Recharge Your Portfolio

As my colleague, Tim Maverick, discussed on Tuesday, battery technology is becoming an integral part of our electric grid system. Indeed, competition among creators of energy storage technology is heating up.

For investors, that means there are several new opportunities for us to power our portfolios with this critical energy development.

Positively Charged

Indeed, batteries are set to solve one of the primary issues with renewable energy. That is, the sun may be shining or the wind blowing, but not necessarily in the right place or at the right time.

Baseload power generated by fossil fuel or nuclear power is typically necessary to compensate for cloudy or breezeless days. What’s more, batteries for energy storage are generally considered expensive and thus an uneconomical solution.

Until now.

In certain markets, energy storage technologies are now cost competitive with conventional grid electricity, according to the asset management team from Lazard. It recently worked with Enovation Partners, a consultant to the power and energy industry, to publish an in-depth study on the levelized cost of energy storage.

While measuring storage may sound simple, it’s far from it. Concrete cost figures are difficult to come by, complicated in part because storage can be measured in many ways, including:

The Lazard study laid out a range of cost scenarios including both “in front of the meter” (power grid-oriented) and “behind the meter” (distributed) systems, and the results are surprisingly positive.

As it turns out, energy storage is rapidly becoming cost competitive.

The results reveal significant capital cost declines expected for selected energy storage technologies over the next five years, driven primarily by increased manufacturing scale and design, engineering improvements, and the increasing use of renewable energy, as well as policies supporting energy storage.