When it comes to the energy transition, the importance of infrastructure can't be stressed enough. In fact, an overview of all the moving parts involved in the energy transition reveals that the global infrastructure is the most exciting area of development.
For example, while electric vehicles and energy storage are two very different areas of the electricity infrastructure, both will be critical for the transition to a net-zero world. The International Energy Agency's (IEA) World Energy Outlook in October 2023 estimated that there will be nearly 10 times as many electric cars on the road by 2030, showcasing the need for more EV-charging infrastructure.
The IEA also estimates that solar photovoltaic will be generating more electricity than the entire U.S. power system does now and that the share of renewable energy in the global electricity mix will approach 50%, versus just 30% today. This dramatic increase in renewable energy will require vast improvements in energy storage.
EVs and energy storage are two major components of the infrastructure that will one day be powering the world using renewable energy. For now, it may be best to look at the trends shaping the future of those two individual components — and the companies driving that future.
Revenue uncertainty is decreasing
According to Wood Mackenzie, one of the most important trends in 2024 is a steady decline in revenue uncertainty — and an accompanying increase in transparency regarding the timing of revenue. An increase in long-term contracts is providing clarity into guaranteed future income for many companies in both spaces.
For example, Tesla (NASDAQ:TSLA) recently secured a massive multi-billion-dollar contract to provide its Megapack to Intersect Power in California. Tesla's Megapack is considered the go-to product for many large-scale energy-storage facilities globally, but this latest contract is the largest one ever. The Megapack enabled Tesla to deploy a record 9.4 GWh of energy storage in the last quarter — more than doubling its previous record.
In the area of EVs, Ideal Power Inc (NASDAQ:IPWR) has completed the first two phases of its program with top-10 global automaker Stellantis (NYSE:STLA). The program targets 2025 for a production ready inverter utilizing Ideal Power semiconductor technology for Stellantis’ EV platform.
Ideal Power recently announced a collaboration with a third global automaker. The automaker is working closely and meeting regularly with Ideal Power on solid-state contractors utilizing Ideal Power’s B-TRAN™ as a potential replacement for electromechanical contractors in the automaker’s EVs.
Other factors driving an increase in revenue certainty include incentives in Latin America, long-term contracts in Europe, capacity markets in the Asia Pacific region, and revenue stacking in the U.S.
Alternative battery technologies
For EVs, Wood Mackenzie also identified some alternative battery technologies in development, projecting that technologies like alternatives to lithium will increase. The privately held Form Energy, ESS, Inc., and EnerVenue are building manufacturing facilities as they work on lithium alternatives for batteries, while manufacturing of sodium-ion cells has begun in China.
Non-lithium battery alternatives are considered to be safer, require no augmentation, and have reduced life-cycle costs.
Consulting firm GreyB also highlighted some alternative battery technologies, specifically, solid-state batteries, which are considered to be comparable to lithium-ion batteries. Solid-state batteries use a solid electrolyte rather than a liquid one, which improves their stability and safety because they keep their form even in the event that the electrolyte breaks.
Nissan (OTC:NSANY), Mitsubishi Corp. (TYO:8058) and Renault (EPA:RENA) (OTC:RNLSY) have all teamed up to collectively invest €23 billion in EVs and hope to have broader commercial production of all-solid-state batteries by mid-2028.
Additionally, Quantumscape Corp (NYSE:QS) is generally considered to be a pioneer in solid-state batteries, having already built one capable of charging from 0% to 80% in less than 15 minutes, versus 60 minutes for a lithium-ion battery.
More public charging infrastructure
Also for EVs, the IEA is forecasting increased public charging infrastructure, noting some trends that should contribute to this. For example, the organization reported that governments are boosting their support for EV charging infrastructure.
Available public chargers increased more than 40% in 2023, with increases in fast chargers rising 55% to outpace the growth of slow chargers. At the end of 2023, over 35% of available public chargers were fast chargers.
Some examples of companies exposed to the expected increase in charging stations include ChargePoint Holdings Inc (NYSE:CHPT), Blink Charging (NASDAQ:BLNK) and EVgo (NASDAQ:EVGO).
Hybrid and long-duration energy storage
In energy storage, GreyB projects increases in both hybrid energy storage systems (HESS) and long-duration energy storage systems (LDES).
A HESS is made up of at least two different types of energy storage systems. They're capable of outperforming single-component energy storage devices like batteries and fuel cells. GreyB expects HESS facilities to be "the long-term solution for microgrids and a sustainable alternative for energy production in standalone applications."
An LDES is capable of storing energy for over 10 hours, which will be critical for solar and wind energy, given that both sources are intermittent. The U.S. Department of Energy has been working to bring down the costs of grid-scale energy storage by a factor of 90% via its Energy Earthshot Initiative. The agency wants to provide inexpensive grid storage for renewable energy.
A smarter grid
One thing that affects both energy storage and EV charging is the electric grid, which will have to operate more efficiently to support renewable energy. Smart-grid technology enables devices to control demand and safeguard distribution while cutting costs and saving energy.
According to GreyB, the global smart grid market was estimated to be worth $43.1 billion in 2021 with an expected compound annual growth rate of 19% through 2030, making it worth $206.25 billion. As such, it's no wonder some big players are in the space.
For example, GE Vernova LLC (NYSE:GEV) and Siemens (OTC:SIEGY) (BCBA:SIEGYm) are both working on such technologies.
Smarter components
Finally, smarter components will impact both EVs and energy storage — and every other part of the electric ecosystem as it evolves to support more clean energy.
For example, Enphase Energy (NASDAQ:ENPH)is working on battery storage for renewable energy and offers next-generation EV chargers and micro-inverters used in solar panels. The company's IQ8 micro-inverters have zero potential for DC arc-fault fires and produce more power from every panel using distributed architecture. They also help prevent repairs and require less maintenance due to "incredibly low" failure rates.
Investing in current EV charging and energy storage trends
When it comes to new technologies, there is always a wide range of directions in which investors can take their portfolios. Of course, diversification is key to protecting against stock-market downturns.
In terms of investing in new technologies for EV charging and energy storage, investors may want to be on the lookout for buy-the-dip opportunities and stocks with excellent potential worth buying now and holding for the long term. Some names could make excellent additions to a portfolio of climate-friendly stocks as part of a much wider, diversified portfolio.
Investors are always advised to do their due diligence before investing in any stock, industry or idea.