the technology improves and the price of flow batteries fall their potential is becoming clearer. According to Wood Mackenzie costs fall some 5 to 8pc every time battery production doubles. And a report from Markets and Markets predicts that the value of the flow battery market, less than $200m in 2017, could touch $1bn by 2023, a compound annual growth rate of more than 30 percent.
The politics of batteries
But though the concept is compelling the politics and economics of battery technology is currently somewhat volatile. The supply chains on which battery production depends are often vulnerable. Lithium is notoriously dependent on scarce metals such as cobalt, over half of which is mined in troubled territories such as the Democratic Republic of Congo; indeed the price of cobalt has doubled over the past two years.
The production of lithium is controlled by just five companies. Vanadium, which has traditionally been used to strengthen steel, is significantly more abundant, but has its own supply bottlenecks. Production is sustained by a limited number of mines, most of them in China, which provide more than half of global supply. It is quite possible that the coming renewables era could be controlled by a handful of corporations in the manner of the fossil fuel industry, which for decades was dominated by the oligarchs known as the ‘Seven Sisters’.
Vanadium’s current dependence on China has been demonstrated by the fluctuations in its price over the past 18 months or so. The price plunged by some 20pc last year when China produced a glut of cheaper metals that provided an adequate replacement for vanadium as an element in steel production, causing demand for the metal to collapse. The price has begun to pick up this year as China has come out of lockdown and increased its demand for all materials, including Vanadium.
Mainstream adoption of vanadium technology will depend on the establishment of secure supply chains that iron out the dramatic price fluctuations to which it is currently susceptible. And there are indications that a more diverse supply network is developing. The South African vanadium miner Bushveld Minerals, for example, has attracted notice over the past year as it steps up production from its Vametco mine.
As one of very few prospective operators in this space Pineapple Power is worth investigation by those seeking exposure to the development of a technology that has the potential to perform a key role in the energy transition. Shares in Pineapple are available from a number of City of London brokers, including Axis Capital Markets and Peterhouse Capital.
So, could giant Flow Batteries power your City in the future? Maybe have a watch below and see what you think…
The author was paid for this article but does not hold stock pre listing in the company.