This “Investment of the Decade” Is Going Green....
Take a look at the picture below…It’s a shot of an oil platform… right next to wind turbines. And it’s front and center on oil giant Total’s website.
What this means is clear to me: The world is moving toward clean energy. Regardless of how you feel about it, this trend is unstoppable. Even oil giants admit it, and are actively investing in clean energy. So, we might as well take advantage of the profit potential… in an underappreciated area of the clean energy sector. It doesn’t get as much mainstream attention. But I think it’s just as exciting. And it’s solving a multibillion-dollar problem.
The “Green Trend” Is Unstoppable
The clean energy revolution is already well underway. According to Bloomberg, by 2050, almost two-thirds of the electricity generated globally will come from renewable sources. Right now, clean energy generates only 24% of the total global electricity output. In other words, the share of fuel-free electricity generation is set to almost triple in the coming decades. Solar and wind energy are among the most popular sources of clean energy you’ve probably heard of.
But the problem is, these forms of energy are what’s called “variable.” This means they don’t actively produce energy all the time. Solar panels only work during the daytime. And wind turbines only turn when there’s wind. On their own, they can’t supply constant electricity. And since consumers will need to power their households 24/7, the grid needs to adapt. That’s where energy-storing batteries come in.
Introducing Grid 2.0
Simply put, energy-storing batteries capture the energy produced during the source’s “on” period, so that it can be used during the “off” period. So, in the case of solar panels, the battery would store excess energy generated on a sunny day, and use it to generate electricity throughout the night, or on a rainy day. This process requires large-scale batteries. Ones that can power your whole house, for example. I think these batteries will supercharge the whole clean energy market. And there’s already money flowing into the space…
The market for residential energy storage is expected to grow from about $2.6 billion in 2019 to over $40 billion in 2030. That’s more than a 15-fold increase. And the number of batteries installed in the U.S. is growing fast. In 2019, it was 68% higher than in 2018. That includes both residential and commercial installation. The U.S. government is even working to make it easier to finance and deploy these clean energy storage projects. It’s working on a piece of legislation called the “Moving Forward Act.” If passed, energy storage projects will be eligible for tax credits.
And global investment in energy storage infrastructure will reach more than $71 billion between now and 2024. In other words, both households and industrial customers around the world will turn to these batteries as the clean energy revolution gains steam. And the most popular energy-storing batteries need one key material… Which is why I think it’s one of the best commodity investments of this decade.
The Best Commodity Investment of the Decade
Those of you who’ve been following along in these pages may have already guessed the key material needed to manufacture these energy-storing batteries: Lithium. Lithium is a key battery metal. It’s something we’ve talked about a lot here at the Dispatch. It’s used to manufacture electric vehicle (EV) batteries, for example. But lithium’s needed for clean energy-storing batteries, as well… in even higher quantities. For example, a Tesla Powerwall battery, which is used to store solar energy in your home, contains about twice the amount of lithium as a Tesla Model 3 EV battery.
And as the push toward a greener future continues, we’ll need a lot more energy-storing batteries… and even more lithium to make them. As more money flows into the space, I expect the underlying metal to surge. And now’s the perfect time to take advantage – before these batteries become more mainstream. One of the best ways to get broad exposure is through the Global X Lithium & Battery Tech ETF (LIT). It holds a broad basket of companies involved in lithium mining, refining, and battery production. Just remember to position size appropriately.
Good investing....
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Courtesy Of Andrey Dashkov - Casey Research USA...