Goldman's 'Holy Grail' Of Renewable Energy

In a new report, Goldman Sachs analyst Brian Lee took an in-depth look at what he calls the “holy grail” of renewable energy: grid-scale power storage.

Battery technology is at the center of the shift away from traditional power, and Goldman gave a run-down of the trends in the space and which companies are the key players.

Untapped Gold Mine

The growth associated with electrification of the vehicle fleet is staggering. Goldman predicts that 15 percent of auto sales will be electric cars by 2025. The firm also forecasts a 42 percent compound annual growth in battery demand over the next 10 years.

“We estimate a secular shift to an IoT-driven power grid could require as much as 750GWh of batteries, bigger than all markets combines and equal to a TAM of $100-$150 billion,” Lee added.

Applications

Lee mentioned six applications that Goldman believes investors should target today. These applications include backup power, peak shaving, renewables integration, ancillary services, T&D deferral and bulk storage.

He noted the profitability of these applications should only increase over time as batteries become lower-cost and more efficient.

‘Game-Changer’ Could Still Be Out There

Lee explained that the primary focus in battery technology has been on Li-ion batteries, but other technology is also showing promise. As Li-ion battery production ramps up, companies continue to explore flow batteries, sodium-sulphur batteries and other technology.

Goldman believes that the true “game-changer” in energy storage could still be undiscovered.

Stock Picks

Although Tesla Motors Inc TSLA and its Gigafactory get many of the battery-related headlines, the stock is not one of Goldman’s top picks.

When it comes to investing in the potential of energy storage, Goldman recommends Buy-rated Albemarle Corporation ALB, Solaredge Technologies Inc SEDG and SolarCity Corp SCTY.

Disclosure: The author holds no position in the stocks mentioned.