Japan May Spend Trillions of Yen on Batteries, Nomura Says
Comment of the Day

June 07 2011

Commentary by Eoin Treacy

Japan May Spend Trillions of Yen on Batteries, Nomura Says

This article by Mariko Yasu for Bloomberg may be of interest to subscribers. Here is a section:
Japan may need to spend several trillion yen on batteries should it follow through on a plan to triple photovoltaic capacity by 2014 amid concern that nuclear power plants are too risky, Nomura Holdings Inc. said.

NGK Insulators Ltd. and GS Yuasa Corp. are among battery makers that may benefit as expansion of the solar power grid requires storage batteries, Kyoichiro Yokoyama, an analyst at Nomura, wrote in a report dated yesterday.

Japan may boost solar-power generation from the current 3.6 gigawatts to 10 gigawatts in 2014, according to the report. When capacity reaches that level, Japan will need storage batteries to smooth out fluctuations in power production based on weather, Nomura said, citing a government estimate.

Japan is preparing an energy strategy that may include an increase in solar and other renewable forms after the March 11 earthquake and tsunami crippled Tokyo Electric Power Co.'s Fukushima Dai-Ichi nuclear plant. The trillions of yen of investment in batteries would take place by 2020, when the target for solar power production is 28 gigawatts, according to the report.

Japan had the third-most solar capacity in the world in 2010, behind Germany with 17 gigawatts and Spain with 3.7 gigawatts, according to the European Photovoltaic Industry Association.

Eoin Treacy's view So called alternative energy sources such as wind and solar are not truly viable as alternatives to mass electricity production fuelled by coal, oil, natural gas or uranium because they cannot meet base load requirements. The only way they could become viable is if technological leaps in battery technology are made to ensure electricity production when the sun is not shining or the wind is not blowing. At present industrial sized batteries that could meet this requirement do not exist. It is highly likely that they will exist in future given the amount of capital being invested in the sector.

Samsung SDI, LG Chem and Cheil Industries listed in South Korea, Johnson Controls listed in the USA, Mitsubishi Chemical and Toray Industries listed in Japan are among the leading contenders to develop industrial sized batteries.

Lithium miners such as SQM, FMC Corp and Rockwood Holdings all appear to have entered periods of mean reversion and will need to find support in the region of their respective 200-day MAs for their medium-term uptrends to remain consistent.

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