Altech Battery Bets Big on Renewable Grid Storage

• Altech Batteries (ASX:ATC) is commercializing a sodium chloride (salt) battery for the grid storage market
• Raised A$3.721 million via a share purchase plan to fund battery projects
• Plans to secure sales contracts with German utility providers and raise €170-180M to build the plant
• Targets selling batteries to grid utility providers capitalizing on demand from renewable energy growth
• Aiming to fund plant in 2023, begin construction in 2025, and produce batteries by 2027

Altech Batteries Powers Up to Seize Grid Storage Market

The renewable energy transition is driving explosive growth in demand for grid-scale battery storage. Wherever intermittent renewable energy sources like wind and solar are deployed, large-capacity batteries are needed to store energy and stabilise the grid. Recognising this opportunity, Altech Batteries (ASX:ATC) is moving to commercialize its sodium chloride (salt) battery technology to serve the grid storage market.

Altech recently raised A$3.721 million from shareholders via a share purchase plan to advance its two core battery projects. As Chief Financial Officer Martin Stein explains, "We gave all shareholders the ability to participate, and it was well received. We've got over 7,500 shareholders and very loyal shareholders in the majority, and they're very supportive as we move forward with our two battery projects.

Funding Plant Construction

With fresh capital secured, Altech is now focused on the next critical steps - securing off-take agreements and financing the construction of its battery manufacturing plant in Germany. The company recently completed a feasibility study for the plant, which is expected to cost €170-180 million. Stein outlines the financing strategy:

We think it will be a combination of equity at the project level and debt in the form of green bonds. We're also confident we will receive some grant and subsidy funding from the German government, state government, and European Investment Bank level. So we're looking at all three options for finance."However, obtaining this financing will require Altech to demonstrate clear customer demand and revenue visibility.

To that end, the company actively engages with German utility providers to line up long-term sales contracts.

Interview with Martin Stein, CFO of Altech Batteries

Targeting Grid Storage Demand

Grid-scale batteries are essential to support the continued build-out of renewable energy capacity. In Germany alone, Stein points out that 2 billion euros worth of renewable energy was wasted last year because the grid could not absorb the generated surplus power. Batteries solve this by allowing energy to be stored when production exceeds demand and discharged later to maintain grid stability.

Grid storage batteries are the future of the renewable energy transition," asserts Stein. "Wherever renewable energy is produced, it's produced intermittently. For example, solar doesn't produce at night, but the grid requires it, so grid storage batteries will be in demand.

Altech is currently in negotiations with multiple German utility providers, targeting deals to sell the full five years of production from its planned factory at a price of €85,680 per MWh for grid-scale battery packs. The global market for grid storage is projected to grow at a 28% CAGR, giving the company confidence in the long-term demand outlook.

Competitive Advantages

While lithium-ion batteries currently dominate the market, Altech believes its sodium-ion technology offers key advantages that will make it attractive to utility customers. The company's batteries are solid-state, meaning they contain no flammable materials and cannot explode like some lithium-ion designs. This safety profile allows Altech's batteries to be stacked, reducing the footprint compared to lithium-ion batteries.

The batteries can also operate in a wider temperature range and are expected to have a 15-year lifespan. Importantly, they do not require scarce, expensive materials like lithium, cobalt, or graphite—they use simple table salt instead. While sodium-ion batteries have lower energy density, Stein argues this is not a major issue for stationary storage.

Expansion Plans

The company intends to scale up quickly if Altech can successfully execute its plan to bring the initial 120 MWh plant into production. A 4 GWh factory is envisioned, and the modular design of the battery packs lends itself to replication in other markets worldwide. With global renewable energy investment accelerating, grid-scale battery storage is expected to be a high-growth market for the foreseeable future.

The Investment Thesis for Altech Batteries

• Exposure to the high-growth grid storage battery market, forecast to expand at a 28% CAGR
• Unique salt-based battery chemistry addresses key challenges with incumbent lithium-ion technology
• Vertically integrated business model spanning R&D through manufacturing
• Targeting large, long-term supply contracts with utility-scale customers
• Proven ability to raise capital and fund development
• Significant expansion potential via modular plant design and global market opportunity

Altech Batteries offers speculative exposure to the rapidly growing market for grid-scale battery storage. With its novel sodium-ion battery technology, the company aims to secure utility customers and scale production to become a key supplier to the renewable energy industry. While still at a relatively early stage, Altech's recent successful capital raise and advanced discussions with off-take partners suggest it is well-positioned to execute its commercialisation plans over the coming years. Altech presents a differentiated way to play the global energy transition theme for investors comfortable with development-stage risk.

The rise of renewable energy and electrification of the global economy is driving unprecedented growth in demand for battery storage. Variable output from solar and wind generation challenges balancing electricity supply and demand. Batteries solve this problem by absorbing excess energy production and releasing it later when needed. At the same time, the shift to electric vehicles is straining supplies of battery raw materials like lithium, nickel, and cobalt.

This convergence of factors triggers an arms race to develop and deploy new battery chemistries and cell designs optimised for different use cases. Affordable, safe, and sustainable stationary storage is critical for utilities to maintain grid stability and avoid wasting renewable output.

As Altech CFO Martin Stein puts it: "Grid storage batteries are the future of the renewable energy transition. Wherever renewable energy is produced, it's produced intermittently. For example, solar doesn't produce at night, but the grid requires it, so grid storage batteries will be in demand."