| | | Energy Storage Is Officially on the Grid for Investors | David Fessler | Energy and Infrastructure Strategist | The Oxford Club | | | These days, generating electricity from solar and wind is on the rise. But storing it for future use is "a horse of a different color," as my father used to say. Energy storage is the fastest-growing area of the energy sector. And it's time for investors to start paying attention. The energy storage space has seen torrid growth ever since the first commercial plants - about 3 megawatts (MW) of capacity - came online in 2013. In the first quarter of 2016, the number of energy storage plants grew a whopping 127% year over year. The U.S. base capacity hit 18.3 MW. Then, in the first quarter of 2019, deployments rose a blistering 232% year over year. Total installation capacity grew to 148.8 MW. Based on those rates, energy storage capacity could surpass 4.5 gigawatts (GW) in just five short years. That's a potential $4.8 billion market! | | Jumping On the Bandwagon This exponential jump has been driven by utilities' growing awareness of the benefits of storage technology. Over the last five years, prices have plummeted. And they are going to continue to drop as utilities scramble to install storage around their grids. Many utilities are pairing energy storage installations with either wind or solar farms. But some are also adding them as stand-alone installations. And we're not talking about just battery storage. The size and variety of energy storage technologies have developed immensely over the last decade. What were once science projects are now coming to fruition. Though the federal government has been slow to invest in research and development, many states have passed legislation. California, Massachusetts, Maryland, New Jersey, Nevada and New York have specific incentive programs for energy storage. And more states are joining the cause. In just the second quarter of 2019, eight states passed some form of energy storage law. New York in particular is throwing money at energy storage. Its Energy Research and Development Authority has set aside $280 million for storage projects. In Texas, a 495 MW energy storage project is set to come online in 2021. The renewable energy developer for the job, Intersect Power, is calling it "the world's largest battery system." Plus, an exciting project is underway in central Utah. The 1 GW project will consist of four different storage technologies: large-scale flow batteries, solid oxide fuel cells, renewable hydrogen and compressed air energy storage. Store These in Your Portfolio A recent poll of institutional investors suggests that energy storage is their top renewable investment sector. The participants were 103 pension funds. In 2016, they focused 2% of their investment portfolios on renewables. That nearly doubled in 2018 to 3.6%. By 2040, the world energy storage market is expected to hit 942 GW. That represents about $620 billion in investments, most of which could come from institutional investors. The long-term cash flows are extremely attractive to large pension funds. But a retail investor (like you) can get in on the action through pick-and-shovel plays. I favor battery stocks like Enphase Energy (Nasdaq: ENPH) and Tesla (Nasdaq: TSLA). Tesla says, "Demand for our energy storage products remains greater than our current production capacity." What a great position to be in. There's no question in my mind that energy storage should be part of your investment thesis. I have it as part of mine. Have a different opinion? I'd like to hear it. Send me your thoughts by clicking the comment button below. Good investing, Dave | | | | | | | | | | Matthew Carr | July 2, 2019 Who are the biggest winners and losers in the cannabis space? Find out here. Read More | | | | | | Anthony Summers | July 1, 2019 Healthcare has become one of the most politicized sectors of the market. But that may be a blessing in disguise for those seeking a bargain buy. Read More | | | | | | David Fessler | June 29, 2019 For years, U.S. insurers have ignored potential liabilities from coal. But the growing financial impact of damages from climate change is starting to hit home. Read More | | | | | | | | |
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