Markets snapped back to finish strong last week.
We won’t know until later whether this is the start of a new uptrend or just another failed rally in what has been a brutal year for the S&P 500 and other major indexes.
But I do know one thing with 100% certainty.
Whether the market goes up, down or somehow stalls out for the next five years, there’s always a bull market in something.
We know that one of those “somethings” (i.e., mega trends) is the rise of renewable energy.
Renewable Mega Trend: It’s Economics!
Last year, renewable energy sources accounted for about 12% of U.S. energy consumption and 20% of domestic electricity generation. That’s up from zero two decades ago, and the U.S. Energy Information Administration expects production to surge to 44% by 2050.
And that was before President Biden signed the Inflation Reduction Act, which incentivizes new solar and wind projects.
Government incentives help. But economics are the bottom line. For new power projects, solar and wind are now cheaper to produce than natural gas (one of least expensive resources to harvest).
Even without a massive overhaul of our existing infrastructure, renewable energy will make up a bigger and bigger share of the total grid.
Renewable energy has always had one major weakness. Unlike gas, coal or nuclear-fueled plants, which can run 24 hours a day, solar energy doesn’t work at night. Wind energy doesn’t work when the wind stops blowing.
The solution, of course, is utility-grade storage: massive battery systems that store electricity from hours of peak production.
If you have solar panels on your roof or know anyone who does, you might have seen a retail version of this in Tesla’s Powerwall line of storage systems.
Its latest offering, the Powerwall+, is about the shape and size of a baby crib mattress and can power most of your home’s electrical needs, including central air conditioning, for hours.
But it’s not just homes and businesses that need battery backup. It’s the utilities themselves.
The Big Names Need Lithium
Demand for storage translates to demand for lithium, the critical component in today’s battery technology.
Experts expect demand for lithium to jump from 559,000 metric tons in 2022 to 2.1 million metric tons by 2030, an increase of 280% in just eight years. And remember that these estimates were published before the Inflation Reduction Act was passed, meaning the real demand will grow from here.
This isn’t something that is years in the future. It’s happening now.
Just last month, Honda and LG announced plans to build a $4.4 billion plant in the U.S. to produce the batteries Honda needs for its future line of electric vehicles (EVs).
And Tesla is taking it a step further. Rather than simply building batteries, the EV front-runner is going further upstream to refine lithium itself. The company is considering its own major lithium refinery on the Gulf Coast of Texas.
Tesla’s CEO Elon Musk has also suggested that his company may go so far as to invest funds in its own mining operation. Musk is smart enough to know that without lithium, he doesn’t have a business!
I can’t tell you with any certainty whether the overall market will finish this year higher or lower. But I have no doubt in my mind that demand for lithium will soar from here … and that growth will continue with every passing year for the foreseeable future.
In last month’s issue of Green Zone Fortunes, I recommended one of my highest-conviction lithium stocks. It has a fantastic runway of growth in front of it, and it pays a solid dividend to boot.
It’s already up almost 25% since I added it to the Green Zone Fortunes model portfolio on August 19, and I think this is only the beginning of its climb.
Of course, that’s not our only renewable play in my premium stock research service. We have multiple tickers in the green with plenty of room to go higher.
If you want to find out why, click here to watch my “Infinite Energy” presentation.
And get ready to follow the lithium and renewable mega trend to incredible profits.
To good profits,
Chief Investment Strategist