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A “Picks and Shovels” Solar Play

Historically, solar power has been great, except for its rather obvious kryptonite…
Night.
It’s one thing for solar panels to transform solar energy…

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This article was originally published by Investor Place

Historically, solar power has been great, except for its rather obvious kryptonite…

Night.

It’s one thing for solar panels to transform solar energy into electricity on a brilliant summer afternoon. But come sundown, you’re out of luck. If the solar energy wasn’t used, it’s gone because there hasn’t been a viable energy storage solution.

This is finally changing.

As our macro specialist, Eric Fry, writes below:

Until recently, residential solar power systems lacked the ability to store energy; they were simply use-it-or-lose-it power generators.

Energy storage technologies (aka “batteries”) were too expensive to be viable additions to solar-power systems.

But this old story is changing rapidly. Solar-plus-storage has arrived.

JPMorgan projects that installations of battery-based energy storage solutions will grow 100-times between now and 2030.

But if you’re thinking about investing in any ‘ole solar stock as a way to play this, hold on. Most are trading at nosebleed valuations.

There’s potentially a much better, safer vehicle for your money – a “picks and shovels” play.

I’ll let Eric take over at this point with the details.

Have a wonderful Labor Day weekend,

Jeff Remsburg

The Future of Solar-Powered Profits Isn’t in Solar

By Eric Fry

On Sunday evening, fire officials ordered more evacuations around the Lake Tahoe Basin.

This two-week old blaze continues to churn through the mountains just a few miles southwest of the Tahoe Basin.

So far this year, more than 6,800 fires have been recorded in California, destroying 1.63 million acres and 2,000 buildings in the process.

This takes me back to the California fires from a couple of years ago.

During the massive Kincade Fire – the biggest California wildfire in 2019 and the largest ever in Sonoma County – PG&E Co. shut the lights off on more than one million customers. In fact, I still remember them shutting off the power at my house in Northern California on October 27, 2019.

So far this year Californians have avoided the rolling blackouts – in which our utilities cut off power to millions of customers in order to avoid even more damaging fires – that plagued us the past two years.

Other parts of the country haven’t been so “lucky.”

In February, nearly five million Texans lost power during the harsh winter storm that hit their state. And on Sunday, as the Caldor Fire blazed near my neck of the woods, more than one million folks in Louisiana and Mississippi lost power after Hurricane Ida hit – and many of them don’t expect to get it back for a week or more.

While for most of us power outages are a temporary annoyance, week-long blackouts can be nearly devastating. And for parents with young children, the elderly, and those who depend on power to treat medical conditions, they can reach critical status quickly.

These natural disasters raise questions about how well the energy industry is prepared for natural disasters.

No wonder my wife’s cousin, Pete, is so busy.

In addition to his full-time job as an electrician for the City of Santa Rosa, Pete spends his off-hours installing backup generators for Northern Californians sick of losing their power during wildfire season.

Pete tells me he installs four to five of them a week… and more and more all the time. In fact, he makes some nice extra income through this “side hustle.”

Generator sales went through the roof following the Texas storm – and they’re doing so now again in the wake of Ida.

However, backup generators are not a long-term solution to California’s blackouts and our shaky national power grid. They’re expensive, dirty, wasteful, and prone to performance problems.

However, a new technology now available to homeowners is a likely solution.

It’s pricey, too, but it’s clean and efficient.

You can use it all year long – not just during emergencies.

And it’s leading many investors to triple-digit gains…

A Battery Revolution

Until recently, residential solar power systems lacked the ability to store energy; they were simply use-it-or-lose-it power generators. Energy storage technologies (aka “batteries”) were too expensive to be viable additions to solar-power systems.

But this old story is changing rapidly. Solar-plus-storage has arrived.

Globally, the deployment of battery-based energy storage solutions (BESS) is ramping up quickly. According to JPMorgan, the cumulative installed base of BESS will soar 100-fold between now and 2030.

Utilities and commercial customers (like office parks and big-box stores) were the first to embrace solar-plus-storage.

And now, the blackouts in California and other fire-prone regions are ratcheting up demand for home-based solar-plus-storage systems.

San Francisco-based solar panel company Sunrun Inc. (RUN) says 25% of its California customers are adding storage batteries to their systems.

Moreover, the entire rooftop solar industry is booming.

Bloomberg New Energy Finance expects this segment of the solar energy market to grow about 25% a year over the next several years – or more than twice as fast as the utility-scale solar sector.

And now, just in time, several solar companies are there to meet homeowners’ needs…

For example, Enphase Energy Inc. (ENPH), an innovative and leading provider of “modular microinverters” for the solar sector, started rolling out its “Ensemble” energy storage solution for home use on November 20. In the simplest terms, this system is a battery linked to solar panels.

Enphase’s energy storage solution includes modular lithium-ion phosphate batteries, seamlessly paired with Enphase microinverters and related solutions.

The Ensemble storage system integrates with the new Enphase IQ8 microinverters to create an “always on” power system. It provides real-time energy management that enables homes to “choose” between using their own solar/stored power or power from the grid, based on pricing and availability.

Importantly, for places like California and the Gulf Coast where blackouts are becoming the new normal, the Ensemble system and others like it can operate independently of the grid and provide power even when the grid is “offline.”

These systems are expensive – after tax credits, around $15,000 to $20,000 for solar-plus-storage, according to the California Solar & Storage Association. Still, Enphase says its Ensemble system “keeps homes powered when the grid goes down” and saves homeowners money “when the grid is up.”

That’s why so many of we Californians – and Texans and Gulf Coasters, too, now – are planning to install solar-plus-storage systems in their homes.

A Metal Revolution, Too

This Second Electric Revolution is powering ahead… and it is creating spectacular opportunities everywhere it goes. But finding the best ways to invest in this revolution is no easy task.

Solar stocks reached bubble territory in late 2020 and early 2021 – and they haven’t receded enough to put them in my crosshairs yet.

Moreover, many leading companies in the EV and energy storage sectors are losing money. The Chinese EV company Nio Inc. (NIO) is one high-profile example, but it’s hardly alone.

Therefore, rather than invest in money losers or bubble stocks, I have recommended “pick and shovel” plays that provide essential ingredients to the solar, EV, and energy storage industries.

I’m talking about “battery metals.”

EV and energy storage technologies — a major part of the Technochasm we talk about here — require vast amounts of metals like lithium, copper, nickel, and manganese. The average battery-electric vehicle, for example, contains about 180 pounds of copper — that’s about half as much as the average American home.

So, the boom in EVs and energy storage is creating major “echo booms” in several metal markets.

To capitalize on these prospective booms, I’ve recommended battery metals plays, like Freeport-McMoRan Inc. (FCX), which mines copper and other metals used in battery production. Already this year, readers of my Fry’s Investment Report service had the chance to book 150% gains on one-third of their Freeport position.

I’m always looking for more plays with Freeport’s sort of potential in Fry’s Investment Report. In fact, I have my latest picks ready to go for you.

And they’re leading a $56 trillion tech shift.

Go here now.

Sincerely,

Signed: Eric Fry

Eric Fry

The post A “Picks and Shovels” Solar Play appeared first on InvestorPlace.

Economics

Between a rock and a hard place

What will the Fed do? European stocks are making decent gains on Thursday, while US futures look a little flat ahead of the open on Wall Street. US equities…

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What will the Fed do?

European stocks are making decent gains on Thursday, while US futures look a little flat ahead of the open on Wall Street.

US equities rallied as the session wore on yesterday and we’re seeing Europe playing a little catchup this morning. Overall, the mood remains a little downbeat in the markets, with investors torn between the “buy the dip” approach that has fared so well in the past and the growing list of economic and market risks that are increasingly evident.

We may see more of this over the coming months as countries get to grips with winter Covid surges, higher energy prices and higher inflation, among other things. Which makes the positions of central banks all the more uncomfortable, with many seemingly determined to persevere with paring back their pandemic stimulus measures.

Of course, if they are becoming more of the view that inflation is not as transitory as they previously believed, then they’re caught between a rock and a hard place and may be forced to act. But that will only pile on the pressure and disrupt the economic recoveries that many have enjoyed.

Next week we should learn a lot more about what the world’s most important central bank thinks of recent developments and how it perceives the risks posed by inflation. It may not be surprising therefore if equities err on the side of caution between now and then as an undesirable response could trigger a nasty reaction in the markets.

US data delivers gains for stocks, yields and USD as gold tumbles

Today’s data from the US has done little to clear things up, with both retail sales and the Philly Fed manufacturing index smashing expectations while jobless claims popped a little but only just exceeded forecasts. Retail sales have been volatile for a number of months but an August increase of 0.7% was the reverse of the decline that was expected.

Philly Fed has been trending lower since March and that trend was expected to continue but a surprise jump may be cause for optimism. While new orders and employment indicators softened, firms remain optimistic about the next 6 months as current general activity and shipments saw large increases.

US futures got a small lift on the back of the data while the dollar continued to rally as US yields drifted higher once more. Gold, which has been through a rough patch over the last 48 hours, didn’t fare well with the data and continued to trend lower on the day.

Bitcoin struggling at $48,000 once again

Bitcoin has steadied once more around $48,000 which remains an interesting technical level. A rotation off here back towards $44,000 could see correction pressure grow. I say this having talked about the prospect of a correction for weeks now and yet, bitcoin has shown remarkable resilience.

It obviously hasn’t burst higher in that time either but it’s certainly dragging its feet. With that in mind, there isn’t much to add at this point. A significant break below $44,000 could make things interesting, while a move above $48,000 will put the focus back on $50,000 and may even trigger a shift in momentum that has been absent in previous rallies.

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Precious Metals

Oil pares gains, gold plummets ahead of Fed

Oil sees profit taking at summer highs Oil is pulling back a little on Thursday after enjoying another strong rally in recent days. Hurricanes hitting…

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Oil sees profit taking at summer highs

Oil is pulling back a little on Thursday after enjoying another strong rally in recent days. Hurricanes hitting the Gulf Coast in recent weeks have disrupted production in the region which has given a boost to prices. And with two more months of Hurricane season remaining, more disruption could follow.

Inventory data from EIA gave prices another lift on Wednesday, with WTI and Brent also rallying ahead of the release after API also reported a large drawdown a day earlier. With prices now back around summer highs, we are seeing some profit taking kicking in but the rally continues to look well supported.

WTI fell a little short of its summer highs around $75, stumbling around $73, while Brent saw resistance around $76. A break through these levels could see the rally gather even more momentum. If we do see a small pullback, the first test of support could come around $70 in WTI, where it had previously seen resistance.

Tough times ahead for gold?

Gold has fallen out of favour and fast, with the yellow metal slipping more than 1.5% today and below a key support level. This comes only a couple of days after it broke back above $1,800 on the back of softer US inflation data but that celebration was short-lived and it’s suddenly looking rather vulnerable.

From a technical perspective, $1,780 marked the neckline of a head and shoulders that formed over the last month, peaking at $1,833. The next major test below could come around $1,750 but further downside could be on the cards.

The fact that this has come ahead of the Fed meeting doesn’t bode well for the yellow metal. Recent data has given the Fed room to be more patient with tapering but the commentary we had late last week from officials suggested many aren’t discouraged. Gold could feel the love once more should policymakers change course next Wednesday but it could be a long week for the yellow metal in the interim.

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Economics

OIl Firm But Gold Flashes Danger

Oil prices leap higher.   Oil prices staged an impressive rally overnight having spent the week ignoring the gloom sweeping other asset classes. Official…

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Oil prices leap higher.

 

Oil prices staged an impressive rally overnight having spent the week ignoring the gloom sweeping other asset classes. Official US Crude Inventories surprised by falling by a much higher than expected 6.40 million barrels. The slow return of production and refining post-Hurricane-Ida being the main culprit. The relentless rise in natural gas prices, now starting to cause nerves to fray in Europe, is also helping to elevate oil prices and is a situation that I believe will get much worse before it gets better.

 

Brent crude carved through $74.00 a barrel on its way to an impressive gain to $75.50 overnight, rising slightly to $75.60 in Asia. $74.00 now becomes a support/pivot point. China’s announcement that it is selling some of its strategic reserves to the domestic market has had zero impact on prices and dips to the $74.00 region should find keen buyers. Brent crude has resistance near by at $76.00 and if that gives way, Brent crude should target the $78.00 a barrel area.

 

WTI leapt 2.65% higher overnight, climbing to $72.60 a barrel, advancing to $72.70 in Asia. Any dips to $71.00 a barrel should be well supported, at least until we see concrete recovery progress from the Gulf of Mexico hub. A rise through the overnight high at $73.10 suggests a test of $74.00 a barrel, which could extend to $76.00 next week.

 

Gold flashes more danger signals.

 

Gold’s price action overnight flashed more warning signs to bullish investors as prices fell despite the US Dollar weakening and US yields remaining barely changed. Gold finished the overnight session down 0.60% to $1793.50 an ounce. Gold rally on Tuesday failed at the 200-day moving average (DMA), and the uninspiring price action overnight is a huge warning signal that gold is living on borrowed time at these levels, with the path of least resistance looking more like lower by the day.

 

Gold has resistance at $1808.50, the 200-DMA which caped gains so well this week, followed by the 100-DMA at $1816.50 and a formidable series of daily highs around $1834.00 an ounce. Support lies initially at $1790.00 followed by the more crucial $1780.00 an ounce zone. Failure there is likely to see gold fall rapidly to $1750.00 an ounce and potentially lower.

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