12/2024

The Ocean as a Source of Electricity Storage?

Lithium is currently the most commonly used metal for batteries because it enables a relatively high energy density. However, sodium batteries are increasingly becoming an attractive alternative: Sodium is available in unlimited quantities as a salt of the oceans (sodium chloride NaCl) and can be extracted without causing environmental damage. Sodium batteries are also characterised by a high level of safety, as they are less flammable. However, sodium batteries also have disadvantages due to their lower energy density. They are more suitable for stationary applications.

Resourceful Researchers in a Race

Market forecasts from Bloomberg and McKinsey predict that the battery market will grow several hundred billion times over. The brightest minds are working with huge R&D budgets to eliminate the disadvantages of sodium batteries – low voltage and corrosion of the cathode (service life). In fact, great successes have now been reported. The first cars with sodium batteries are already on the road in China. The industry leader BYD is investing more than USD 1 billion in a large production plant. The other industry leader, CATL, wants to reduce the cost per kilowatt hour to $57 with a new generation of sodium batteries. A car battery would then cost less than $5,000. Research is going in various directions, and experiments are also being carried out with other inexpensive metals (magnesium, aluminium, zinc). There are great expectations for solid-state batteries, for example, which boast greater energy density and improved safety. The first factories are already under construction and should be supplying safe, high-performance batteries as early as next year.

Significance for Carnot

Battery prices have been falling slightly for years. However, with the emergence of new materials and technologies, a significant price reduction is now imminent. Due to the high capital intensity and major technology risks, battery production remains unattractive for us as investors. Nevertheless, the significant reduction in battery prices is relevant for us, as it makes the combination of renewable energy and storage cheaper. This triggers further investments in the conversion of the energy supply, where our portfolio companies are involved – from engineering, technology and installation through to system control and optimisation (AFRY, Concentric, ABB, etc.).

Did You Know?

700,000 tonnes of cheese are stored in American caverns. That is more than three times Switzerland’s annual production.

Interview with Matthias Kubli – Portfolio manager and part of the management team

Dear Matthias, what motivated you personally to become part of Carnot Capital – and what excites you about our focus on energy and resource efficiency?

I have known Carnot Capital for many years – I was part of the team from 2013 to 2015. The contact has never been broken off, and since 2021 I have also been privately involved as an investor in the Carnot Efficient Energy fund.
I am convinced by Carnot Capital’s clear guiding principle: technologies must make both economic and ecological sense. This interplay is central to me. At the same time, I am motivated by the goal of outperforming the market and achieving a measurable positive impact.

What specific experience from your career path do you bring to the table that is particularly valuable for our portfolios?
My investment universe has overlapped considerably with that of Carnot Capital in recent years – we have regularly exchanged views on companies and market trends. My in-depth understanding of industrial and technology companies is a clear value add. I also have the skill critically analyse new technologies and realistically assess their market potential – an essential skill in an environment that is focused on efficiency.

Was there a key moment that particularly shaped your interest in sustainable investments?

Throughout my travels to various regions of the world I have seen how differently resources are used. In Switzerland, we are already well positioned in terms of energy efficiency – globally, the situation is often quite different.
For sustainability to have a global impact, solutions must be affordable and scalable. Overly expensive technologies or purely theoretical approaches do not help. This pragmatic approach fits in very well with Carnot Capital’s philosophy.

Where do you see the greatest opportunities for Carnot Capital in the coming years – both at a portfolio and company level?

Carnot Capital has loyal clients and a strong position in the market for impact investments. Its long-standing specialisation in energy and resource efficiency is a competitive advantage that enables it to identify new trends at an early stage.
Many companies in our investing universe have experienced challenging phases in recent years. However, I am currently seeing a trend reversal in several sectors. This new phase of reorientation is an opportunity to make targeted investments in companies that are on the verge of a sustainable growth spurt – and thus generate additional returns for our investors.

How do you see the role of listed companies in the transformation towards an energy- and resource-efficient economy?
We are at a turning point: the time for declarations of intent is over – reality is catching up with us. Shortages, extreme weather, pollutants in food – all this shows how urgent change is. Listed companies play a central role: with their innovative power and financial strength, they can scale solutions and achieve real impact. For many, this transformation offers not only a responsibility, but also an enormous opportunity for growth.

What values are particularly important to you in management and collaboration – and how would you like to bring these to Carnot Capital?
In a small team like Carnot Capital, entrepreneurial thinking and pragmatic action are crucial. For me, a common goal is the central anchor. I attach great importance to discussing ideas openly – at all levels. If everyone can actively contribute, the company remains dynamic and continues to develop. This is precisely the kind of forward movement that I want to help shape at Carnot Capital.

Many thanks dear Matthias – we look forward to a sustainable future with you.

Nuclear Power – A New Boom or the Beginning of the End?

This was the title of a discussion programme on SRF television. The answer depends very much on your point of view. The expansion of nuclear power slowed down after the Chernobyl disaster (1986) and practically came to a standstill after Fukushima (2011), with Asia (China, India) being the exception. Since Europe has renounced Russian gas and wants to take the reduction of CO2 emissions seriously, nuclear energy is enjoying more support in Europe again.

The biggest advocates of nuclear power come from the IT industry: for Jensen Huang, CEO of Nvidia, nuclear power is virtually the natural energy source for operating the power-hungry data centres and Microsoft has already concluded a long-term supply contract with the damaged Three Mile Island nuclear power plant.

Some Key Aspects

In addition to high reliability and climate neutrality, nuclear power’s apologists cite the greater safety and lower radioactive waste of the new reactor designs. In addition, nuclear power plants reduce dependence on problematic exporters of fossil fuels. Essentially, however, proponents and opponents have been putting forward the same arguments for decades. Public opinion remains divided and varies from country to country.

The technology is indeed developing. However, the first SMRs – Small Modular Reactors – are unlikely to go into operation before 2030. The economic viability of new construction projects remains a major challenge, as the new plants in the UK and Finland have shown. While state support for solar and wind projects is declining, this is not (yet?) the case for new nuclear power plants.

Significance for Carnot Capital

The future of nuclear technology remains vague due to high costs and safety concerns, which is why we are not directly involved. In addition, sustainability is controversial. Over the last 20 years, the production of nuclear power has remained more or less stable globally. Due to the high growth in renewable and fossil electricity production, the proportion has halved to around 10%. In terms of value, investments in renewable energies are currently around ten times higher. We are therefore looking for investment opportunities in the management of electricity grids, where requirements have risen sharply. Schneider Electric, ABB and BKW fall into this category.

Did You Know?

The first British coal-fired power station was started up by Thomas Edison in 1882, and the last one went out of operation at the end of September.

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12/2024

The Ocean as a Source of Electricity Storage?

Weitere Beiträge

Interview with Matthias Kubli – Portfolio manager and part of the management team

Interview with Matthias Kubli – Portfolio manager and part of the management team

Nuclear Power – A New Boom or the Beginning of the End?

Nuclear Power – A New Boom or the Beginning of the End?