Renewable energy is in the spotlight and the battery technology supply chain is key to the transition.
Wind and solar energy are forecast to supply around 48% of world electricity needs by 2050, with battery technology, gas peakers (turbines or engines that burn natural gas) and dynamic demand anticipated to drive market penetration of solar and wind by more than 80% according to BloombergNEF1 . The same report also suggests the costs of renewable energy will undercut coal and gas in most parts of the world by 2030 – a compelling reason for countries to focus on it.
While investors may be well aware of Tesla’s credentials in battery storage, the supply chain for battery technology extends far beyond one company and covers mining companies, manufacturers of battery storage and storage technology providers.
Here are 5 companies fuelling the transition.
1) SolarEdge Technologies Inc (NASDAQ: SEDQ)
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Investors may be feeling a cautious sense of optimism as we enter 2021 with global vaccine rollouts. Last year, technology companies and commodities were investment winners, so what will 2021 hold for investment markets?
There are three trends we see influencing ETF investments in 2021: the movement to value, thematic investing and short & leveraged investing.
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Movement to value
As news of vaccines hit markets in late 2020, investors started to shift their approach away from a pure growth focus and towards value investments such as banks and industrials.
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Thematic investing exposes your portfolio to some of the major socioeconomic, environmental and technological themes of our times in a tailored way. So what does this actually mean and how can you use thematic investing in your portfolio?
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What is thematic investing?
Thematic portfolios look at long-term macro trends, such as robotics and automation, and then use various screens and information sources to identify the companies or assets which support this trend through infrastructure or services. It can span several sectors or even asset classes, for example, a thematic investment in technology is likely to include companies within the technology sector as well as those in other sectors which access this trend, such as Amazon or Netflix.
Investment themes should be:
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Renewable energy is a growing sector that is set to overtake fossil fuel energy in the future. Investors interested in this area should consider battery technology and storage, an area that is essential for the growth of renewables.
A growing market: why battery technology?
The value chain for battery technology ranges from mining companies, mining for metals like lithium, to manufacturers of battery storage and storage technology providers. All are potential beneficiaries of the anticipated growth in this industry.
Lithium ion batteries have transformed the battery industry and accounts for 85% of commissioned, utility scale battery storage worldwide[1]. By 2022, utility scale battery energy storage capacity is expected to more than double, while the market for battery technology is anticipated to reach $90bn by 2025, growing more than 12%[2][3]. This growth is due to growing demand and increasing affordability of renewable energy like wind and solar power, along with the transition towards electric cars. Renewable energy in particular is an intermittent source and thus, dependent on reliable storage systems to ensure ongoing power. The Telsa-built Hornsdale Power Reserve in South Australia is a large-scale example of battery storage in play.
How to invest in battery technology?
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To access the white paper, please click the download now button above.
Investors considering growth in the portfolio may find megatrends offer an alternative and sustainable long-term approach. So, what are megatrends and how can you invest in them?
Megatrends are universal socioeconomic, environmental or technological forces that change the way we do things . These trends tend to be sustained over longer periods, in some cases, 20 years or more and based on known patterns and pressures . Investing in megatrends has become increasingly accessible in recent times. A range of ETFs have appeared in the market to target specific trends and incorporate a wide range of companies in that area.
Three examples of megatrends follow.
1. Virtual connectivity and digitisation
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