Welcome to the Green Chip Review Weekend Edition — our insights from the week in everything alternative and cleantech, as well as links to our most-read Green Chip Review and sister publication articles.
When discussing energy, most people focus only on the here and now.
And I have to hand it to them. That's a great way to discount renewables.
But it's also a great way to miss out on what's shaping up to be the biggest investment theme of the first half of this century.
You know the arguments I'm talking about...
"Wind and solar only account for a fraction of energy production, and will never amount to anything... "
"Renewables are way too expensive compared to coal and natural gas... "
"Switching to renewables will hurt our economy, raise utility bills, and cost American jobs... "
Or any of the other talking points you hear that are rarely backed up with any real data.
I actually love people that believe that kind of stuff.
Not only will it be fun to watch them eat crow in a few years; it's also good to know that they'll be missing out on a monumental shift in energy wealth.
They can spout off today about the fallacy of global warming, not wanting to trade in their uber-consumerism for a green lifestyle, and how switching to cleantech would put an unecessary burden on the middle class — all classic unfounded naysayer rhetoric — while we focus on making money from trends they're just too narrow-minded to see.
So pay attention. Here are five green swans they're not considering.
Five green swans
1. The developing world
1.6 billion people still lack basic access to electricity. That's more than five times the U.S. population and represents about a quarter of the global population.
Countries where those people are located don't have a grid. They don't have coal plants. And they likely never will.
As I've detailed here, these countries are developing green from the start.
By 2025 there will be about two dozen cities with populations over 10 million. The U.S. will only have two of them. Most of the rest are being built now — and they're being built green.
Of the $95 billion expected to be invested in cleantech outside the United States and Europe this year, $40 billion will go to developing countries, not including China.
2. Technology development
We've only dipped our toes in the clean technology pool.
The entire sector is undergoing a rapid technological transformation. Fossil fuels have had more than a century to innovate, but the focus has only shifted to cleantech in the past decade or so.
Cleantech is now one of the top three sectors getting venture capital, along with Internet technology and health care.
And the government has created ARPA-E — energy's equivalent of DARPA, which is credited with inventing the Internet.
It's busy developing, among other things, next-generation batteries for electric cars, megawatt-scale storage systems for wind and hydro, soft-magnetics and chips that can reduce the power consumption of electronics, and even microorganisms that harness chemical and electrical energy to convert carbon dioxide into fuels.
It even helped pioneer the new light bulbs we've been telling you about.
If you think there can't be rapid transition in an industry so big, I have two words for you: Smith Corona.
3. Cost
This isn't two years ago. Cost is quickly fading as an argument against clean energy.
Here's where we stand now:
Hydro, geothermal, landfill gas, biomass, and wind are already at or well below current grid prices for coal.
Also, note where efficiency stands. That's a major catalyst for the smart grid.
Solar will be the next technology to reach parity, with installed costs of $0.12/kWh expected by most companies and analysts by 2012.
So the cost argument is just about out the window.
4. Utilities
These fiscally conservative, slow-to-change, highly-regulated giants are quickly starting to warm up to cleantech after a long and calculated wait time.
These guys are penny pinchers, so there's no way they were going to adopt clean energy until it was competitive...
But guess what? The time has come.
Utilities used to have to be forced to purchase clean energy through laws. Now they are seeking it out — and in some cases, not signing power purchase agreements with developers, but rather taking ownership of the assets themselves.
This is especially true of solar, which is about to reach parity, and avoids many challenges associated with transmission, interconnection, and permitting. And also of the smart grid, for which 25% of U.S. utilities have already made a firm commitment.
When the utilities like it, you know it's a viable product.
5. China
China's 2009 cleantech investment: $33.8 billion.
The U.S.? Just $17.9 billion.
China now has three of the top 10 wind companies in the world, and has become the largest domestic wind market in the world after passing the U.S. last year.
They have six of the top ten solar companies, and they produce more than 50% of the world's solar energy products.
And they're just getting started.
Bottom line
In a recent report, the International Energy Agency said that “a revolution in energy technology is occurring, spearheaded by substantial increases in renewables generation, particularly wind and solar power.”
And even with all the progress, these are only the “first small, fragmented steps on a long journey towards transforming the way we supply and use energy.”
It has concluded that renewables could provide 50% of the world's power by mid-century.
Put your money in cleantech. Put your money in the future.
Some more ideas on how to do that below.
Call it like you see it,
Nick
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A big clue comes from your mention of utilities. They are getting the huge subsidites, If the subsidies weren't there, they wouldn't be doing most of the alternative energy stuff. In addition, the alternative energy is still more expensive, but they're raising their rates to cover it. They can do that since they have govenment enforced monopolies. But as they add more alternative eenergy, and keep raising their rates, the people may reach a breaking point. So your whole analysis is bogus.
Why not just be honest and say that it's a big boondoggle, but until people wake up, which may not be any time soon, we can make big money from the boondoggle?
I value GREEN STOCKS and
I have been a very patient green investor for over a decade . I look for the basic thermodynamic efficiency , often masked by faulty narrow economic analysis that does not understand " net energy" EROI .
I always discount subsidies to fossilized sectors and nukes, which, as you know ,are huge( much larger than any to renewables ) ! So I'm still holding all my early round investments and hoping they don't need to go public and dive into Wall Street's still shark-infested waters.
Hey Chuck, you obviously don't do your research. Take a look at all the subsidies for oil and coal and natural gas. You are one of the many morons who believes all the stuff you're spoon feed you on television. When you look at all the subsidies and externalities, you will see how stupid your argument is. Isn't there a message board on Glen Beck's site you can go to and share your brilliant wisdom?