Power Grids Install Large Batteries as Energy Storage Production Capabilities Increase Globally
Wind and solar power have made great strides over the last two decades—but the increased use of these technologies and their underlying reliance on favorable weather conditions present intermittency issues for utility providers. As such, the energy storage industry has grown rapidly over the past five years.
As utilities think about their power assets in the context of current and future demand requirements, some assets will inevitably need to be upgraded or retired. In lieu of building new coal-fired or natural gas production capacity, many are investing in solar and wind energy production combined with large battery systems that can store this renewable energy and deploy it during peak periods. These large batteries—typically 100 megawatts or more—are being installed at great scale, hooking into power grids to become a significant component of the energy mix.
The global electrification of transport and infrastructure, as well as the increased demand for grid-scale energy storage, have prompted China and Europe to massively ramp up energy storage production capabilities. The U.S. will inevitably follow suit, dramatically reducing the cost of these technologies.
Private equity firms that have historically made oil and gas investments are now shifting into the renewables space. Additionally, global industrial companies are making strategic acquisitions and investments to support the commercialization and scaling of the energy transition. With respect to the energy storage industry, we believe that it will likely follow a path similar to that of the wind turbine industry—ending up with four to five global energy storage systems providers/OEMs.
Energy storage is a thin margin business, and these companies will need scale to achieve efficiencies. This consolidation and increase in the global battery supply chain will drive a continual cost curve downward trend, which is critical for the industry’s long-term success. These technologies need to be cost-competitive to traditional power generation for widespread adoption to take place. We are seeing this evolve quite rapidly as governments, companies, shareholders, and citizens are aligning on the importance and immediacy of confronting climate change with new technologies.
This industry is constantly innovating, and there will always be new and better forms of battery storage technology. Recent advancements in solid-state batteries and other next generation lithium-ion battery technologies are particularly interesting, but there is no one technology that will be all things for all applications. Continual innovation in all areas will push the industry forward and create opportunities for investors and power consumers alike.
What’s Your Why?
There is a lot of tangible activity and momentum in the renewable energy industry right now, which is really great to see after advising in the space for the past 15 years. I find it rewarding to play a role in investments and transactions that will be relevant for generations to come—these technologies will have a meaningfully positive impact on our planet and are necessary to transition to now. Energy storage is a meaningful way to address some of the climate issues we face, and I enjoy that I get to work with people who are passionate about that mission.
About Jamie Boyd, Managing Director, Energy & Applied Technology
Jamie has been a Managing Director and investment banker at Cascadia for over 15 years. He founded and leads the firm’s Energy & Applied Technology practice, which has been a dedicated team advising on companies and technologies in the energy transition and sustainability space since 2005. Jamie leads origination and execution for a global client base seeking M&A, capital raise, and complex corporate finance advice, and he has personally advised on billions of dollars of innovative and industry-leading transactions in his career. Prior to joining Cascadia, he was a lawyer practicing corporate securities and M&A law for international specialist law firm Dechert LLP. Before entering the legal profession, he worked in Vancouver, Canada at Colliers International, where he advised corporate and institutional clients with respect to significant commercial and residential real estate investment transactions.