28. April 2021 | 07:36 CET
VW, Silkroad Nickel, E.ON - Mega electricity storage, the next big thing
We all want clean electricity. Currently, we face the problem that some of the sustainable electricity "disappears" unused. The reason is that we cannot store it and so, hours of Gigawatt electricity go to waste.
Extensive electricity storage facilities are needed, such as the 300 megawatts Tesla has built in California. What hardly anyone knows - Tesla is planning the same mega electricity storage sales in the long term as its car division. In Germany, STEAG also wants to build a mega electricity storage facility with 250 megawatts, expanding to 500 megawatts. We, therefore, look at three stocks from this sector: VW, Silkroad Nickel and E.ON.
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ISIN: DE0007664039 , SGXE31916740 , DE000ENAG999
"[...] China has become the manufacturing capital of the World, and because of its infrastructure, expertise and capabilities, Silkroad Nickel has strategically positioned itself to partner with Chinese companies in the Stainless Steel and EV industries [...]" Jerre Foo, Corporate Development Executive, Silkroad Nickel
VW - Bidirectional batteries
VW wants to create a unique selling point in the field of car batteries. The Company plans to use bidirectional batteries by 2022. These can use the electricity not only for driving but also for a storage device that can also deliver the electricity again, for example, to the household. The idea is that the one's car just sits around most of the time.
But the Company is currently facing bad news. Deutsche Umwelthilfe (German Environmental Aid) has won access to the files on the VW emissions scandal from the Ministry of Transport. In addition, the chip crisis remains and it is feared that it could get even worse. As a result, the entire production is coming to a standstill.
So after the highs in March and the fantasy around electromobility, clouds are now appearing. Since Monday, the share has been falling and is still caught in the sideways range between EUR 214 and EUR 252.
Silkroad Nickel - Focused on growth
Silkroad Nickel published its 2020 annual report on April 15, and like almost all companies, Corona took a significant hit. Sales collapsed from around USD 15.5 million in 2019 to USD 0.5 million, as work was simply not allowed in Indonesia.
Things have been looking up since the beginning of this year. In January, cooperation with Ganfeng Lithium was agreed. Together, they want to exploit the e-mobility market. In March, the Company announced an offtake agreement with Tsingshan, probably the largest stainless steel producer in the world, for USD 90 million over the next 2 years.
The money is to be used to finance an RKEF smelting plant. Although this will cost USD 400 million, it will be refinanced within 2 years and is another step towards becoming a complete nickel producer. In addition, other plants have been established to take advantage of demand from the stainless steel and electric car markets.
Nickel is essential for battery construction. Not for nothing has Elon Musk called for more nickel to be mined.
Management is on an excellent strategic path, and with the new agreements, the Company should be on an upward trend in the long term, which should also boost the share price.
E.ON - In the wake of electromobility
As an electricity provider, electromobility offers many opportunities. E.ON is also in the local battery storage space by storing solar power. According to a press release, the Company expects further significant growth in e-cars in Germany. One can assume an annual growth of 24% until the year 2030. As a result, electricity consumption in Germany will continue to rise.
The share has been able to break out of the long downward trend and is currently trading above the psychologically important EUR 10 mark. One possible explanation is the decline in 10-year government bonds. Due to the high level of debt, the share can undoubtedly be described as sensitive to interest rates.
Another possibility is the dividend. It will be paid in May, and at just under 5%, it is one of the best shares in the DAX. It was probably the dividend that attracted the Norwegian pension fund. It now holds E.ON shares worth almost USD 464 million. Goldman Sachs has issued a price target of EUR 12.