Anil Achyuta Investment Director, TDK Ventures
Introduction: The U.S. Is the Largest ESS Market
In an age where energy consumption is at its peak and climate change looms ominously, the need for innovative, sustainable energy storage systems (ESS) has never been greater. Nowhere is the demand more pressing than in the United States. Geopolitical, economic, and technical factors have converged to place the United States at the center of the energy-storage universe with a projected need for over 600GWh of energy storage by 2030 among all storage in general of which 400GWh will be required of batteries in particular. That represents a total of $40B and a growth rate between now and then of about 23%. As such, the demand for energy storage within the US represents a monumental call to action for game-changing innovation in ESS technologies.
Figure 1. Top energy-storage markets globally.
Beyond the demand-side factors like increased renewable adoption, federal mandates etc., there’s an increasing need for resilience in our energy infrastructure. Extreme weather events, aging power grids, and electrification across various sectors are all contributing to this urgency. Energy storage is fast becoming an imperative for national energy security and sustainability, offering grid-balancing and peak-demand capabilities.
In sum, the U.S. ESS market is a monumental call to action for innovators, investors, and policymakers. The next decade will be transformative for energy storage, and the United States is setting the stage for this evolution, serving as both a crucible and a catalyst for technological breakthroughs.
Prevalence of LFP-based ESS and Complexities in the US
Lithium Iron Phosphate (LFP) batteries currently dominate the global Battery Energy Storage Systems (ESS) market. Celebrated for their low cost, safety profile, and durability, LFP technologies were initially perceived as the golden ticket to usher in a transformative era of energy sustainability. However, a deeper probe in this space reveals a series of socio-economic issues that can’t be ignored. Chief among these is the People’s Republic of China’s (PRC) dominance in the LFP market, a fact that inherently ties in vis-à-vis a very real geopolitical uncertainty pertaining to the supply chain and presents risks that extend beyond technical limitations.
When considering solutions to the US landscape, an initial thought, understandably, would be to replicate domestically the same LFP infrastructure and production used elsewhere. The reality, however, is anything but straightforward — as many major manufacturers have learned through their valiant attempts to do just that.
The heart of the dilemma comes down to resource distribution and lack of mass manufacturing experience of LFP batteries. A substantial portion of the critical materials for LFP batteries — i.e., lithium and phosphate — are either mined or controlled by China, while others — theoretically easier for the US to access — are located far from North American shores in regions of Africa or South America. The result? An intricate, expensive, and often unreliable logistics network is required to sustain an LFP supply chain for the US.
Figure 2. Supply-chain risk associated with various materials important to energy storage solutions.
More than inconvenient, the bottom line is the supply chain is at the whim of fluctuating geopolitics — a massive challenge to the progress of sustainable energy in the United States. Consequently, there’s a burgeoning demand (or rather a strategic imperative) — particularly within the states — for an ESS solution that can sidestep the geopolitical issues of LFP without sacrificing ESS-battery technical performance or safety. An important caveat to note is that such a solution requires more comprehensive consideration than just being technically viable and “not-LFP”. Nickel-Manganese-Cobalt (NMC) batteries suffer from the same issues, and demonstrate that risks really lie in the availability of rare minerals, metals, and resource — preferably those local to North America.
Previous Attempts & Concerns with Li Mining Safety
Despite demand signals for LFP alternatives, projections show a clear need for greater than 10x additional Lithium supply by 2040. Motivated by this, there have been previous efforts to go forward and develop LFP infrastructure within the states — including mining, refinement, and production. However, such endeavors are far from simple and have their own unique set of challenges, such as operations scale and maintaining quality control. US LFP efforts have been fraught with issues related to these concepts — including defects in battery cells, and even explosions due to inadvertent issues in cell production (e.g., the GM Battery Lab explosion in 2012). At its core, such problems have stemmed from a fundamental lack of experience and knowledge within the US of mass manufacturing LFP cells and has naturally led to looming safety concerns and cautions within the industry. Overall, these concerns have lended even more gravitas toward the objective of developing a suitable alternative.
Sodium-ion could be a Cheaper, Safer, Resilient, and Manufacturing-friendly Solution
In the complicated ESS landscape, sodium-ion technologies offer significant promise as a pathway forward and the economic calculus for is compelling! Globally, sodium is over 1700 times more abundant than lithium, and even more so in the US, which hosts a booming 23-billion tons of sodium, compared to only 0.63-million tons of lithium. The implications are enormous, as it is completely immune to the geopolitical uncertainties that trouble the LFP supply chain. Cost-wise, sodium’s abundance could translate to it being up to 1000 times potentially cheaper than lithium, a key aspect for enabling grid-scale ESS technology production, which then is even further amplified by the incentives offered by the Inflation Reduction Act (IRA) signed by President Biden, which encourages and helps domestic sourcing and manufacturing.
Figure 3. Geographically resource distribution of sodium compared to lithium. Reference: Meng et al. Sodium-Ion Batteries Paving the Way for Grid Energy Storage (link [redirect.medium.systems])
Beyond economics, sodium-ion technology stands out for its technical attributes. It requires less complicated Battery Management Systems (BMS) than LFP, resulting in cost reductions and streamlining of the technology. Sodium’s thermal stability further simplifies thermal-management requirements, making these batteries inherently safer potentially. As energy density is a key metric for ESS scalability, the reduced complexity in sodium-ion batteries could lead to an increase in pack energy density, without compromising safety or operational resilience.
Future of Grid-scale Battery ESS Thesis
As we look toward the future, it is clear that the ultimate game-changer in the ESS industry would be a startup that can strategically address multiple key facets of the evolving energy landscape. A “King of the Hill” startup would feature a multifaceted approach, transcending mere technological prowess to encompass robust, resilient, and efficient solutions.
§ Focus on producing sodium-ion batteries that not only match but potentially outperform Li-ion batteries in grid-scale applications spanning 2–10 hours. The aim should be for these batteries to offer not just economic benefits, but also technical advantages such as superior energy density and thermal stability.
§ Must demonstrate an ability to quickly establish a local supply chain, enabling the construction of American gigafactories at a scale and speed that outstrip the progress of local LFP-based initiatives. The cost benefits and local abundance of sodium should be leveraged to achieve this.
§ The startup should assemble an all-star team capable of tackling this monumental task. They should have access to defensible intellectual property (IP) in sodium-ion technology, demonstrate expertise in setting up fully automated gigafactories at a rapid pace, and also have a proven track record of attracting significant capital investment.
This next-decade frontrunner would not only contribute to the energy sector, but also play a pivotal role in fortifying national energy security, invigorating the domestic economy, and promoting environmental sustainability.
Enter Peak Energy
In the crowded arena of Energy Storage Systems (ESS), one startup stands poised to claim the “King of the Hill” title: Peak Energy. With an ambition to construct U.S.-native sodium-ion battery manufacturing capacity, Peak Energy aims to address the burgeoning ESS market by providing cells that are unparalleled in performance and price.
What sets Peak Energy apart is its dream team of industry veterans. At the helm is CEO Landon Mossburg, whose invaluable experience with Northvolt in Europe includes the construction of gigawatt-scale manufacturing plants. His insights into large-scale battery production promise to be a cornerstone in Peak Energy’s strategy. Joining him is Cameron Dales, the man who brought Enovix to market with a staggering $2.2-billion IPO. Serving as COO and CCO for 15 years at Enovix, Dales brings with him more than 20 patents in automated materials processing — expertise that will be leveraged to automate Peak Energy’s operations to an unprecedented degree. Completing the triumvirate is board member Greg Reichow, a six-year veteran VP at Tesla, where he oversaw Model S and X manufacturing, achieving a revenue rate exceeding $8 billion.
This powerful combination of intellectual property, hands-on experience, and industry acumen positions Peak Energy as a formidable contender. With its capable leadership and vision, the company is well-positioned to disrupt the ESS landscape, offering a viable, sustainable alternative that could redefine the future of energy storage in the United States and beyond.
Competitive Landscape and Why We Believe This Team Has the Best Approach to Win
In a marketplace that is starting to pay attention to the potential of Na-ion technology, Peak Energy is not without competition. Heavyweights are in the early stages of developing their own Na-ion solutions. However, where Peak Energy truly distinguishes itself is in its holistic strategy. While others are working on component level innovations (like new cathodes, anodes, electrolytes, packs etc. all of which are very important parts of the ecosystem), Peak Energy is diving deep, taking a comprehensive approach that spans from meticulous technology selection to IP portfolio development and system integration.
We at TDK Ventures invest in companies when we believe they generate venture-style financial returns, offer significant strategic value, and has strong social impact — what we call as our triple bottom line proposition. Usually, we discuss our investment hypothesis around how we envision a technological breakthrough could drive the market to create a potential king-of-the-hill. In this case, we believe that the business model of Peak Energy to work closely with component makers in SIB and drive innovation spanning automated materials production, gigafactory construction, and battery chemistry brings the most unique multidisciplinary approach to a complex problem.
Lastly, the team cannot be understated — Peak Energy is not just a collection of individuals, it is a confluence of expertise.
