The king of oil is betting on batteries for a green world

In his first interview since leaving the commodity giant in 2019, billionaire Alex Beard said his investment fund Adaptogen Capital planned to build storage with a capacity of at least 500 megawatts (MW) to power homes when network supplies run out.

In its heyday at Glencore, the Beard team traded up to 7% of world oil. The fact that it is targeting infrastructure to support renewable energy is another sign of how the wind is blowing for the global energy industry.

“I have time for a second career in energy markets. It won’t be oil and gas, but it will be the transition outside of carbon that will be most relevant over the next 25 years,” he said at his offices on London’s Regent Street.

Adaptogen Capital’s fundraising comes at a time when the UK energy industry is facing one of its worst crises in decades. A perfect storm of low gas supplies around the world has caused prices to rise, while wind and nuclear power has not been able to take over.

“The current crisis gives you an idea of ​​what we will experience more and more often,” said Beard, 54. “Batteries provide you with stability when the grid becomes unstable and are key assets that facilitate the energy transition.”

As economies move away from fossil fuels, power grids are becoming increasingly important, and governments and businesses are looking at ways to make them more resilient to avoid supply disruptions and price volatility that have affected power grids. China in California over the past year.

Renewable energy supplies, such as wind and solar, can fluctuate greatly depending on the climate and peaks and troughs do not necessarily match demand, so battery storage has been seen. for a long time as a way to cushion shocks.

“Volatility box”

At the moment, the UK has 1.1 gigawatts (GW) of battery operating capacity to store energy that can be recharged from the grid when needed. An additional 15 GW capacity is being built or planned, much of the companies investing in renewable energy assets.

Beard said Adaptogen’s 500 MW storage will use lithium-ion battery technology. That would be enough to supply about 750,000 homes in the UK, according to a Reuters estimate based on National Grid data.

The National Grid has estimated that in a scenario where the country is rapidly decarbonising, it may need more than 40 GW of storage capacity by 2050.

“The world has learned to build renewable energy on a large scale and now we need to build enough storage to accelerate this transition to clean zero,” Beard said.

He also said that renewable energy companies have a long way to go to understand and integrate trade and price volatility into their operations, the kind of risks that nine energy suppliers in Britain have fallen this month as that soaring wholesale energy and gas prices.

For now, renewable energy companies rarely face one-off price risks as they operate under government-guaranteed contracts, which has allowed them to stay competitive with fossil fuels, he said.

But as renewable production grows and government support for prices expires, the green energy industry will face a steep learning curve to understand how to better protect price volatility, Beard said. much of his career as a merchant.

“Batteries can also be seen as a commercial box of volatility for the green energy industry and a crucial asset to add to wind and solar generation,” he said.

The battery response to supply and demand lasts milliseconds and can be run using algorithmic software to take advantage of energy market volatility, unlike analog instructions to increase production in a traditional power plant. fossil fuel.

Beard, which has a $ 2 trillion stake in Glencore worth $ 1.2 trillion at current prices, has also sponsored Energy Transition Partners, a special-purpose acquisition (SPAC) company listed in Amsterdam.

The blank check company raised 175 million euros ($ 205 million) when it went public in July and is studying targets in the renewable energy, electrical and storage sectors.

Beard says oil and gas will continue to play a vital role in global energy supply, but renewables will grow faster and hundreds of billions of dollars will be spent on the non-carbon energy transition in the coming years.

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