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11 February 2021

Crowdfunding pours into RheEnergise’s high-density hydro

UK start-up RheEnergise reappeared on our radar this week, following several appearances in the mainstream media and with an outrageously successful crowdfunding effort on Crowdcube; it’s already raised seven times more than it had aimed for, 17 days ahead of its funding deadline. While much of this success can be pinned on the company’s technology, some credit must be attributed to the surge in influence of climate conscious retail investors.

RheEnergise’s technology adopts a process which is essentially identical to traditional pumped-hydro, allowing energy to be stored as gravitational potential in an upper reservoir, before its kinetic energy is harnessed as electricity when water flows through turbines down to a lower reservoir. At times of low energy demand, when there is excess renewable electricity supply, liquid is pumped up to the upper reservoir, allowing the entire system to act as a virtual battery for when the opposite is true. Through the process, pumped-hydro players including RheEnergise, are able to achieve round-trip efficiencies of around 83%.

It’s difference, however, lies in the fluid it uses. Instead of water, the company has developed a High-Density R-19 water-based fluid, which is 2.5 times heavier than water, with the addition of solid particles and a surfactant. The company claims that this mineral-rich fluid is inert, non-reactive and non-corrosive, meaning that it poses zero environmental risk.

The benefit of this increased fluid density is that turbines can generate 2.5 times more power for a given flow rate. This means that existing pumped-hydro projects could generate more electricity, or that smaller projects can be deployed to achieve the same result.

The RheEnergise route to market focuses on the latter and aims to capitalize on the abundance of hills – initially in the UK – rather than high mountains. Through heights of around 200 meters, the company aims to develop projects of between 10 MW and 50 MW capacity.

The company notes that in the UK, there are many more hills at 150 meters than at 375 meters. While pumped hydro is currently the world’s largest source of energy storage, the vast majority of its available sites have already been put to use.

While these projects will remain a size that is sufficient for grid connection, especially if collocated with other renewable generation projects, RheEnergise notes that 65% of pumped hydro costs are typically associated with civil engineering costs. Using a higher density liquid in projects that are 60% smaller, the company suggests that its technology could provide a levelized cost of storage that is 40% lower than that of lithium-ion batteries – placing it at around $90 per MWh. The reduced scale will also reduce the environmental impact of the project’s construction and will also allow a lead time of just one to two years, compared to the ten-year period that can often be seen in conventional hydropower.

With plans to bury Olympic swimming pool-sized storage tanks at both the top and bottom reservoirs, the technology also provides the potential to provide long-duration storage, without degradation, although incentivized revenue mechanisms will be required before this is economically viable in the UK – currently its technology is specified for between two and ten hours of storage.

The company claims that its technology will have a 60-year lifespan, and will almost be fully underground, allowing for communities to use the rest of the land to restore natural grasslands or plant trees.

RheEnergise has already identified around 700 sites across the UK where its high-intensity hydro projects could be hosted, including some smaller 10 MW installations at disused mines and quarries. In total, the company claims that there is potential for 7 GW of energy storage from high density hydro.

In theory, this could just be the tip of the iceberg. RheEnergise’s digital mapping analysis shows that there are around 9,500 UK site opportunities, 80,000 in Europe (largely concentrated in France, Spain and Turkey) and 160,000 in Africa. For Africa, the ability to use a non-water fluid also relieves pressure on its scarce water resources.

The UK is expected to need over 13 GW of energy storage by 2030, nearly all of which will be supplied by Lithium-ion batteries, according to Rethink Energy’s latest forecast. While Prime Minister Boris Johnson has pledged that all of the country’s homes will be powered by offshore wind in this timeframe, more than half of the country’s electricity demand – in industrial and commercial sectors – could be powered by alternative sources, including natural gas.

Beyond 2030, the UK’s decarbonization efforts will become more and more reliant on long duration storage to optimize the usage of its wind-power resources. With short-duration storage only, the maximum penetration that wind power can have into the power mix is little over 60%. With 24-hour storage capabilities, this rises to nearly 90%, while values greater than this would require storage of between 10 and 100 days to prevent an outrageous overbuild of wind power capacity.

In this space, RheEnergise provides a similar offering to technologies provided by the likes of EnergyVault, Gravitricity and Energy Cache, although investment in green hydrogen, which is also tapped to occupy this space, has started to gather momentum. Physical storage mechanisms, however, are currently set to be less expensive, and will allow green hydrogen to have a greater amount of penetration in sectors such as transport and heavy industry.

Stephen Crosher, CEO of RheEnergise, has stated the company’s plan to develop a 500 kW demonstrator project in 2022, with SSE, WelshPower, GreenCat Renewables and REG-Power acting as prospective customers. Off the back of the company’s current crowdfunding round, as well as £500 million it has received in grant funding, the company is aiming to build a defendable moat of intellectual property across its 6 integrated sub-systems, before developing its first commercial scale project in mid-2023. By 2028, RheEnergise is hoping to have deployed nearly 100 projects, with annual revenues hitting £27 million.

The ease at which RheEnergise has managed to pull in crowdfunding has been astonishing. Despite an initial target to raise £100,000, the company has raised more than seven-times that much, and still has 17 days left to raise more.

While RheEnergise’s concept for its high-density hydro is a solid one, the ability for it to exceed its funding targets so dramatically also points to a surge in activity from climate conscious, and independent investors.

The power of ‘Retail Investors’ shot into the fore several weeks ago, with reddit page Wall Street Bets upending the stock market through short squeeze plays on the likes of GameStop, AMC and Nokia to name a few. While the longevity of these price spikes was brief, there is no doubt that it has impacted the way in which large financial institutions look down upon millennial investors.

While this generation of investors only accounts for 7% of global wealth, access to zero-commission platforms such as Robinhood or Trading212 are accelerating the rate at which they are shaping a new-era for global investment, especially as their collective wealth continues to accumulate; it’s expected to more than triple by 2040.

According to Deloitte, some 87% of Millennials believe that corporate success should be measured by more than just financial performance – a metric which has been the focal point of investment within Gen X and Baby-Boomer investors. On top of this, climate change – even through Covid-19 – has continued to top the list of their concerns, above healthcare, employment and economic growth.

As this generation finds its feet and realizes the impact it can have on global markets, its focus will shift from simply disrupting Wall Street goliaths, to addressing the issues it considers the most pertinent. Companies like RheEnergise will do well to push its funding efforts into the eyes of these investors, who will be seeking a way to advance their finances, while simultaneously driving the transition to clean energy.