As the globe transitions away from fossil fuels and toward renewable energy sources, investment in energy storage stocks is becoming more crucial.
Investors may wonder how they can tell which energy companies are worth their attention in the face of a plethora of options.
This guide will assist you in identifying some of the greatest energy stocks currently available on the market and provide some insight into the corporations that own them.
Firms that design and manufacture energy storage technologies are classified as energy storage stocks. Battery storage, capacitors, and flywheels are all examples of these.
This vast industry is also made up of electric vehicles, power generation facilities, and businesses.
Why is energy storage necessary? Solar and wind energy are not reliable sources of energy.
For instance, you receive solar energy during the day but must also use it at night when you cannot generate any. Wind energy is also a highly unpredictable source of energy.
Then there's the matter of producing more energy than is necessary (for those lucky enough). For instance, in particularly sunny areas, solar farms or individual household panels may harvest more energy from the sun's rays than is required – in which case, the excess energy must be stored.
Energy storage systems are in high demand as the demand for renewable energy increases.
Numerous stakeholders are involved in the renewable energy sector at various stages of energy production. Among them are the following:
Manufacturing of solar panels and energy equipment
Energy system installation
Energy generation facility operation.
However, we will concentrate our efforts on companies that provide energy storage solutions.
As the world transitions to intermittent renewables such as wind and solar, more energy storage will be required. After all, the wind is not continuously blowing, and the sun is not continually shining. As a result, energy storage is critical for the clean energy transition. When the sun shines, massive batteries can charge and then feed power back into the grid. California and New York have asked their state utilities to install additional batteries, and Florida is currently building a massive battery.
While battery storage is the most discussed option, there are others, such as pumped hydro and hydrogen storage. Pumped hydro entails pumping water uphill into a reservoir during periods of abundant power generation and then releasing it on demand. Although it is the most widely deployed solution, it is difficult to find new locations. Green hydrogen can also be used to store energy, but it is still prohibitively expensive.
Lithium-ion battery storage remains the most popular type of battery storage, accounting for more than 90% of new capacity installations. Although battery costs are increasing again due to the price of green metals, BloombergNEF reports that lithium-ion batteries are 90% cheaper than they were a decade ago.
Lithium-ion batteries benefit from the increased investment in lithium-ion batteries for electric vehicles, a larger market. However, as a result of the skyrocketing price of lithium, alternatives such as zinc-based storage are being developed.
According to the International Energy Agency (IEA), battery storage capacity additions in 2020 will increase by 50% year on year, reaching a record 5 GW. By 2020, total investment in battery storage will have increased by nearly 40% to $5.5 billion. Utility-scale battery storage investment was particularly robust, increasing by 60% year over year.
Energy storage has the potential to grow to be a significant market.
According to the IEA, the world will require 585 GW of battery storage capacity by 2030 to achieve net-zero carbon emissions in 2050, up from the current capacity of about 17 GW in 2020. Additionally, BloombergNEF forecasts that global annual energy storage capacity installations will increase to approximately 34 GW by 2030, up from approximately 4 GW in 2020. Unsurprisingly, Elon Musk believes Tesla Energy can be on a par with Tesla Automotive in terms of size.
Renewables have grown at a faster rate than conventional energy sources over the last decade. Solar and wind energy, in particular, have made remarkable strides. According to the International Energy Agency (IEA), a record 23 countries met or exceeded their fossil fuel energy demands in 2016 by using renewable energy.
Solar energy, in particular, has exploded in popularity. Solar energy accounted for the largest share of the net increase in global electricity generation over the last four years, according to the IEA, in 2016. Additionally, this growth has resulted in a decrease in the cost of solar energy installations.
The concept of energy storage has become much more mainstream over the last several years. This is due to several technological breakthroughs that enabled the harvesting of energy from renewable sources. The first generation of energy storage devices consisted of massive lead-acid, sodium, and lithium batteries. These batteries were designed to be charged and discharged within hours. These devices fulfilled a necessary function, but not one that met the world's needs. This is because they require a continuous supply of energy, which is scarce.
Ultracapacitors were the second generation of energy storage devices. These batteries enable the harvesting of energy on a moment-by-moment basis.
Identifying the best energy storage stocks in a crowded industry can be difficult. However, we have already completed the majority of the work for you. We investigated all viable options, taking into account the primary characteristics that distinguish energy storage stocks.
We considered the following during our research:
Stock Price
The price-to-earnings ratio (P/E) is a critical factor to consider for any investor. We examined various energy storage companies with a low P/E ratio, and this implies that you will pay less for each dollar of profit generated by these energy stocks.
Rate of Growth
The energy storage market is currently growing at an exponential rate and shows no signs of abating. Any energy storage firm worth investing in should be able to keep pace with this unprecedented expansion. This factor was used to eliminate some energy stocks that are still lagging or showing no signs of growth.
History of Returns
We must rely on publicly available data in the energy industry to ascertain the performance of various energy companies. Our primary criteria for listing an energy storage stock were revenue growth and returns.
Carbon Emissions
Every business, large and small, is attempting to become carbon neutral. Before compiling this list, we considered the sustainability of various energy storage stocks. At the very least, they make a sizable contribution to reducing carbon emissions.
1. EOS Energy Enterprises (EOSE)
EOS, founded in 2008 and headquartered in Edison, New Jersey, is a battery-based energy storage company. In 2020, the company went public via a SPAC merger. Joe Mastrangelo, the CEO, was previously the head of GE Power's Gas Power Systems division.
In contrast to Tesla's lithium-ion battery storage, EOS batteries are zinc-based. Zinc is less expensive than lithium, whose prices are expected to skyrocket in 2021. Additionally, zinc batteries have excellent power discharge and thermal properties, which makes them less prone to catching fire. While zinc-based batteries are insufficiently powerful for EVs, EOS argues that they are adequate for storage.
EOSE is a risky, early-stage venture with no revenue and no profits. The company slashed its 2021 guidance, blaming macro headwinds such as labor and cost inflation and global supply chain constraints, which have resulted in the delay of energy storage projects. Additionally, like many other SPACs, the stock has been crushed over the last year.
2. Fluence Energy (FLNC)
The second company we'll look at is Fluence Energy, which uses a modular system to create configurable, scalable energy storage. The base is the Fluence Cube, a standardized 'building block' energy storage system developed over a 13-year period in the energy storage niche. The Cube enables rapid delivery and deployment, enabling cost-effective battery system build-outs. The scalability of the design is unlimited, ranging from 1 megawatt to 500 megawatts or more.
The Fluence Cube system is combined with the Fluence OS, a management platform that enables comprehensive system management across single installations or larger grids. The addition of the Fluence IQ platform, an AI-enabled platform that accelerates the system's decision-making process and asset performance, resulting in increased revenue.
Fluence has installed or contracted for over 3 gigawatts of energy storage in 29 markets worldwide. Earlier this month, the company announced that it had signed a contract with Enel-X in Italy to deploy the Gridstack energy storage system. The installation, which will include two systems, will have a combined capacity of 40 megawatts.
Fluence shares went public on October 28 in an initial public offering (IPO) that raised approximately $998 million in gross proceeds. The shares began trading at $28, and 35.65 million were issued.
James West of Evercore is one of the bulls, praising the fundamentals of this newly public company.
"We believe FLNC is a must-own stock in the energy storage sector. The company is backed by industrial and utility market leaders, Siemens AG and AES Corp., and has grown rapidly to become one of the leading providers of energy storage. Despite competitive threats and supply chain risk, we believe that the best way to value FLNC is to focus on the company's fundamentals," West stated.
3. Enphase Energy
Enphase Energy provides homeowners and businesses with renewable energy storage solutions. It is one of the world's largest manufacturers of solar storage systems based on micro-converters.
Enphase Energy's technology integrates solar generation, energy storage, and management into a single intelligent system.
It makes a significant contribution to clean energy production and storage. Enphase Energy recently announced a partnership with Semper Solaris, a residential solar and battery storage market leader.
The joint venture between the two mega-corporations has the potential to revolutionize California's clean energy supply. A proper procedure is currently being followed for the introduction of IQ Microinverters and IQ Batteries.
These are Enphase Energy's efforts to grow its micro-inverter solar and battery market share in the United States. The installation of home energy systems in Arizona is one such late development. Due to these bold moves, the company expects to double its deployment in the coming years.
Enphase's investments and developments have significantly increased the company's stock market value. It is currently on investors' radars as a possible future-proof energy storage stock.
4. ABB Ltd. (NYSE: ABB)
ABB Ltd is a multinational corporation headquartered in Sweden and Switzerland that will rank among the top 50 energy storage companies in 2021.
This company is one of the largest electrical engineering conglomerates in the world, with operations in over 100 countries.
The company is extremely versatile, with a product line that includes robotics, power grids, and automation technologies.
ABB's market capitalization is $67.72 billion.
Last quarter, demand increased significantly, with orders up 18 percent year over year, indicating underlying strength across all business sectors.
Despite supply chain delays in certain segments of the business, revenue growth of 5% exceeded expectations, owing primarily to increased orders.
5. Stem, Inc. (STEM)
Based in San Francisco, STEM is a provider of intelligent battery storage solutions. The company's energy software, Athena, is an AI-powered analytics platform that optimizes energy consumption by automatically switching between battery power, onsite generation, and grid power. STEM's solutions span energy storage, wholesale energy markets, microgrids, utility bill optimization, and commercial EV charging.
STEM also acquired Energy Holdings, Inc. last week. The acquisition increased the company's solar asset management portfolio to 32.85 gigawatts (GW) across more than 50 countries. STEM's growth, margins, and expansion as a global provider of clean energy intelligence and optimization solutions are expected to be accelerated as a result of the acquisition.
Additionally, STEM and ENGIE North America entered a co-marketing agreement in January to enable the widespread adoption of mobility solutions for schools, transit agencies, and commercial fleets throughout the United States through the integration of Athena software and ENGIE's electric vehicle (EV) charging solution. This integrated offering may provide the company with additional growth opportunities and revenue streams.
STEM's fiscal third-quarter revenue increased 334.3 percent year over year to $39.83 million in the quarter ended September 30, 2021. In the to-be-reported quarter, the company's gross margin increased 580 percent year over year to $5.80 million. STEM's net income increased by 715.4 percent to $115.61 million years over year. Additionally, the company's net income per common share increased 280.9 percent year over year to $0.85.
6. Albemarle
Albemarle is the market leader in lithium-ion energy storage batteries on a global scale. We've included it on this list due to the tremendous growth in the global use of electric vehicles.
Growth was slowed over the last decade because the appropriate technology for electrical energy storage was in its infancy. Albemarle is determined to change the narrative today.
Albemarle reported phenomenal revenue and earnings growth in the fourth quarter. However, it has seen a decline in stock that falls short of projections. This could be an excellent time to invest in the best clean energy storage stocks.
Albemarle is a future-proof energy storage stock due to its ability to adapt to technological advancements. Individuals are abandoning flooded gel energy storage batteries.
Lithium-ion batteries have a high energy storage capacity while maintaining an overall lightweight. Indeed, they are hundreds of times lighter than other materials. As a result, they are the optimal choice for EVs and will soon drive the automotive industry.
7. NextEra Energy Inc. (NYSE: NEE)
NextEra Energy is a market leader in renewable energy and energy storage, with over 60 years of industry experience. The company has already developed critical energy storage systems that homes or businesses can use during times of peak demand.
Additionally, its products benefit large corporations such as Gulf Power Company and Florida Power & Light Company. Among the company's numerous honors is being named one of Fortune magazine's Most Admired Companies every year since 2009.
Not only was NextEra Energy named Fortune magazine's #1 Most Admired Company for 2020, but it was also named one of the top 20 companies for innovation, people management, and quality management.
However, NextEra's stock has fallen 19% since the beginning of the year, and that is a massive loss for an electric utility. However, NextEra has generated a positive total return to stockholders in 19 of the last 20 years, including dividends paid. Since the stock market bottomed in March 2009 during the Great Recession, NextEra has generated a net profit of nearly 1,000 percent.
What differentiates NextEra from other utilities is its willingness to make significant investments in renewable energy projects. At the moment, no other company in the country has a greater capacity for wind and solar energy generation.
This trend is likely to continue. The corporation has relied on historically low lending rates to fund renewable energy projects. Management intends to invest $50 billion to $55 billion in new infrastructure between 2020 and 2022. Given the company's track record of performance and its 2% dividend, NextEra Energy is an excellent long-term investment for investors looking to take advantage of the recent dip.
The bottom line
Renewable energy sources are intermittent, and we must find ways to store energy during periods when the wind does not blow, or the sun does not shine in order to meet our energy needs. The energy storage market is growing as demand for peak load control, grid balancing, and technological advancements in energy storage systems increase. Energy Storage Stocks could prove to be one of the best long-term investments you can make for your financial well-being.
Real-time News
