Goldman Sachs: Wind & solar the “new shale gas”

  • Leading investment bank publishes The Low Carbon Economy //
  • Benchmark advises on the lithium and battery supply chains //
  • Solar and wind “the new shale gas” //
  • Albemarle and Tesla identified as investment targets //

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Goldman Sachs has declared wind and solar power industries the “new shale gas” in its first ever published opinion on the low carbon economy.

The report entitled The Low Carbon Economy: GS Sustain equity investor’s guide to a low carbon world 2015-2020 was released last night coincide with the COP21 climate change talks in Paris this week.

The world’s leading investment bank has called 2015 a “watershed year” for low carbon technologies and one that could have a significant impact on the lithium-ion battery supply chain and its raw materials of lithium, graphite and cobalt.

With solar and wind installations on track to reach 100GW, and significant growth in the pipeline for hybrid and electric vehicles, Goldman believes the space has now reached a tipping point.

Interestingly, the company also highlighted the rise of LEDs to take 70% market share of the global light bulb market in little over a decade as a major industry to watch.

“In a crowded world of low carbon technologies, four front runners stand out,” the report explained.

“LEDs, onshore wind, solar PV, and hybrid and electric vehicles stand out by combining market scale [with a multi-billion dollar annual revenue opportunity and] with a consistent track record of volume growth [in excess of 10% a year].”

Goldman Sachs explained that the converging factors of political support, economic viability, the need for new industries and jobs, and scandals such as VW are all major contributing factors to “tipping the scales” and taking the “training wheels off of the low carbon economy”.

Benchmark advises on lithium and batteries

Benchmark Mineral Intelligence advised on the lithium and battery supply chains during the report’s research and Goldman Sachs believes that the minerals’ performance this year and a consistent, long term, rising price trend is further evidence of being an early, direct beneficiary of the low carbon economy.

“Other industries have been beneficiaries of the growing importance of low-carbon technologies. The price of lithium, for example has defied the downward trend in global commodity prices, with prices on a steady upward trajectory since 2011. The material is a critical raw material for the fast-growing global battery-supply chain,” the report said.

Goldman Sachs also cited a handful of companies to watch in the low carbon space with Albemarle Corp being the only lithium company and Tesla Motors the only electric vehicle producer.

Serious questions remain over the ability of these supply chains to meet such demand figures, however, and the availability of products such as lithium or installation skills for solar and stationary batteries are likely to being slowing factor.

You can download the report below with Benchmark data being cited on p48 (lithium) and p24 (batteries).

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