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The Lithium Revolution Just Got Hotter

Utility-Scale Lithium Batteries Taking Off

Written by Keith Kohl
Posted September 8, 2015

When I say the word "lithium" nowadays, the immediate reaction I get is, “So what's Tesla doing now?”

Make no mistake, dear reader — when Elon talks, the market listens. The media is no different, with one slight addendum: They've been fixated on the wrong catalysts.

Look, I know it's difficult to get past the headlines flooding the media whenever Musk and friends unveil something cool. Two weeks ago, we were hypnotized by the snake-like automatic car charger that had me wondering how close we were to Judgment Day.

Yesterday, I saw the Model S P85D go from zero to 60 mph in 2.8 seconds, putting my Jetta to shame.

But let's push aside Tesla's Model S and its "Ludicrous Mode" for a moment and focus on the real catalyst fueling the lithium revolution taking place right now.

Here's the real buying opportunity for individual investors like us...

Storage Wars

By now, I'm sure you've heard about Tesla (NASDAQ: TSLA) pairing its Powerwall home chargers with SolarCity's (NASDAQ: SCTY) home solar panel kits.

In reality, these individual battery systems are NOT what's driving the energy storage movement.

More than home batteries, utility batteries are becoming more affordable and thus more popular with large energy companies. In the second quarter of 2015, 40.7 megawatts of energy storage capacity was installed in the U.S. — and 87% of that capacity was used for utilities.

In July, we reported on General Electric's (NYSE: GE) expansion into large-scale utility lithium battery systems, as well as its offer of control systems and software for the company's batteries.

Now, as technological innovations from both companies and numerous start-ups continue, lithium batteries have become cost effective enough for many energy utilities. This year, an estimated 220 megawatts of energy storage projects will be built in the U.S., according to GTM Research. Most of this will be from newer, more affordable lithium-ion batteries.

While that may not be a massive amount compared to what many power plants can produce, it's certainly a major step in the right direction in energy storage. And with the battery systems becoming more affordable, more utilities will use them to help reach new clean energy requirements.

You see, some companies do not wish to convert older power plants to renewable or natural gas plants; the construction is expensive, even if the fuel is not.

Instead, plants can be upgraded to meet safety regulations and have the batteries installed to save energy for peak times. This way, emissions are reduced in part because the power plants do not have to be ramped up during the times of the day when energy demand is highest; the plant can stay at a more normalized production rate, and the stored energy will cover the extra demand.

Now, even though both Tesla and General Electric are major players, shareholders must have felt underwhelmed over the last year:


Had you put a dime in either company a year ago, your bet would be down between 5% and 15% right now. That's a pretty lackluster performance even in spite of Tesla's rally since April. Still, you can't help but wonder if there isn't a better way to play it...

And that, of course, leads us to an opportunity to get in on the ground floor of this lithium revolution.

My Must-Own Lithium Stock for the Revolution

I want you to close your eyes and say this mantra over and over again: It's all about supply.

Well, things are starting to heat up for any company with the potential to help feed the growing demand for lithium. In fact, you might've caught the news regarding the first Tesla supply contract that was inked not too long ago.

As it turns out, the first deal went to the Sonora Lithium Project Partners (Bacanora Minerals and Rare Earth Minerals) in Mexico.

Although that didn't sit well with some people in Nevada's state legislature, Elon reiterated two important things recently via social media. The first is something that we already knew — the supply contract wasn't exclusive.

The second is whether or not Tesla would be looking to Nevada companies for a supply source. His answer was: definitely.

That may narrow the playing field a bit, but the key here is to find those little investment gems that are diamonds in the rough. Recently, I told you about my upcoming investment report that will give you three must-own stocks that will take full advantage of this lithium revolution.

Today, I want you to have a sneak peek at this report. Inside, you'll have access to an energy metals company with a potentially tremendous lithium upside.

It's the exact kind of ground-floor opportunity you find once in a generation — and here's your very own chance to get a first look at it.

Until next time,

Keith Kohl Signature

Keith Kohl

follow basic@KeithKohl1 on Twitter

A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.

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