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Falling Battery Costs Finally Able to Undercut Coal, Gas Generation

Critical mass is getting closer and closer…. Lithium-ion batteries are reaching critical cost-parity levels compared with traditional energy sources such as coal, oil and natural gas, recent analysis by Bloomberg New Energy Finance (BNEF) has found.

During 2018, batteries co-located with solar or wind installations and without subsidies, for the first time provided competition in the broad global market place. Grid storage installations are rivalling the competitiveness of coal- and gas-fired generation to provide ‘dispatchable power’ - the base-line electricity needed to cover for circumstantial and peak grid needs.

According to BNEF, the benchmark levelised cost of electricity (LCOE) for lithium-ion batteries has fallen 35% to US$187 per megawatt-hour since the first half of 2018. That figure takes the cost of lithium-ion battery storage 76% lower since 2012, based on recent project costs and historical battery pack prices.

The lower cost of grid-connected battery energy storage is opening a new window to opportunity for utilities to add renewables-heavy generation into their development plans.

Electricity demand is subject to pronounced intra-day peaks and lows, which were in the past met through traditional technologies such as open-cycle gas turbines and gas reciprocating engines. But these dated solutions are now finally facing serious competition from batteries, which can continuously discharge electricity from one to four hours.

While solar photovoltaic (PV) and onshore wind installations have won the race to be the cheapest sources of bulk renewable power generation in most jurisdictions, the encroachment of these clean technologies – including batteries – are now threatening the balancing role that gas-fired plant operators, in particular, have been hoping to play.

The BNEF data shows benchmark LCOE for onshore wind has tumbled by 24% since the first half of 2018 to $50/MWh. Similarly, the benchmark LCOE for PV has reached $57/MWh early this year, down 18% from equivalent figures a year ago.

We believe the rate at which lithium-ion battery-based grid energy storage costs are falling portends continued strong demand for the technology in new renewable applications. It will continue to drive higher demand for the constituent basket of energy metals critical to manufacture energy storage panels that wind and PV installations rely on to be relevant.

These findings only add to our strong conviction that we’ve created a robust investment case for shareholders of Cobalt 27. We are positioned as the premier investment vehicle in the electricity metals space, able to provide owners with exposure to energy metals. Moreover, we are continuing to build our unparalleled portfolio of assets, underpinned by physical cobalt, cobalt and nickel metal streams, royalties and interests in early-stage mineral properties containing cobalt, which we believe will spin-off value.

I welcome shareholders to get in touch with the team to discuss any questions or to get more information.

Anthony Milewski, CEO and Director of Cobalt 27

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