| Kit Winder | 3 September 2020 |
Why energy storage is the next big thing
Houses, prices, populism – boom
Given we are in a deep recession, how can we be having the biggest property rebound in years? Look first to ten-year government bond yields. They are down to 23 base points – part of a 40-year trend of compressing yields. Plus low interest rates boost what people can borrow. The more people can borrow, the higher prices are. And a dearth of new supply is pushing prices up higher… beyond want people can afford. That is a polarising political issue.
| | In today's Exponential Investor…
- Why the mainstream media is wrong about California
- How mega-batteries are already solving the problem
- Why politics matters to the energy transition
You might've noticed that California has been having a tough time of it this past week or so.
It's been held up at the Republican convention as an example of a failed Democrat state.
The issue most recently has been blackouts, which many are blaming on the huge shift to renewables.
California has been leading the charge on this front for a long time, and for those who seek to criticise the transition for whatever reason, the blackouts have provided some good fodder.
But as I'm sure you all know already, renewables do not stand up on their own two feet.
California has achieved something remarkable over the last decade. It has cut coal from 2,300 GWh of generation to under 300GWh.
Solar has gone from 90GWh to 26,000GWh in the same period.
What's interesting though is that total electricity demand has been flat over the decade. Around 200,000GWh has been produced per year since 2010, while the Californian economy (GDP per capita) has grown at an annual rate of 2.5%. The economy has grown, but without growing its contribution to climate change. An example to us all, for sure.
Anyway, such an incredible increase in solar production does need backup though– and it's in this regard that perhaps California hasn't done well enough.
You may be interested in The No. 1 Investment for 2020 MIT Scientists call this technology "a technological paradigm shift, akin to the shift from typewriter to the computer."
Market research firm IHS Markit forecasts it grow 946,000% in the months and years ahead…
Bill Gates has taken a $650 million position in this technology…
And believes it will be worth "10 Microsofts…"
It could outperform every investment out there in 2020… and beyond.
Capital at risk. Forecasts are not a reliable indicator of future results. |
For a state that produces over 60% of its electricity from solar and wind, and used around 500GW per day, to have only 500MW of battery storage across the whole state seems quite clearly insufficient.
Steve Berberich, the chief executive of the California Independent System Operator, told the Financial Times that as much as 15,000MW of battery storage would be necessary to help California meet a goal of eliminating CO2 emissions from the power grid by 2045, replacing gas-fired generation in the evening hours. That's a near-3,000% increase.
But already reports are emerging of batteries forming the backbone of the state's response. In fact, just last week the world's most powerful battery was unveiled in San Diego.
This is why I remain very keen on the sector. Energy storage is the forgotten child of the energy transition, but not for much longer I don't think. It's becoming necessary, rather than merely helpful.
Another key date coming up
In the US specifically, the election is becoming quite a crucial one for energy transition investors.
Joe Biden is all about storage, electrification and renewables as part of his commitment to get the US to net-zero by 2050.
His focus, led by the Advanced Climate Research Projects Agency, will focus on the following:
- Grid-scale storage at one-tenth the cost of lithium-ion batteries
- Small modular nuclear reactors at half the construction cost of today's reactors
- Refrigeration and air conditioning using refrigerants with no global warming potential
- Zero net energy buildings at zero net cost
- Using renewables to produce carbon-free hydrogen at the same cost as that from shale gas
- Accelerating the deployment of electric vehicles
- Decarbonising industrial heat needed to make steel, concrete and chemicals, and reimagining carbon-neutral construction materials
- Decarbonising the food and agriculture sector, and leveraging agriculture to remove CO2 from the air and store it in the ground
- Capturing carbon dioxide from power plant exhausts followed by sequestering it deep underground or using it make alternative products
- Decarbonising aviation
- Accelerate the development and deployment of carbon capture sequestration technology.
His campaign website says, "To accelerate this progress, President Biden will make the largest-ever investment in clean energy research and innovation."
It's actually very interesting to see the areas of focus according to Biden.
There's another point in there, which I found fascinating. Biden promises to: "With our partners, offer Belt and Road Initiative countries alternative sources of development financing for lower-carbon energy investments."
Meanwhile, to paraphrase, Donald Trump wants to drill in the Arctic and save US coal jobs.
While I'm obviously not interested in telling anyone how to vote, this is an election we can watch closely for financial reasons. If Biden wins, picking the right stocks to benefit from a boom in the American energy transition could be a seriously fruitful trade.
That's something we'll definitely be working on over the next couple of months over at Exponential Energy Fortunes, James Allen's wonderful investment service picking the best stocks for the energy transition.
So keep Tuesday 3 November in your diaries. It could be big.
What California tells us is not that renewables give you more expensive and inconsistent electricity. What it reminds us of, instead, is an eternal truth. That there is no silver bullet, and things still need to be done right.
Renewables without storage is like an office without backup power. You might not need it all that often, but you're in trouble if you don't have it.
And it chimed with a recent article by my colleague Will Dahl, also behind the paywall sadly, in which he studied the movements in gun-related stocks in the years since Trump's victory.
He highlighted how some of them have racked up 500%+ gains during The Donald's term, and so perhaps we need to be aware that green energy stocks could be given a powerful tailwind under a Biden administration.
It's certainly worthy of our attention.
All the best for now,
Kit Winder,
Editor, UK Uncensored
PS Green technologies are not the only ones on the cusp of a big decade. Like it or not, 5G is the next upgrade coming to your phone, your home, or your office if you're in one. Why? Because it's faster than what came before. It's an improvement.
I'm no expert on 5G though, so if you want to find out more about that you'll have to click here to find out more.
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