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Is renewable energy storage a good investment?

23/05/2023

As the world shifts from fossil fuels to renewable energy sources, we’re seeing an increased focus on ensuring that the renewable energy we produce isn’t wasted. Storage ensures that any energy supply that is above grid capacity or demand can be kept for future use, helping to guarantee continuity of supply. 

With that in mind, could renewable energy storage be the next big thing for investors?

 

What does the growth forecast for renewable energy storage look like?

The UK government’s aim is to fully decarbonise the energy sector by 2035 – and for this to happen, more renewable energy storage will be needed. According to the National Grid there is currently around 5 GW of renewable energy storage in the UK system. By 2030, they say, the UK will need up to 29 GW of storage – a figure that will rise to 51 GW by 2050. 

Rystad Energy, an energy research firm, has more conservative estimates but still predicts huge growth. They say that storage will grow to 24 GW by the end of the decade, attracting investment of £16.15bn and ranking the UK fourth in the global storage table behind China, the US and Germany. 

 

Investing in renewable energy storage

Back at the start of 2021, consultancy LCP stated in a report that they were “cautiously optimistic about the investment case for battery storage in GB”. Since then, investment in the sector has grown – with, for example, BlackRock committing up to £200m to UK battery storage projects. Similarly, Centrica and UK Infrastructure Bank have announced investment of up to £265m in the sector. 

For individual investors, there are still relatively few ways to invest in renewable energy storage. One way is to invest in energy storage funds, with three examples listed and described here

These funds – the Gresham House Energy Storage Fund (GRID), the Gore Street Energy Storage Fund (GSF) and the Harmony Energy Income Trust (HEIT) are all investment trusts – and as with all investments, their value can go down as well as up. However, this is a growing sector. As Peter Sermon, Energy and Infrastructure Advisory Director at JLL, says, “We’re only really at the beginning. Many new projects are emerging – and many more will be needed to satisfy grid demand”.

 

“Stable Rise Limited is not authorised or registered by the Financial Conduct Authority. The marketing materials are not intended to provide financial advice nor promote any individual financial products.”

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