There’s a lot of talk about alternative energy solutions these days, from wind to solar to hydropower. Unfortunately, the global economy doesn’t conveniently schedule its energy use for windy or sunny days, or locate every manufacturing facility beside hydroelectric dams.
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That means the future of alternative energy relies on infrastructure as much as it does solar cells and other power generation technologies. If we cannot transmit or effectively store that energy for use at different times or different places, we’ll never wean our way off fossil fuels.
The following seven investment ideas stand to benefit from the pending energy storage boom. There is no way to predict precisely how the landscape of utility and energy companies will evolve, but these firms are front-footed when it comes to the next generation of energy storage infrastructure:
| Stock | Year-to-date Performance (as of Oct. 19 close) |
| Tesla Inc. (ticker: TSLA) | 78.7% |
| BYD Co. Ltd. (BYDDY) | 29.3% |
| Albemarle Corp. (ALB) | -33.0% |
| Fluence Energy Inc. (FLNC) | 12.7% |
| Global X Lithium & Battery Tech ETF (LIT) | -15.1% |
| First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN) | -19.8% |
| First Trust Nasdaq Clean Edge Smart GRID Infrastructure Index (GRID) | 2.6% |
Tesla Inc. (TSLA)
Known for its “gigafactory” designs, Tesla is a natural fit for any list about battery technology. The firm changed its formal name from Tesla Motors in 2017 to acknowledge the fact that it does much more than just cars, including its SolarCity residential solar products and Powerwall integrated battery systems that allow homeowners to store and manage their home’s energy. In fiscal 2022, TSLA recorded more than $3 billion from non-automotive revenue — good for about 12% of total operations. You’ll have to make your peace with Tesla making most of its profits from electric vehicles rather than storage, but that may not be too much of a deterrent for many investors given the fact that Tesla has nearly doubled year to date in 2023.
BYD Co. Ltd. (BYDDY)
Lithium batteries are seen by many as the future of energy storage. They are used in everything from cell phones to electric cars, and their fast-charging and high-capacity nature makes them exemplary of 21st-century energy technology. BYD is among the largest manufacturers of both lithium-ion and nickel batteries — though, like domestic rival Tesla, it also has a decent-sized EV biz, too. By some measures, there are larger lithium battery companies out there, including China’s Contemporary Amperex Technology Co. Ltd. (300750.SZ) and Korea’s LG Energy Solution Ltd. (373220.KRX). But without U.S. stock listings, these companies can be difficult to trade. BYD is reasonably liquid with about 200,000 shares changing hands daily, and it provides a good alternative for those looking to play the China-based growth in the lithium battery sector.
Albemarle Corp. (ALB)
Albemarle is a step away from battery specialists and is instead a direct play on the chemicals that go into energy storage devices — mainly, lithium compounds. Founded in 1887 and the largest lithium miner on the planet, this firm is a key part of the global supply chain for battery metals. It may not have as much flash as an EV manufacturer, but it is a broader and more direct participant in the megatrend of next-gen energy storage. Interestingly enough, ALB stock has underperformed significantly in the last year or so — despite expectations of 30% to 40% growth in lithium sales this year, and a growth rate expected to range from 20% to 30% through 2027.
Fluence Energy Inc. (FLNC)
A hybrid energy storage and artificial intelligence play, Fluence offers energy storage products with integrated software in addition to the batteries and hardware itself. Its offerings include industrial-grade energy storage products, and that makes FLNC stock a great way to invest in large-scale energy storage applications. The fact that it also provides engineering and delivery services to support its products also gives it a unique way to invest in the ongoing maintenance of any “smart grid” technology in the future. The company is small, valued at just $3 billion or so, and it roughly breaks even from an earnings standpoint — so there’s a high degree of risk here. Still, it’s a great example of a startup with growth potential in the energy storage industry.
[READ: 6 of the Best AI ETFs to Buy Now]
Global X Lithium & Battery Tech ETF (LIT)
Rounding up these stocks, and others like them, is this $2 billion-plus Global X exchange-traded fund that is designed to be a diversified play on lithium and battery storage technology. LIT invests in about 40 companies that are involved in every part of the lithium cycle, from mining to battery production, cutting across traditional sector and geographic definitions to give a holistic exposure to this industry. Albemarle is the top holding, followed by Tesla, so if you can’t decide from the previous stocks, this fund is a good one-stop investment to play the pending energy storage boom.
First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN)
With more than $1 billion under management and about 60 components, this First Trust fund is another interesting and diversified way to play energy storage. It’s got a lot of similar names, including Tesla as the top holding, but it looks beyond just battery tech to include specialized chipmaker ON Semiconductor Corp. (ON) and integrated solar company First Solar Inc. (FSLR). If you want a bit less EV exposure, this clean energy ETF could be a good alternative to investing in the broader trend of clean energy and related storage concerns.
First Trust Nasdaq Clean Edge Smart GRID Infrastructure Index (GRID)
Another interesting energy storage ETF is GRID, which is focused on alternative energy infrastructure companies such as power management company Eaton Corp. (ETN), industrial conglomerate Johnson Controls International PLC (JCI), and electronics and automation pioneer Abb Ltd. (ABB). About 100 total stocks make up this $1 billion fund, and each component is a direct player in the future of a smart grid and related utility-grade energy storage solutions. Furthermore, about half of the stocks are U.S.-based, and the rest are headquartered overseas to give it wide exposure to the global nature of sustainable energy concerns. If you want to play the infrastructure of energy storage, GRID is a great way to do so.
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7 Ways to Invest in the Energy Storage Boom originally appeared on usnews.com
Update 10/20/23: This story was previously published at an earlier date and has been updated with new information.
