If you've heard it once, you've heard it a thousand times...
"The sun doesn't shine at night and it's not always windy."
To be honest, I've heard this so many times, I'm numb to it.
It's the obligatory “go-to” response for any individual who has an irrational aversion to integrating renewables into the global energy mix.
Of course the sun doesn't shine at night, and of course it's not always windy — but to deny that both solar and wind will play a significant role in the future of power generation is naïve.
I won't waste any time today going over the myriad of reasons as to why renewables are a lock going forward. Those who haven't figured that one out by now have no interest in availing themselves of one of the most obvious realities — and opportunities — in the world of energy today.
However, because there is still truth to the intermittency restrictions of both wind and solar, I am going to share with you today some new data that indicates what has long been considered an intermittency problem is turning into a multi-billion-dollar intermittency opportunity.
The Holy Grail
It's true: The sun will never shine at night, and the wind will never blow 24 hours a day.
However, with energy storage applications, solar and wind producers do have the opportunity to send juice to the grid even when their respective resources are not available.
With energy storage in place, excess renewable power can be generated during non-peak hours. And during times of peak demand, that power can be released, thereby adding further value to solar and wind producers.
So it's no secret that for renewables, energy storage has been the holy grail. And there are dozens of storage and tech firms out there tripping over each other to become the leader in what will ultimately be one of the hottest markets on the planet.
Solar and Wind on the Rise
Last week, Navigant Research published its latest market research report entitled, “Energy Storage for Wind and Solar Integration.”
In it, analysts wrote:
More than 1,300 GW of wind and solar energy are expected to come online in the next 10 years. This variable generation will create an unprecedented amount of instability on the grid – particularly in key markets within North America, Western Europe, and Asia Pacific. As grid operators adapt to increasing levels of variable generation on their systems, stricter connection requirements and narrower compensation schemes will prompt them to consider energy storage solutions.
Globally, the way in which variable generation is compensated is changing. Key markets are moving away from generous feed-in tariffs and toward feed-in premiums and other market signals to encourage the adoption of variable generation. Major markets for renewables — including Germany, Japan, and the United States — have enacted rules or legislation specifically to encourage the adoption of energy storage systems (ESSs) for the purpose of integrating variable energy sources onto the grid. Navigant Research forecasts that the installed capacity of energy storage systems for solar and wind power integration will total 21.8 GW from 2013 to 2023.
My friends, this represents a massive opportunity for a few key players including, but not limited to:
Dresser Rand (NYSE: DRC)
Active Power (NASDAQ: ACPW)
Enersys (NYSE: ENS)
GE (NYSE: GE)
Siemens (NYSE: SI)
There's another storage play on the horizon, too.
It's actually a common name these days, but the company isn't really known for being a potential player in the energy storage market outside of the transportation sector...
Tesla Motors (NASDAQ: TSLA), the company I hyped long before it even went public — and the company that helped me and my many readers make boatloads of cash this year — could prove to be a very lucrative under-the-radar play on storage.
Sure, the company will continue to grow and thrive in the electric vehicle market. It already has the best product in the marketplace, a remarkably loyal following, and a growth strategy that's so solid, it makes the major automakers look like amateurs...
But Tesla could soon prove to be just as successful in the energy storage space as it is in the electric vehicle space.
You see, a couple of weeks ago, solar leasing company SolarCity Corp. (NASDAQ: SCTY) announced that in 2015 it will introduce a bundled package of solar panels and batteries that will allow its customers the opportunity to utilize solar-powered electricity at any time, day or night.
And guess who's providing the batteries?
That's right... Tesla.
And if SolarCity meets its aggressive yet very realistic growth targets, Tesla could end up selling more batteries to SolarCity than it actually installs in its own vehicles. And that's just on SolarCity's growth.
Although SolarCity is pretty much the best bet in the solar leasing game, it's not the only horse in this race. And if Tesla's batteries prove to be a solid fit for solar leasing companies, it could easily become the “go-to” battery supplier for other solar leasing and solar installation companies throughout the United States.
We'll know more after SolarCity begins testing the new batteries. But because there's such a close relationship between Tesla and SolarCity (Tesla CEO Elon Musk is a major shareholder in SCTY, and SCTY's CEO is Musk's cousin), I have little doubt that this is going to be a major coup in the world of distributed generation...
And I'm not going to miss out on this action.
To a new way of life and a new generation of wealth...
@JeffSiegel on Twitter
Jeff is the managing editor of Energy and Capital and contributing analyst for the Energy Investor, an independent investment research service focusing primarily on stocks in the oil & gas, modern energy and infrastructure markets. He has been a featured guest on Fox, CNBC, and Bloomberg Asia, and is the author of the best-selling book, Investing in Renewable Energy: Making Money on Green Chip Stocks. For more on Jeff, go to his editor's page.
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