Why we invested in Polar Night Energy
Recently Contrivance Ventures facilitated an angel investment in Polar Night Energy, a provider of underground heat energy storage solutions based in Tampere, Finland.
Shift towards renewable energy sources
In December 2019 the European Union launched a major climate plan, the European Green Deal, outlining a path to becoming the first climate-neutral continent by 2050. This ambitious goal is expected to come at a high cost, with the EU forecasting 25% of its overall budget spent on “climate mainstreaming” across all EU countries. Within the EU, there is a huge discrepancy in consumption of energy from renewable sources with Iceland and Norway leading the way (c80% of total energy consumed in 2019 is from renewable sources) to Luxembourg, Malta and Netherlands lagging behind (<10% of total energy consumed in 2019 is from renewable resources). Likewise, there is a huge gap between Europe and other continents such as Asia, North America and Africa.
Increased dependency on solar and wind
This discrepancy is mainly explained by access to different renewable sources. Historically, hydropower has been the most popular renewable energy source. In the past two decades, however, we have seen a strong shift from hydropower to solar and wind energy providers mainly due to recent discussion around trade-off between hydropower generation and irrigation use. As a result, renewable energy generated from solar and wind sources has increased from 1% in 2000 to 30% in 2020 of total renewable energy, respectively. We expect the shift towards solar and wind energy to accelerate going forward.
Challenges of solar and wind energy sources
However, solar and wind energy does not come without challenges, and the biggest one is intermittency. Humans have little control over energy supply from such sources, which often differs from energy demand. In many regions the power grid is centralized, top-down and unable to utilize that energy supply.
There are two solutions to this problem: 1) Makeover of the existing grid to a new decentralized, bottom-up one, able to accommodate energy from different sources and redirect it in an efficient way; and 2) Energy storage solutions, which are often decentralized (not connected to the grid) and with limited capacity.
1) is already underway in some regions but will take a lot of time and capital to be implemented. 2) sounds way easier than it is and comes with multiple limitations such as high cost, limited storage, efficiency loss and most importantly, additional CO2 emissions. As Bill Gates rightly put the problem in his blog, “It is surprisingly hard to store energy”.
Here comes Polar Night Energy
The team at Polar Night has developed and patented a unique technology, which converts electricity to heat and stores it in an underground container surrounded by high-temperature sand. An average industrial complex and residential household use 30% of energy in the form of electricity and about 70% in the form of heat. The company’s solution could be customized to consumers’ needs and is available for residential homes, industrial complexes, and whole districts. The pilot project is a 3MW storage system in Hiedanranta, Tampere, which is connected to a local district heating grid and provides heat to a couple of buildings already.
There are a lot of reasons why we like Polar Night Energy and here are the main ones:
1. Unique technology — The technology developed by the team is unique in many ways and here are a few numbers to confirm this statement — storage capacity up to 20 GWh (way above storage limitations of other solutions), efficiency up to 99% (no energy loss in the process of storage) and investment cost of < €10/kWh (highly scalable solution).
2. Passionate team — Tommi, Markku and Liisa have very strong technical backgrounds backed by multiple degrees specializing in Energy Storage Solutions and Hydraulic Turbine Monitoring. Most importantly, they have been working on the project for the past 8 years united by the mission to develop a self-sufficient and cost-effective storage solution.
3. Big market — There is no question that the market is big and there is a high demand for such product, which solves a real consumer, industrial and regional problem. The future is renewable and we are all moving slowly towards it.
We at Contrivance Ventures are very excited to be part of Polar Night’s journey and look forward to what the future holds for the team! If you are passionate about the topic and want to learn more, feel free to reach out at info@contrivanceventures.com or oushatova@contrivanceventures.com.
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