Fleet electrification to increase as marine battery technology becomes commercially viable

Fleet electrification to increase as marine battery technology becomes commercially viable

28/11/22

Of the more than 400,000 commercial vessels around the world today, approximately 575 of these are electric and hybrid currently. However, this all looks set to change with sector specialists predicting we will see the number of electric and hybrid vessels increase dramatically in the next few years.

As demand to reduce emissions from shipping accelerates, the utilisation of batteries has proven to be both a functional and commercial solution for short-distance, high frequency vessels, with its application into larger vessel classes growing.

Trends in maritime batteries and current technological readiness suggests there will soon be a dramatic uptake in electrification thanks to its ability to delivery strong commercial value while also reducing GHG emissions.

Hans-Arne L'orange, Head of Metals & Minerals, Clarksons Securities said:

"Looking at the maritime industry from the early days, the trajectory of offshore has always tended followed that of onshore. In shipping, we have seen and continue to see electrification trends and developments mirroring those which have already taken place to reduce emissions in onshore. The development of relevant technologies means that we are now at a stage where vessel owners can obtain improved economics and reduced GHG emissions via batteries. As vessel owners continue to look to reduce emissions, the size of the battery-driven fleet is expected to increase exponentially. This is supported by a large orderbook which now accounts for 70% of today's fleet."

Clarksons Securities recently hosted a webinar in conjunction with Brent Perry, CEO, Shift Clean Energy, which looked at trends in maritime batteries and current technological readiness. Based out of Vancouver, Canada, Shift Clean Energy develops energy storage solutions that support decarbonisation goals. He said:

"More than 80% of new builds are now being designed with ESS and we are seeing vessel demos replaced with fleet rollouts. Here at Shift, we have seen incredible growth in recent years because of two fundamental elements. Firstly, we deliver financial payback to clients, usually at around the three-year mark, meaning clients are in a position to make money doing something innovative. And secondly, the GHG reductions which our technology makes possible is steering clients towards futureproofing their fleets in line with the industry's 2030 and 2050 goals."

Perry believes the maritime market has recently achieved the tipping point in preparing to and adopting battery technology globally.

He believes that landmark projects such as Aurora, the world's largest battery ferry, have helped to highlight battery technology as a commercially viable option. Originally built in 1991, this 111-metre ferry was retrofitted with 640 batteries by Shift Clean Energy in 2017. The ferry, which operates a 4km route between Sweden and Demark and carries 7million passengers, 1.3million cars and 450,000 trucks per year, is now 100% carbon-free, saving 1.56Mt GHG emissions per year.

Clarksons Securities understands that options around decarbonisation can be confusing for owners looking to futureproof their fleets. However, what is clear is that the electrification of vessels will feature firmly as part of these efforts. Our specialists are battery minerals experts with extensive knowledge, experience and coverage of the sector spanning several recent transactions. Devoting their efforts consistently towards the segment for more than eight years, they have a proven track record and placing power which is appreciated by long-term partners. Our Investment Banking team has a core focus on supporting companies developing and producing battery minerals within all aspects of financing. While the Research team offers extensive coverage of both equity and credit on relevant companies to provide investors with a broad base of information to tailor their portfolio's battery exposure. Furthermore, our specialised team of battery-related research analysts follow the key minerals needed for battery production and the green transition.

Contact Clarksons Securities