Tuesday, December 03, 2013

Sumitomo: Batteries Tucked Away

In July 2013, Sumitomo Electric Industries Ltd. (SMTOF:  OTC), a subsidiary of Japan’s industrial powerhouse Sumitomo Corp. (SSUMF:  OTC) , announced the sale of a special battery to Hokkaido Electric Power Company.  The battery, rated at 60,000 kilowatts, is a vanadium redox flow battery.  These batteries are unique in that the electrolyte is held in external tanks.  Pumps supply the electrolyte to a ‘flow’ cell where electricity is charges and discharged.  Sumitomo’s batteries are additionally unique by using vanadium for both electrode and cathode.  The electric reaction is accomplished simply by changing the valence of vanadium ions.

The configuration of the vanadium ‘redox’ battery makes for some interesting economies.  These batteries have a long charge/discharged cycle.  The life of the electrolyte is not restricted to the deep discharge problems of conventional batteries.  What is more the electrolyte is not subject to combustion problems.

By using Sumitomo’s storage solution, Hokkaido Electric will be able to receive as much as 10% more electricity from a solar power facility as well as smooth out the day-to-night fluctuations in the solar power source.  Installation is slated for 2014 and will take place over three years.

To be certain, the vanadium redox batteries are a very small part of Sumitomo’s overall business.  Indeed, the corporate web site for Sumitomo Electric Industries does not even mention the redox batteries.  The only mention of Sumitomo’s redox flow battery system is a small illustration entitled the ‘smart energy system’ that is tucked away in the company’s corporate brochure.

While Sumitomo might be a more substantial company, a position in the stock is not a stake in large-scale power storage.   The majority of its revenue is generated through the sale of wire and cable insulation.  That said, the company has been investing heavily in research and development in environment as well as infrastructure products. 

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.


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