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Lithos Capital

May 15, 2020

“With the world mired in an oil depression, lithium could be the remedy for this and other international upheavals.”

The year 2020 has seen several events that will define the next decade and perhaps even the whole century. Oil war, pandemics, sharp drops in the stock markets, problems in the pension system and environmental crisis are some of the current events that make us rethink about everything and look for new markets and opportunities to invest, searching for the next winning tendency while avoiding those that will be left behind.

One of these successful tendencies is the gradual replacement of fossil fuels for more environmental-friendly options. The turmoil in the oil markets created from the disagreements between Russia and Saudi Arabia and then aggravated by the global lockdown due to the COVID-19 pandemic has set unprecedented changes in the energy sector, from which sun power and wind power are receiving a huge boost as more countries and people alike try to quit their dependency on the shaken oil industry. And with the expansion of these green technologies, the demand for lithium grows as an obvious consequence. 

Lithium is used to build lithium-ion batteries, which currently are and will be for the next decade, the best devices to efficiently storage energy. They are inseparable from renewable energies because of the intermittency in sun and wind availability. Actually, the adoption of these clean energy sources depends more from the advancements in lithium-ion battery technology than in solar panels and wind turbines; the better we can storage energy, the more we can reliantly depend on sun or wind as energy sources. In the next image, you can see a typical solar farm, where each row of solar panels is connected to a lithium-ion battery for electric energy availability at night.

Some analysts estimated that the pandemic would significantly affect economic growth and energy consumption, delaying the adoption of new green technologies. But instead of that, green technologies are being adopted with an increased rate. Even the US, famous for its predatory stance regarding oil, is on the road to feeding its electric grid with more renewable sources through the recent approval of a $1-billion USD solar plus battery storage project in Nevada.

What is true is that the prices lithium-ion batteries have decreased as a result of an oversupply of these devices and getting easier to build them. This is good news, because it means they are more accessible, which in turn generates more market revenues; while prices decrease, consumption and adoption increase.

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