My colleague and Real Wealth Strategist Editor Matt Badiali raised a great point in recent days when he wrote about the recent price action in lithium and the rising fascination with electric vehicles (EVs).
I too have been a skeptic, but now find myself among the converted.
EVs are only one part of the revolution. The other part is the prospect of large-scale energy storage, which promises to disrupt the entire business of electricity distribution as we know it.
A recent announcement from Germany’s Daimler AG, the parent company of Mercedes-Benz, stands as a good example.
A few weeks ago, the automotive company broke ground on a $562 million lithium-ion battery factory in the town of Kamenz in eastern Germany. Keep in mind, Daimler already has one battery factory in operation at this same site — however, this new investment will essentially quadruple the size of its battery-manufacturing capacity.
But the batteries it will start churning out in mid-2018, when the first phase is finished, won’t be just for the expanded line of electric cars and trucks envisioned by Daimler in coming years.
The company sees large modular batteries — a trend I wrote about recently, with a new recommendation on the pages of Total Wealth Insider — as another sales outlet for its manufactured batteries.
For instance, Daimler recently signed up for a partnership with Vivint Solar, a U.S.-based solar installation firm. The idea is that Vivint installs the photovoltaic panels, and then offers the homeowner the option of also hooking those panels up to Daimler’s $13,000 2.5 kilowatt-per-hour modular batteries.
Is home energy storage ready for prime time? We’ll find out soon enough.
But utility-grade batteries, the kind that can power thousands of homes for a handful of hours, are already gaining traction. Tucson Electric Power recently signed a solar power purchase contract with NextEra Energy that incorporates a 30-megawatt battery facility as part of the deal. It’s the fourth such utility-grade energy storage deal announced since the end of last year.
And we’re still in the first inning of the energy-storage ball game.
According to Bloomberg, battery costs have dropped by 60% since the start of this decade. Some now believe they’ll achieve cost parity with gasoline-fueled vehicles as soon as 2025.
And perhaps more importantly, the energy density of those batteries continues to rise , according to Tesla’s chief technical officer. It’s the reason why General Motors’ new Chevy Bolt EV can drive over 200 miles on a single charge, versus the much more limited range of most EVs from only a few years earlier.
It also means that batteries are half again as powerful every six years or so. With those kinds of numbers, it doesn’t take long to realize that batteries aren’t the next big thing; they’re already here and starting to change our economy before most people even realize it.
Jeff L. Yastine
Editor, Total Wealth Insider