New Emissions Regulations May Mean Tesla Battery Boom

When the Obama administration and the Environmental Protection Agency recently proposed new regulations designed to limit power-plant pollution, they set in motion a chain reaction that could create a $200 billion surge in the value of one industry in six years, according to Bloomberg.

That industry is the battery industry, led by projects like Tesla’s TSLA Gigafactory which, when fully up and running will produce significantly more battery power by 2020 than the entire world produces today.

By leaving it up to individual states to determine how to cut emissions, the door opened for states to take advantage of the following section of the EPA proposal:

“Electricity storage technologies have the potential to enhance emission performance by reducing the need for fossil fuel-fired EGUs [Electric Generating Unit] to provide generation during periods when intermittent wind and solar generation are unavailable due to natural conditions. States may wish to consider this possibility as they consider options for design of their plans.”

Related Link: Here's The State Many Are Betting Will Get Tesla's Gigafactory

In other words, states that grow their solar panel and wind turbine industries would need batteries to store energy for when the sun doesn’t shine or the wind doesn’t blow.

Bloomberg New Energy Finance went on to note renewable sources of energy would account for almost 70 percent of generation capacity added between 2012 and 2030. This translates to a significant uptick in wind and solar and by default, their best friend – batteries for storage.

Currently the world’s largest battery makers are Samsung SDI, LG Chem and Panasonic. Altogether, however, those companies account for only a tiny fraction of the total market for power storage.

Nearly 95 percent of energy stored worldwide is the result of using off-peak electricity to pump water uphill, store it, and later release it to flow downhill and produce energy during times of peak demand. 

According to Bloomberg Industries analyst James Evans, that will change as states move to find ways to store renewable energy using batteries – especially in areas where large reservoirs are not possible or practical.

Evans said, “The Gigafactory would open up battery storage packs not just for electric vehicles but also for power storage more generally. The EPA rules are designed for the states to reduce their carbon emissions, and they can do that however they see fit. Energy storage is going to be one of the many tools states could potentially use to get there."

Meanwhile, in addition to the use of batteries for power grid energy storage, Musk’s release Thursday of the company’s electric vehicle patents could result in an eventual explosion of competing electric vehicles – all of which will need battery packs in order to run.

At the time of this writing, Jim Probasco had no position in any mentioned securities.