Creating energy from new sources such as wind, waves, fuel cells and biomass is all very well but it’s only one part of the solution to the world’s looming energy crisis.
But there’s an even more enticing opportunity I want to talk about today. You see, just as important as creating energy is a more efficient use of the energy that we are able to produce.
A vast amount of energy is wasted each day. From simple things like leaving lights on unnecessarily, to the flaring away of gas and to leaky electricity grids. Energy is also wasted because it cannot be stored, and this is providing an opportunity for companies like Sirius Exploration (ticker: SXX).
Traditional power stations produce electricity when it is needed. But wind farms are unable to match supply with demand in the same way. Put simply, the wind might blow during the peak hours of electricity demand, but a nice fresh north-easterly may strike up in the middle of the night. On the wind farms the windmills will turn, but how can the power that could be generated be stored until everybody is boiling their kettles at breakfast time?
Searching for the energy storage solution
Energy storage is a major challenge and there are already a number of possible answers. One is ‘pumped hydro’. In this method, surplus electrical energy is used to pump water uphill, so that it can later fall and power a hydroelectric generator.
Another early form of electricity storage was the flywheel. Here surplus power is used to set a wheel spinning, and this rotational motion can be converted back to electricity later on. Batteries and super-capacitors are also means of storing energy, and all of these technologies are the subject of much research work around the world.
But Sirius Exploration is interested in another type of storage…
Sirius deals specifically with wind energy. It’s involved with compressed air storage using underground caverns. Again the basic concept is simple enough. Find a huge hole in the ground, force air into it and cap it. Later just release the cap, the air will come rushing out and can be used to power a generator. As with pumped hydro and the flywheel this essentially stores not electrical power but the means to make it. It could transform the economics of wind energy which hitherto has always required some form of subsidy in order to be price competitive.
Sirius, which already has mining assets in China and Macedonia, has taken a majority stake in Dakota Salts. It’s the latter that is eyeing up a project that is about more than just the storage of compressed air.
An ingenious way to create the space… and make money from the contents
First of all it must create those large holes underground. In order to do so it is planning to mine salt and potash. It could not be in a better location. Dakota Salts controls five thousand acres of the vast Williston Basin which runs into Alberta, Sakatchewan and Manitoba and already supports the world’s largest potash producer, Canada’s Potash Corporation.
Potash Corporation has been a popular share in recent years thanks to the world’s increasing demand for fertilizer of which potash is a principal ingredient. So Dakota Salts is confident that it can sell any potash that it is able to produce.
But as a mining project it has two other advantages. The first is that there is no doubt of the existence of large salt and potash deposits, and the second is that these can be recovered through the well established solution mining technique. This involves the injection into the mine of water in which the salt or potash dissolves, and then sucking the solution out.
Finally, there is a third dimension to this ambitious plan. Aside from the possibility of using the underground caverns for compressed air storage, there is also the chance that they could be used to store gas. Subterranean salt caverns are superior to depleted oil reservoirs or aquifers for the storage of gas. They can allow gas produced during the summer months to be saved for use in the winter. Already one gas pipeline runs through North Dakota, but there is a possibility that a new pipeline taking gas from Alaska to the industrial state of Chicago could run past the new gas storage facilities.
So this is an intriguing and neat proposition. However, with a share price of 1.38p which values Sirius at just £1.7m, there is clearly a deal of scepticism that the plan can be realised. This is one share I would like to follow for a while before considering an investment.
But one thing is for sure. The whole business of energy storage is an important theme and holds real potential for investors.
Good investing,
Tom Bulford
For The Penny Sleuth
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