The Rising Sun On Solar Grid-Tied Energy Storage

by: Livio Filice


Overview of grid-tied energy storage (GTES).

GTES market expected to grow from $200 million in 2012 to $19 billion in 2017.

Introduction to several investment opportunities in the space.

Editors' Note: This article covers a stock trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

Lithium ion-based batteries offer significant characteristic advantages for solar PV grid-tied energy storage (GTES) systems, providing solar system owners high efficiency, deep-cycle capability, and an impressive 10-year warranty -- including various maintenance and safety features. Unfortunately, at this point, the price premium is a major downfall for consumers, especially when related to other traditional battery chemistry.

GTES, a term that is more frequently being used in the solar PV business, is the ability to produce energy and store it onsite in a battery bank and releasing the energy at a later point when required. Although the market for GTES applications is only being tested in very mature solar PV markets -- such as Germany, Japan, and California -- it is rather evident that the industry has merely touched the surface with this technology and will continue to evolve. Other immediate markets exist for these energy storage systems, including applications such as micro grids, diesel optimization, and backup power.

Germany, Japan, and California are active with an incentive for energy storage systems, coupled with the decreasing cost of solar PV equipment. So the market for energy storage systems is predicted to grow rapidly. IMS reported that the market is expected to grow from $200M in 2012 to $19B in 2017. This has obviously triggered a significant number of system integrators to develop and launch new energy storage systems. With all of the positives, investors are now beginning to focus on opportunities within this market. Many of the next-generation battery technologies along with leading system integrators are not publicly traded, although this could change as the markets appetite grows. Recently, Ideal Power (NASDAQ:IPWR) -- a U.S. power electronics company focused on energy storage inverters -- completed a successful IPO, raising $15M. Inverters convert electricity from DC to AC in energy storage applications; they have the ability to further convert back to DC, best known as bidirectional conversion.

SMA Solar Technologies (OTCPK:SMTGF), the global leader in photovoltaic inverters, has recently responded to the energy storage market with two key announcements. They first stated their intention to invest over 100M euros for research and development aimed at the integration of energy storage solutions and decentralized energy production. The second announcement was made by Pierre-Pascal Urgon, speaker of the Managing Board: "Should we succeed in reducing production costs through technical innovation and open the market for energy management and solar-diesel hybrid systems, we will be able to return to profitability from 2014." SMA later released its 2kW Sunny Boy Smart Energy system, which incorporates 2kW of lithium ion batteries.

Tesla (NASDAQ:TSLA) and Solar City (NASDAQ:SCTY) partnered together to roll out residential energy storage systems in California. They have since expanded and now include combined solar energy storage systems as a lease package, aimed at the commercial and industrial demand response market.

The growing trend in solar energy storage was recently shook up in the past weeks when Tesla Motors announced the "Giga Factor." Tesla has informed the capital markets that the Giga Factor will supply the energy storage markets, which sent share prices of several lithium mining, battery manufacturers -- and Tesla itself -- skyrocketing. With energy storage making its way to center stage, it is a good time to review energy storage-related stocks. Outside of the companies already mentioned, other companies in the area include NRG Energy (NYSE:NRG). It is an integrated wholesale power generation retail and electricity company in the U.S. with an interest in deploying and commercializing potentially disruptive technologies, including distributed solar and smart meter products, which have the potential to change the nature of the power supply industry.

The OM Group (NYSE:OMG) is the parent company for EaglePicher Technologies. EaglePicher is an industry leader in integrated power solutions that is aggressively developing battery solutions to meet the GTES markets. They recently launched their Power Pyramid battery system and are working with New York-based system integrator Arista Power (OTCPK:ASPW) to deploy these systems.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.