To be realistic, renewable energy is not a perfect solution for all energy needs.
To be realistic, renewables sometimes cost as much as what I’ve called nature’s batteries – compacted carbon from plant and animal life that we call oil and gas. These “batteries” are already highly condensed sources of natural energy.
Unfortunately, nature’s batteries have a downside; they emit elements like carbon and compounds like methane which are significant contributors to greenhouse gases. On the other hand, don’t be fooled by those who keep saying renewable energy is “free energy”.
It costs money to build solar panels. These panels also come at a significant environmental cost, as the earth must be ripped up (using fossil fuels in many cases) just to obtain the materials needed to build the solar panel. Then there are maintenance costs. Finally, what do we do with these monstrosities once they reach the end of their lives? Some parts can be recycled, of course – at some cost for the energy needed to recycle them. Others must be landfilled or otherwise destroyed. This can still emit fumes as toxic or more toxic than carbon.
The same is true for wind energy. These massive leviathans are composed of raw materials that must be mined and then manufactured, using processes that often require significant fossil fuel energy. Since large wind farms create severe noise pollution, they are often placed in remote locations that require transportation by fossil fuels and, often, road construction using petroleum-derived asphalt. Wind farms are also not maintenance-free. Regular maintenance is essential.
Add to that the hundreds of thousands of bird and bat deaths attributable to wind power, the fragmentation of animal habitat, the high cost of construction, the even more than solar question of what to do with some of the materials that are in the turbine blades and of course the intermittency of the wind in many places. We can see, looking from start to finish, that the costs, both in dollars and in potential devastation, can be much higher than advertised. Clearly, there are pros and cons to the rush towards what are too often mistakenly called free renewable energy sources.
However, one company has brought the dream one step closer to reality.
Enter FREYR Battery listed on the New York Stock Exchange (NYSE: FREY)
If you can locate your battery production plant as close as possible to where the cells and materials needed for production are transported from, that brings you closer to the ideal.
If you can use energy that doesn’t create carbon, methane, or other dangerously polluting output to power your manufacturing process, that’s one step closer to your ideal.
If you operate in an area that has been producing electricity in this clean way for over 100 years and has the infrastructure in place to ensure continuity – all at a very low cost – this brings you a lot closer.
FREYR (the name is that of a major god in Norse mythology associated with fertility, prosperity, virility and good harvests) does all of the above. It chose to set up its first manufacturing facility in central Norway, in a town called Mo i Rana. Unfortunately, when I last visited there, FREY was not yet well enough established for visitors. I have an open invitation to visit FREYR on my next visit there, and I promise to report my findings when that happens.
For those who have never been there, you might think it is a small market town covered in snow most of the year. Nothing could be further from the truth. Mo i Rana is a city with a hundred years of industry already present. Billed as “the green industrial capital of Norway”, it has many restaurants, cafes and shops. The mile-long main street is free of snow and ice in winter thanks to excess heat from local industry.
Because it’s on the sea, the Gulf Stream pulsates right next to Mo i Rana, so the climate is more temperate than you might think. This fortuitous climate has made it much easier for FREY to attract top engineering and manufacturing talent, not just from Norway or Europe, but from around the world.
Here’s FREYR’s plan of attack – what he plans to accomplish and how
FREYR’s plan is to gradually reduce carbon emissions from start to finish, from mine to recycling, from the typical level of a battery manufacturing plant to just 20% of its competitors!
Currently, the first raw materials will mainly come from Asia, particularly China, just like a large (too?) part of the world today. But the plan is to source supplies from much closer quarters and from allied neighbors or longtime friends.
How does FREYR plan to achieve these objectives?
First, by sourcing as many raw materials as possible from their closest Nordic neighbors. Finland, Sweden, Norway and even Denmark can provide some of the metals and elements needed. Norway itself has copper, cobalt, nickel, graphite and aluminum, and there is much more in the rest of the Nordic countries.
Each of the above metals are essential for home and commercial electricity storage of utility plant-sized battery energy storage systems (BESS), and for electric vehicles ((EV)) .
All Norway lacks of the “Big Six” needed for battery energy storage systems and electric vehicle batteries is lithium. It’s not a major producer of any of these, but it already has enough for the proof of concept. (Also, very interesting research is currently underway to extract lithium from the oceans, where it is more abundant, but so far it is impossible to recover it.)
Then, using hydroelectric and wind power for the electricity needed to manufacture their products. Norway is blessed with the massive runoff of thousands of waterfalls. Over 97% of electricity in Norway is produced by hydroelectricity. It’s the cleanest renewable resource, and Norway has it in abundance. In Vestlandet, the West Country where FREYR is located, you’ll be hard pressed to drive or cruise a mile without seeing at least one mighty waterfall.
Finally, Norway is currently building five of Europe’s largest wind farms, two onshore and three offshore, with 36 more planned. Intermittent? No. The wind in the North Sea and the Norwegian Sea is quite reliable for much of the year!
FREYR has already signed joint venture and supply agreements with companies such as Glencore, the world’s largest mining and metallurgical company in terms of turnover. FREYR also has relationships with Itochu, one of the world’s largest trading companies, as well as a recently signed $3 billion supply agreement with Nidec Corp., the world’s largest manufacturer of high-efficiency electric motors. .
Very large, very old, very experienced companies have chosen to do business with FREYR.
But is FREYR worth buying right now?
I think so. I bought another renewable energy company, Lithium Americas Corp. (LAC), for our Investor’s Edge Growth and Value Portfolio at a similar stage of development last year. As more investors became aware of LAC’s potential, the stock price doubled during a “not particularly wonderful” market. I see the same potential with FREY. It’s just not widely known, but I expect big things as more and more investors find out about this company.
Seeking Alpha gives FREYR a quantitative rating of “Hold” – but also ranks it (barely!) in the top third of all companies in the electrical component and equipment industry. Not bad for a company that is still in the development phase and has no revenue yet.
Seeking Alpha also rates FREYR in terms of profitability – since there are no profits – and gives it an average rating for evaluation and reviews. But take a look at the two areas that are most important to me for what I consider to be a booming company still in the development phase. Seeking Alpha gives FREYR an A+, the highest rating, for Growth and an A+ for Momentum.
There’s nothing to do with the usual headings of earnings, dividends, etc., but I’d like to highlight FREYR’s profile compared to some of Seeking Alpha’s peer companies:
Analyzing all this and taking a closer look, I personally chose FREYR hands down.
Are there any risks associated with an investment in FREYR? Of course there are. The usual risk is there, as with any business, that things don’t work out and you sell for less than you paid. But when it comes to the company-specific risk often associated with early-stage companies, I don’t see any significant risk.
FREYR has $488 million in cash, has agreements with some of the world’s largest companies and has the full support of the Norwegian government. Also, more recently, because they are planning a move to the United States, they are in line to receive designated funds under the bipartisan $1,000,000 Infrastructure Act approved in November 2021.
I’ll end with this graph of FREYR’s year-to-date performance against the S&P 500 (SP500) over the same period:
I see FREYR as a company whose management and employees are not yet fully in place. Of those who are, these are the the best of the best, highly respected in their field. I see a company that is ready to become a real force in its industry. And I see a company at the forefront of a unique approach to meet an important need.
I buy a FREYR battery.
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