The Technology That’s Disrupting the Energy Grid as We Know It, Part 2

David Fessler By David Fessler
Energy and Infrastructure Strategist, The Oxford Club

Alternative Energy

Last week, I told you that despite being one of the great engineering achievements in human history, the U.S. power grid is in desperate need of repair. It simply can’t cope with this century’s grid requirements.

Renewable power is here, and yet our existing electrical infrastructure can’t handle it. The problem becomes more serious when you consider that the rapid deployment of electric vehicles is almost here.

Unlike other crucial networks, our electric grid can’t store the electricity it provides.

What we need is a system built on robust and reliable energy storage. This is the critical building block in a disruption-proof power grid.

The importance of this – as well as the staggering opportunity awaiting investors – cannot be overstated.

Energy Storage: Why It Matters

Reliable energy storage is important to avoid power disruptions, which have an increasingly negative economic punch.

Between now and 2025, utilities and grid owners will inevitably spend billions of dollars upgrading grid infrastructure.

They have two choices: Make small upgrades using existing technology. Or invest in new technologies, allowing for better power storage that enables the grid to support a 21st-century customer base.

The electrification of the economy is already in full swing. And an outdated power grid is a drag on economic progress.

How the Electrical Grid Can Benefit From Energy Storage

It’s hard to beat batteries for reliable, steady sourcing of power. Some industries have relied on giant battery banks for decades.

It’s the reason landline telephone networks operate in a blackout. The system gets its power from batteries.

Batteries are great at balancing shifting demands with shifting supplies. It takes a fossil fuel-fired generating plant minutes to hours to come online.

To keep that delay short, grid operators keep those plants hot and running. This wastes valuable fuel and increases costs.

A battery storage system is on all the time. It can respond in a few seconds when asked. And its accuracy is spot-on.

Qualities like these allow grid operators to deploy storage to solve many grid problems. Battery storage easily handles demand peaks.

Batteries also discharge during high-peak usage times and recharge with unused power produced during off-peak hours.

This time-shifting feature sets batteries apart from anything else grid operators currently use. Some operators are forced to use pumped hydro storage during peak times of demand.

But pumped hydro has the same startup latency that fossil fuel or gas power plants have…

In contrast, battery systems have at most a few seconds of latency.

Above all, battery storage improves grid resilience – especially the grid’s ability to restore power after a disruption.

Investing in Energy Storage

In 2014, the International Energy Agency published a study on the state of U.S. energy, including the power grid. It determined that in the U.S. alone, utilities and grid operators need to invest $2.1 trillion in grid upgrades through 2035.

The same study said that by 2025, utilities will have to spend $48.7 billion on energy storage.

Investors have few choices when it comes to an energy storage pure play. Large, diversified technology companies make most battery storage systems.

However, one company on my radar is focused mainly on battery storage. EnerSys (NYSE: ENS) is a manufacturer of industrial batteries.

The company has a 21% market share with 10,000 customers in more than 100 countries. Forty-eight percent of its revenues in 2017 came from its Reserve Power division.

This division focuses on battery backup systems for use in the electric grid and data systems.

I like the company’s prospects. If you’re serious about the future of energy storage, you might want to take a look.

Good investing,

Dave

P.S. Energy disruption is happening on a large scale. There are opportunities all around… if you know where to look.

Subscribers of my Advanced Energy Strategist service are well aware of this… and they’ve been racking up the profits on several positions, including four with triple-digit gains.

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