There’s a global energy crisis brewing. And the only solution is a brand-new approach.
Bloomberg estimates that some 15 million Texans are without power this morning because utility companies weren’t prepared for the arctic chill sweeping the country.
Japan noted that with its current electric vehicle adoption rates, it will run out of electricity this summer.
Toyota’s president said that if EVs are adopted too quickly, that will happen around the world.
If it wasn’t clear before, all of these headline stories solidify our global problem with electricity.
We just use too much. And while we continue to transition to green technologies, there’s a major gap that must be made up.
With smart technologies, internet-of-things and electric vehicles, we’re only going to create a worse problem going forward.
Yet almost no one is addressing it.
Wall Street has been giving money hand-over-fist to electric vehicle makers and tech companies. But those companies are only creating more demand for electricity.
That’s why a second wave of the tech boom is almost a certainty. And the companies set to benefit most are still unfamiliar names.
Last year, Sunrun Inc. (NASDAQ: RUN) became one of the largest solar companies in the world when it bought Vivint Solar in an all-stock deal.
Since that deal closed, investors have started to seriously pick up on how important this merger will be for the energy market:
But it’s not just the solar panels and residential home installations that make it such a powerful player.
It’s Vivint’s other business that has started attracting these buyers, or at least it should be.
Vivint was one of the few companies in the grid battery business. That company’s products were smaller scale than others. But its underlying technology allowed homeowners to successfully go completely green and practically disconnect from the grid.
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With the headlines we’re seeing this week, that’s a big deal.
Grid batteries are the only solution to our current energy crisis. As coal-fired and natural gas power generation become a thing of the past, stopgap solutions are needed.
Solar energy works great… when the sun is out. Wind power is amazing… when there’s wind. The obvious problem is that’s not always the case.
Energy storage is the biggest, yet least-talked-about trend you need to keep an eye on.
And there are only a few companies actually offering solutions.
Vivint’s battery products are good. But there are others doing this on a whole other scale.
The AES Corp. (NYSE: AES) is a huge $19 billion utility that has its hands in everything. It both generates power and transmits it to millions of homes.
But it is also a leader in grid battery technology.
Partnering with Siemens, AES’s grid-sized storage capacity reached 2.4 GW this past year. That’s the most in the industry.
That’s around 1.7 million homes’ worth of power.
That might not sound like much, especially with some 15 million without power in Texas just today. But remember, this is a stopgap solution.
It also shows you just how much room this industry has to grow.
Of course, AES isn’t the only one in the business. And its other products and services make this segment one of its smaller revenue generators.
Another recently entered this field that has me watching it very carefully.
Eos Energy Enterprises Inc. (NASDAQ: EOSE) went public late last year through a reverse merger with a SPAC.
It is one of the few with products that can match the enormous grid demand that’s desperately needed.
The company isn’t new. It’s been around for about 12 years before it jumped onto the stock exchange. But it remains relatively small, with a market cap of just $1.2 billion.
Investors have liked it since it made its debut:
But with so much demand right now, this early rally could be just the start.
I’ll continue watching this space. But I don’t expect these kinds of opportunities will last long. Eventually, the tech boom will turn to this problem.
After all, what good are all those EVs, Peloton bikes and smartphones if there’s no place to plug them into?
To your prosperity and health,
Joshua M. Belanger