From electricity generation towards batteries and hydrogen – next steps in renewable energy

Blog | Jussi Lilja | 31.10.2023

I recently visited an old ironworks area, where the first steps of renewable energy reminded me of their existence. It is heartwarming to think what an important role simple energy sources, like sawmills powered by constant rapids and grain grinding windmills, have played in our well-being. As automation has worked its magic and muscle ache has decreased, time has also been freed up for innovation.

A sawmill was then connected to the rapids to cut the trees, then a planing mill was built to create wood boards, and finally an electricity-generating generator to light up the village. Now, modern renewable energy is also taking a step forward in its own value chain from valuable, but inconsistent, electricity production towards battery storage and hydrogen. A significant challenge in solar and wind power is the inconsistent production of energy.

The challenge of inconsistency has now really been tackled by investing in energy storage. Global battery capacity will rise from five gigawatts in 2022 to as many as 42 gigawatts by 2030 and more than double by 2050, estimates Aurora Energy Research¹. In many countries, the battery system is already a facilitator or even a prerequisite in the permitting process for solar and wind power projects. At least fifteen industrial-scale battery storage facilities will also be connected to Finland’s electricity grid in 2024, says the network operator Caruna².

Hydrogen provides an even better solution than batteries for storing large amounts of energy and for further refining energy. Hydrogen is a carbon-free energy source, and only electricity and water are needed to produce it. This renewable and emission-free, so-called “green hydrogen”, can be used in the production of raw materials, as a fuel for transport and in industry. Chemical production, heating, energy distribution, transport on land and at sea, among others, can all make versatile use of hydrogen³.

There have also been smaller, more mundane developments in the renewable energy value chain. Combining agriculture with solar energy production, the so-called agri-PV (“agriculture photovoltaics”), is a practical example of a simple insight. In order to utilize arable land and reduce water evaporation, solar panels can be installed on top of crops so that crops can be grown, or animals grazed underneath. The shade of the panels creates a microclimate under the panels, and the installation can thus contribute to reducing water loss, for example, in the scorching heat of southern Europe.

The general advice now in the field of energy is to “electrify everything you can” and do it specifically with renewable energy. Indeed, renewable energy is currently cheaper in terms of production costs than energy produced from fossil energy sources⁴. Electricity prices, on the other hand, are lower than in the year 2022 “electricity crisis” caused by world events, but higher than before⁵. Korkia expects the profitability of renewable energy plants to remain at a good level.

In recent years, Korkia’s funds have invested in the biggest bottleneck of renewable energy, quality renewable energy projects, and we already have invested in eight target countries. The strong growth of renewable energy sources is rapidly increasing their share of total energy production from 25 % to 35 % (2022 vs. 2025)⁶. With us, you can invest in this great energy transformation of our era.

Korkia Renewables & Energy Infrastructure LP fund is our sixth investment instrument in renewable energy. The fund invests in solar and wind power and, especially now, also in energy storage, such as battery and hydrogen projects, and agriculture photovoltaics. The fund is aimed at institutional investors and wealthy, advanced retail investors. The Fund’s development pipeline employes 100 energy and investment professionals.

Investment in financial instruments always involves risks. Past performance is no guarantee of future results. Targeted returns may not be achieved and the money invested may be lost partly or totally.

¹Aurora European Battery Market Attractiveness Report, 2nd edition, 2023

²https://caruna.fi/ajankohtaista/sahkovarastot-yleistyvat-carunan-verkkoon-liitetaan-ensi-vuonna-ainakin-15-akkua

³https://www.liebreich.com/the-clean-hydrogen-ladder-now-updated-to-v4-1/

⁴IRENA, Renewable Power Remains Cost-Competitive amid Fossil Fuel Crisis, 13 July 2022

⁵Statista, Average monthly electricity wholesale prices in selected countries in the European Union (EU) from January 2020 to August 2023, 7.9.2023

⁶IEA, News, 08 February 2023

WRITER

Jussi Lilja

Executive Vice President, Fundraising and Client Relations