Energy storage stocks rides the renewable energy wave - The Average Joe

    Energy storage stocks rides the renewable energy wave

    Victor Lei — Head of Research

    November 11, 2021

    energy storage

    November 11, 2021

    One of the biggest problems with solar/wind energy is that when the sun stops shining and wind stops blowing — energy stops flowing. The answer (and better solution for Homer): energy storage.

    Can’t have solar or wind without energy storage

    Biden wants solar to make up 45% of US electricity by 2050 — an ambitious goal from its current 4%. And the government sees energy storage solutions as a key part to achieving that target.

    Energy storage remains a small side business for many of the larger battery companies (ie. LG Chem and Panasonic). But that might finally be changing.

    In 2019, utilities providing public energy infrastructure began adopting energy storage at a rapid pace — driven by increased solar adoption. According to research firm, Wood Mackenzie Power & Renewables:

    • Global energy storage is expected to triple in 2021 — with more storage deployed in 2020 than the prior 6 years.
    • Expects the US to add 5x more storage in 2025 than in 2020.

    Who’s leading the industry?

    One of the largest and leading pure-play storage companies — Fluence Energy (NASDAQ:FLNC) — went public in 2021. The company was a joint venture between industrial giants, Siemens and AES Corporation — launching in 2018 after years of research. Fluence Energy sells:

    • Physical components to store energy and the operating system to manage it.
    • Bidding software to optimize energy usage and maximize sales by selling energy back to the grid.

    56% of its sales comes from the US with global customers in the EU, Asian and Latin American markets. While the industry is still early, Fluence’s numbers are no joke. In 2020, the company did $561M in sales — up 509% from 2019.

    Investors: Speculative energy storage plays

    Like other emerging industries, there’s no shortage of more speculative, smaller companies disrupting the industry with their own tech:

    • Stem (NYSE:STEM) — a smaller competitor to Fluence — was the first pure-play energy storage company to go public ($36M 2020 sales).
    • Eos Energy (NASDAQ:EOSE) — an even smaller competitor — went public via SPAC in 2020 ($0.2M 2020 sales).

    While the industry is growing, these companies have a tough road ahead. Supply chain issues across the market are also impacting energy storage companies — as their hardware is often manufactured overseas.

    Once these temporary issues are cleared, with governments favoring renewable energy policies and the transition just beginning — “the best is definitely yet to come“.

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