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03 May 2017

Powerwalls and Mobile Phones



Battery technology is pretty much the hottest topic in applied science right now, and it will pose questions that the metal trading community will have to take very seriously. That may appear a bold claim, from a non-scientist, but just think about it for a moment. It’s not that long ago that pretty much the only rechargeable item in common use was an electric razor. Now, you’ve got a phone, an iPad, a laptop, a large part of your children’s toys, maybe a car - all running off rechargeable batteries, fuelling the demand for lithium along the way. But maybe the biggest change is still to come, standing just beyond our reach, but getting ever closer.

Elon Musk has turned Tesla Motors into a company with a market cap bigger than Ford (so I’m told), he has made SpaceX look like it has a viable product (although, as ever, the timing isn’t yet clear), but potentially the most interesting of his developments is the one just beginning to become available. I’m talking about the ‘Powerwall’, the domestic and commercial electricity storage system. Now, first of all, I understand others are developing similar products; I refer to Tesla simply because they have a background of balancing price and utility effectively, which has not always been true of other pioneers in this area. But anyway, it’s the product that’s important, not the identity of the producer.

So the product is a way of storing electricity for domestic use (they talk about commercial and industrial use, but the ability to harvest sufficient power for this still seems some way off). The domestic application, though, looks pretty good (and indeed I’m told there is at least one new development scheme - in New Zealand - where all properties are powered this way) - generate from solar panels on your house, store in the battery capacity you have installed and reduce your need to draw power from the grid. The logical end point to that is that -  taking out installation and maintenance costs - domestic power consumers would see zero cost power; generate from solar, store, consume.

That of course has implications for the power generation and - particularly - distribution networks. In other words, the utilities, who risk seeing their franchise cut back to heavy industrial use, as domestic consumers withdraw from the grid. And ultimately, since we all know technology makes things cheaper and more efficient, who is to say the same possibilities may not appear also for heavy industry? If it’s a good time to be a miner of the metals used in batteries, it’s a worrying time to be running a power utility.

That makes me think of another industry where there is a substantial change happening. I still use a landline telephone, in common with - I think - most of my generation. My children, though, rely exclusively on mobile phones, with the greater flexibility they offer. So where does that leave the suppliers of landlines? Needing to change their business model, I would suggest, to find something else to replace static telephone lines as a source of revenue. There are better opportunities than for the power distribution networks, as we can see with the provision of broadband and cable TV services by telecom companies. The future for them will be different, but quite possibly offering more not less opportunities.

So why should these interest Lord Copper readers? For the obvious reason - these are examples of industries that are big consumers of metals which will be obliged by technological change to revamp their businesses. The point to address for the metals industry is how the changing mix of metals will pan out. A few years ago, lithium was broadly ignored; now, it takes centre stage. Copper will probably both lose and win; lose, because of its usage in power and telephone cables - which will I guess decline - but win, because of its use in (a growing number of) electronic devices and power storage equipment. Otherwise? I genuinely don’t know, but the changing mix of metals the world needs is going to create some good opportunities. Metals and technology have always moved hand-in-hand: time to keep an eye on what Mr Musk and his competitors are doing. Right now, they are showing the way. Or, as the Gallagher brothers (almost) said: “Where’s my Wonderwall?”



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