He's a multibillionaire who ranks among the wealthiest people on the planet. He loves electric vehicles. And he wants to revolutionize how energy is stored. Based on that description, you might be thinking that I'm talking about Tesla(NASDAQ: TSLA) CEO Elon Musk.
But actually, I'm referring to Bill Gates.
Gates is investing in a new venture and some people are now asking whether Gates could beat Musk and Tesla at their own game. In one key way, Bill Gates just might.
Image source: Getty Images.
Getting rusty to generate electricity
Gates founded Breakthrough Energy back in 2015 with the hope of speeding up the reduction of carbon emissions. The organization doesn't just advocate for policies to further that goal; it also invests in companies that can help make it happen.
Form Energy is a private start-up that is backed by Gates' Breakthrough Energy. The company's mission is "to reshape the global electric system by creating a new class of low-cost, multiday energy storage systems." It's working hard to do just that -- and in an intriguing way.
The Form Energy battery system is based on reversible rusting. When the battery discharges electricity, it takes in oxygen from the air to convert iron to rust. When it charges, the battery converts the rust back into iron and emits oxygen.
This approach could be about to hit the big time. Northern States Power, which is owned by Xcel Energy (NASDAQ: XEL), recently won regulatory approval to hire Form Energy to build a 10 megawatt/1,000 megawatt-hour iron-air battery system that will be installed on five acres near Becker, Minnesota.
Move over, Musk?
Tesla is investing in a major way in lithium-ion batteries. The company already has a battery factory in California and is building a second one in China. It also plans to spend $375 million to build a new lithium refinery in Corpus Christi, Texas.
Musk tweeted last year that "lithium batteries are the new oil." With countries scrambling to reduce their dependence on oil in favor of renewable energy sources, Musk's words could be more accurate than he thought.
The cost of storing energy with Form Energy's iron-air batteries is less than 10% of the cost of lithium-ion batteries. There's also another big advantage. Form Energy's batteries can deliver electricity for up to 100 hours, compared to less than eight hours for most existing batteries.
Iron is also readily available in the U.S. and throughout much of the world. Lithium, on the other hand, presents some challenges. Over half of the world's estimated lithium is located in just three countries -- Bolivia, Chile, and Argentina.
There is one key downside to Form Energy's iron-air batteries, though: They don't recharge quickly. This could limit the use of the batteries where fast recharging is important such as in electric cars and smartphones.
Betting on batteries
Can retail investors buy stock in Form Energy? Not at this point. The company hasn't announced any plans to list its shares on a public stock exchange. You can't invest in Gates' Breakthrough Energy, either. However, there are ways to indirectly bet on Form Energy's battery technology.
One is to buy shares of ArcelorMittal(NYSE: MT). The giant steelmaker has invested $42.5 million in Form Energy. The two companies also signed an agreement to explore the potential for ArcelorMittal to supply direct reduced iron for Form Energy's batteries.
Most of the other backers of Form Energy aren't publicly traded. However, Italian energy company Eni(NYSE: E) is an exception. So is Australian financial services company Macquarie Group (OTC: MQBK.Y), although U.S. investors can only buy the stock over the counter. Both Eni and Macquarie participated in several rounds of funding for Form Energy.
You could also invest in the stocks of companies that stand to benefit from Form Energy's batteries. Xcel Energy especially stands out. In addition to the Minnesota project, Xcel plans to build a Form Energy battery system in Pueblo, Colorado.
Southern Company(NYSE: SO) is another possibility. Its Georgia Power unit is deploying a 15 megawatt/1500 megawatt-hour iron-air battery system built by Form Energy in Georgia that's expected to come online in 2026.
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Macquarie Group and Tesla. The Motley Fool has a disclosure policy.
