There's an energy revolution taking place at this very moment and you may not even be aware how it will change the future of energy. Consumers, businesses, and public institutions are becoming energy producers by turning unproductive rooftop space into productive energy assets by capturing the sun's energy. Potentially even more revolutionary is research going on today that could make energy from the sun or wind storable on a large scale, which would change the electricity industry entirely.
When put together, solar energy and energy storage are a potent mix that will reshape the way we look at energy. Investors who can get in on the trend early are in for huge potential gains.
Solar energy -- the equalizer
The amazing thing about solar energy -- and rooftop solar energy in particular -- is that it's flipping the power of the electricity industry, turning consumers from rate takers reliant on utilities for electricity to power producers. This dynamic has upended not only how consumers can look at energy, but also how utilities look at consumers.
Today, a company like SolarCity (NASDAQ:SCTY), SunPower (NASDAQ:SPWR), or a number of others can offer a solar lease to homeowners or building owners for less than the cost of electricity with $0 down. That means that distributed solar costs are now below $0.15 per kW-hr and falling fast, as you can see below.
No matter how you look at it, solar energy has shifted the energy landscape by making power generation a commodity that's available to all of us. The scary thing is that solar energy has only begun to scratch the surface of its potential, which can literally be measured in trillions of dollars.
Energy storage -- the game changer
The downside of solar energy and even wind energy is that it's not around all of the time. These intermittent energy sources need energy storage to provide electricity 24/7.
In recent years there have been great advancements in energy storage, and it's been done using traditional lithium ion batteries. Tesla Motors' (NASDAQ:TSLA) Gigafactory in Nevada is earmarking about one-third of its battery production for SolarCity's (NASDAQ:SCTY) energy storage solutions, which are already being rolled out to customers.
SunPower (NASDAQ:SPWR) has also been testing energy storage and recently launched a home energy storage product in partnership with KB Home.
Now that energy can be produced by everyone from homeowners to large businesses, it's possible to reduce reliance on the grid and as the cost of energy storage falls the revolution taking place will be moved into a whole new phase. Leaving the grid will be a reasonable possibility, and new concepts like microgrids will become a very real possibility.
Energy storage -- not just solar energy -- is the real key to the future of renewable energy, and if companies like Tesla Motors can lower battery costs from $500-$600 per kW-hr today to $200 by 2020, as McKinsey & Company predicted here, it'll make energy storage all that much more feasible.
The average U.S. home uses about 30 Kw-hr of electricity each day, and at $200/kW-hr a full day's energy storage system would be about $5,940. That's not all that expensive when you consider that the average home spends $1,287 per year on electricity, and that cost is rising each year. Soon, it may be economical to go solar and include energy storage, which would truly change the game in electricity.
Travis Hoium manages an account that owns shares of SunPower and is personally long shares and options of SunPower. The Motley Fool recommends SolarCity and Tesla Motors. The Motley Fool owns shares of SolarCity and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.