Renewable Energy

The Best Energy Storage Play for Your Portfolio

Readers often ask me why I like technology stocks so much.

The answer is easy: Technology companies have some of the fastest-growing stocks in the market. And investors who are after outsized returns should have them in their portfolios.

One of my favorite tech sectors these days is renewable energy. And within that sector, energy storage is one of the best industries you can invest in.

Back in 2010, the total amount of battery energy storage in the U.S. was 59 megawatts. Compare that with 2020, when 3.5 gigawatt-hours (or 3,500 megawatt-hours) of battery energy storage capacity were installed.

That’s a 5,832% jump. And it is more than the total number of megawatt-hours that were powered up in the six years prior.

This year, the U.S. will add almost 12 gigawatt-hours of storage. By 2030, we could see close to 100 gigawatts of new energy storage come online.

Energy storage has grown for nine quarters in a row. But it’s still early for the energy storage sector.

Its big growth spurt is just getting started…

Back Up With Batteries, Not Generators

In recent years, more and more homeowners have experienced power brownouts and blackouts. And to keep this problem from happening again, many are turning to battery storage.

They’re ditching backup generators. These are noisy, require constant refueling and need periodic maintenance.

And the pandemic has only increased storage demand. Work-from-home employees need reliable electricity to stay online.

California has been plagued with brownouts and blackouts. And the deep freeze in Texas this past winter underscored the state’s need for battery backup power systems.

These systems provide uninterruptible power for hours or days at a time, depending on their size.

Lower costs continue to be a major driver of energy storage. And prices are going lower still.

Today, lithium-ion battery cell costs are about $137 per kilowatt-hour.

In just two years’ time, that number is expected to hit $100 per kilowatt-hour.

It’s all about scale. As the volume of energy storage systems builds, prices are destined to drop.

Best Storage Investments

I’m a pick-and-shovel guy. And lithium miners are a great way to play the battery storage space right now.

If you don’t want to choose between the numerous lithium miners out there, another way to invest is to spread your bet across many lithium stocks.

And one of the easiest ways to do that is via the Global X Lithium & Battery Tech ETF (NYSE: LIT). This exchange-traded fund invests in miners, refiners and lithium battery production.

It has 40 holdings. And over the past year, its shares have risen more than 127%.

But as I mentioned earlier, these are still very early days for energy storage. Every investor should consider this fund for their energy portfolio before the industry truly takes off.

Good investing,

Dave

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