California Energy Storage Investing

Brian Hicks

Written By Brian Hicks

Posted August 13, 2013

Imagine harnessing the energy of the sun at your fingertips, free to use it as you please. You could use it to cook, watch TV, power up your cell phone. And the great part is that the sun is tax free. No one owns it, and it is available to everyone.

Now, more utility providers are catching on to the idea that they can provide more solar energy to their customers with the right storage technology. That’s why energy storage is garnering so much interest.

solar roofAnd solar isn’t the only industry that will benefit; wind power and thermal energy are also being stored in batteries, capacitors, etc.

Now, I don’t want to get ahead of myself and say energy storage is the field to jump into. At the moment, energy storage is still expensive without subsidies, and it remains to be seen if it has long-term viability. But things are looking promising.

Take California, for instance. The California Public Utilities Commission (CPUC) is setting up a proposal that would require investor-owned utility companies (IOUs) to provide a total of 1.3 gigawatts of energy storage by 2020. That would be enough energy for roughly one million homes. And California wants one-third of its energy generated from renewable sources by 2020.

The three major utility companies that would be affected are Pacific Gas & Electric, owned by PG&E (NYSE: PCG), San Diego Gas & Electric, owned by Sempra Energy (NYSE: SRE), and Southern California Edison, owned by Edison International (NYSE: EIX).

We know about the solar market’s failure to draw enough investment lately, which is why California passed Assembly Bill 2514 in 2010 – an incentive that will encourage greater use of energy storage to promote renewable investment.

To further break down market barriers, the CPUC is setting up a reverse auction system, where energy storage contributors would bid on non-negotiable prices, and IOUs would select the project with the lowest bid. This would be a biannual auction, with the first being scheduled for June 2014. With each auction, these IOUs are required to produce at least 200 MW of stored energy.

Other states like New York and Texas have similar support systems for energy storage, but California will be the trend-setter.

German Energy Storage

Germany is essentially the California of Europe. The nation has long been considered a center for solar energy and renewable technology, and its storage market is expected to reach $19 billion by 2017.

Even though Germany withdrew solar subsidies and left its solar companies starved, the government has implemented a program where citizens can receive a 30 percent discount for the purchase of energy storage items.

Through feed-tariffs, German homeowners can store solar energy from their rooftop photovoltaic systems at a cheaper cost, which places less stress on the national energy grid.

Germany and California may seem like they are on the same path, but there is a stark difference. While Germany has low prices for PV systems, prices in California are still high, which could be a barrier when it comes to drawing in more residents and businesses.

On the flip side, Germany has high electricity rates. So it makes economic sense for consumers to buy PV systems to avoid high energy prices.

But Germany and California are similar in the respect that more utilities and large-scale companies are making conversions to energy storage.


Energy Storage Capital

A sub-sect of energy storage worth looking into is large-scale storage for industrial and utility companies.

Both of these titanic fields are looking for ways to save costs while being able to provide renewable energy in an instant.

In the next few years, storage will become a more prominent presence in the renewable market. And we’re already seeing a smidge of capital flowing in the storage sector. Within the last five years, capital in the amount of $2.2 billion went into storage technology.

Others may be taking the risk by pouring capital into this field, but here is why you should be interested in energy storage.

It is being looked upon as a serious method of adding more power to national grids, reducing pollution in the process. Solar has not made much money in the past few years, mostly because of sub-priced panel gluts from China, but energy storage holds the potential to reverse that.

It is the root behind renewable energy and the reason why it is marketable to consumers and power companies. It also alleviates concerns that solar power is useless when the sun is blocked.

Tesla (NASDAQ: TSLA) CEO Elon Musk has invested heavily in SolarCity (NASDAQ: SCTY), supplying Tesla batteries to support SolarCity panels.

Even big-name companies like Microsoft (NASDAQ: MSFT) and General Electric (NYSE: GE) are investing in the storage field.

Bill Gates, Peter Thiel, and Vinod Khosla are just a few top-name investors placing their investment capital behind smaller companies engaging in the storage technology market.

We know about utility providers that will pay consumers if they contribute extra electricity through solar and other means. But now startup companies are in a hurry to provide the best form of storage at maximum capacity.


If you liked this article, you may also enjoy:

Angel Publishing Investor Club Discord - Chat Now

Brian Hicks Premium


Hydrogen Fuel Cells: The Downfall of Tesla?

Lithium has been the front-runner in the battery technology market for years, but that is all coming to an end. Elon Musk is against them, but Jeff Bezos is investing heavily in them. Hydrogen Fuel Cells will turn the battery market upside down and we've discovered a tiny company that is going to make it happen...

Sign up to receive your free report. After signing up, you'll begin receiving the Energy and Capital e-letter daily.