By Christopher Gannatti, CFA
Global Head of Research
Many aspects of modern life that we are all used to depend on a constant supply of energy. Similar to how the concept of Moore’s Law has led to the idea that we can almost always expect more computing power, it’s possible we’ll see this kind of expectation for the future of energy storage .
The critical goal in 2022 along this line is: where are we going to source all the metals?
Energy storage can progress down several paths
Consider three possible use cases:
1. A high-performance electric vehicle. Here, the emphasis would be on energy density and autonomy, with the assumption of being able to recharge on a fairly regular cycle, that is to say while the owner sleeps at night. The battery can be large and somewhat heavy, but these specs largely depend on other details about the specific vehicle. Size and weight would certainly not be unlimited.
2. Stabilize the power supply of an electrical network supplied by intermittent sources. The world sees the benefits of zero-emission energy sources like wind and solar, but we know that the wind isn’t always constant and the sun isn’t always shining. Extremely large batteries that can efficiently store power for several days or even weeks could be useful here. On the spectrum, size and weight wouldn’t necessarily be a concern here since the battery itself is stationary.
3. A custom designed battery intended to power a small device. Efficiency and weight could be the main concerns in the case of a wearable health monitoring device, for example.
Since the range of use cases is so diverse, we would expect a similar push for a diverse array of energy storage solutions. Lithium-ion technology has been dominant for about three decades, but the future may support a host of different technologies.
Thinking about battery life? Focus on the cathode
When we change the batteries in a remote control or a smoke alarm, we see the + and – signs and if you’re like me, you have to be very careful that the correct sign attaches in the correct way.
• The negative or terminal sign can be called “the anode”.
• The positive or terminal sign can be called the “cathode”.
Every battery must move electrons to provide energy. When in use, electrons move from anode to cathode, and when charging, they reverse. It is well known, however, that batteries cannot be infinitely charged and recharged, and problems with this tend to emanate from the cathode.
Much of the research in battery development has focused on which cells and types of structures work best in the cathode. If we are talking about an NMC 811 configuration, for example, it is nickel-manganese-cobalt, with eight nickel units, one manganese unit and one cobalt unit. This covers some economic and supply concerns while balancing security and energy density needs. As the atomic structure inside the cathode is subject to use and reuse constraints, we notice that battery life and charging performance may not match what we saw when it was new.1
Are metals independent of their source?
Now, the nickel, manganese, and cobalt for use in a battery can come from a variety of places. They could come directly from the mines, having never been used before in another battery. Likewise, they can come from a mixture of recycled products, knowing that it is not always easy to extract more of these materials.
Is there a difference? In other words, should we expect to notice qualitatively that they obtain inferior performance if the source of the battery metals is recycled? Logically, the atoms of the distinct metals should be the same regardless of their source, but it is certainly worth testing.2
Redwood Materials is a company dedicated to sustainably producing battery metals and sourcing an ever-increasing amount of necessary inputs from recycled content. The Materials Research Group at Argonne National Laboratories recently tested the performance of high-nickel cathodes, like the NMC-811 we talked about earlier, to see if they could see a difference in performance between freshly sourced metals and recycled metals.3
The results of this test indicated that the performance of Redwood’s recycled materials was indistinguishable from that of new metals when used in battery construction.4 We can’t say this will immediately lead to an explosion in battery recycling from now on, but it’s an important step, adding credibility that while performance and safety are paramount concerns, these can all as well be achieved with recycled materials.
Conclusion: Recycling has interesting supply chain implications
Anyone who follows global battery production would notice at some point that China is the biggest player, currently responsible for manufacturing around 78% of cathode materials.5 We have to remember that metal ores don’t just come out of the ground and into a battery – there’s a lot of processing involved. On the current trajectory, this share could reach 90% by 2030, even if the United States makes efforts to invest and develop its own internal capacities. China has built an advantage – since the supply chain is national in its market, it has centralized expertise and can break down raw materials and scrap metal faster and more economically and feed it into the structure cathode needed, time and time again. China is well on its way to getting to a place with battery minerals and production similar to what Taiwan is today with semiconductors.6
Redwood Materials is an example of an American company taking some rather interesting steps, moving from simply selling raw materials to other suppliers to moving towards producing its own cathode materials. The company even announced a 10-year, $3.5 billion investment in the Reno, Nevada, area, where it plans to produce enough cathode material for 100 gigawatt hours of battery cells by 2025, or roughly the equivalent of what CATL, the main Chinese producer, did last. year.seven
Although the demand for recycling is generally high as the market pushes for sustainable solutions across many industries in 2022, there are risks at this early stage of industry development. One of the risks is whether a company like Redwood can scale up production of very pure metals, as purity makes a difference in battery performance. The structure of the metals in the cathodes must be very precise. Then there’s the problem that many electric vehicles are fairly new, so there’s not a huge volume of car batteries to recycle yet. Battery recycling currently occupies an interesting early point in its historical development, and we believe it could be an important link in the broader energy storage value chain as the trend develops in the future. .8
We believe the WisdomTree Battery Value Chain and Innovation Fund (WBAT) represents an interesting way to consider the many distinct business activities that contribute to a thriving energy storage ecosystem, including recycling.
Christopher Gannatti is an employee of WisdomTree UK Limited, a European subsidiary of WisdomTree Asset Management Inc.’s parent company, WisdomTree Investments, Inc.
As of November 1, 2022, WBAT held 0% and 2.21% in Redwood Materials and Contemporary Amperex Technology Co. Limited (CATL), respectively. Click here for a full list of Fund holdings.
1 Source: Gregory Barber, “Recycled Battery Materials May Perform Just as Well as New,” WIRED, 10/13/22.
2 Source: Barber, 10/13/22.
3 Press release: “U.S. Department of Energy’s Argonne National Laboratory Verifies Performance of Redwood Cathode Using Recycled Content”, Redwood Materials, 10/13/22.
4 Press release: Redwood Materials, 10/13/22.
5 Source: Barber, 10/13/22.
6 Source: Barber, 10/13/22.
seven Source: Barber, 10/13/22.
8 Source: Barber, 10/13/22.
Originally published by WisdomTree on November 4, 2022.
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