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Energy Integration is the Next Booming Trend

by | published December 17th, 2012

As an ongoing debate centers on the different benefits of renewables and fossil fuels, the presumption is that only one clear victor will emerge from this competition.

But recent trends in the wind and solar age show that this conclusion just isn’t so.

The coming energy balance will require both to work in tandem in order to achieve our sourcing goals around the world. And – as developments accelerate – it is in this “new” energy balance that individual investors will have a widening array of profit opportunities.

These days, with oil-rich countries like Saudi Arabia and the United Arab Emirates unveiling huge renewable energy projects, some analysts are drawing the wrong conclusions. But I have to stress, renewable development is not a signal these countries are running out of crude oil anytime soon.

Quite the contrary, they have realized that one side of this equation will require the other.

The same holds true in North America, where the surplus of unconventional natural gas has led some to the erroneous conclusion that wind and solar – still requiring significant government subsidies – have been dealt a fatal blow.

Wrong again.

This is not a winner-take-all battle.

There will be no silver bullet hawking the next age of energy. Rather, it is the integration of energy sources that will comprise the next development. And that requires different sourcing from genuinely distinct and dissimilar energy categories.

In fact, three recent events provide clear indications that energy integration is the coming trend.

One of these was in the San Francisco area, where gas turbines were cranking out electricity at near capacity on one end of the bay, while a huge wind farm laid almost dormant on the other due to a lack of wind.

A second occurred in Southeast Asia. There a new battery of photovoltaic cells offset a bottleneck in the delivery of coal and natural gas to power plants.

The third was the usage of wind power in the Baltic to offset an unexpected interruption in gas deliveries on a recently completed onshore distribution spur from the new Nord Stream gas line moving under the Baltic from Russia to Germany.

Now these were three highly different events, but they certainly do not reflect a sudden change in either global energy problems or planning. What each has proven is that new trends in energy grid optimization have been accelerating over the past decade.

And this continuing trend will be the main driver in how we power our lives moving forward.

Renewables Impact Remains Limited

Here is the argument in a nutshell.

So long as we remain dependent on single energy sources for needed sectors, alternative possibilities will have little impact except on the margins. That means we require distinctly different energies that are capable of being mutually exchangeable as required.

Even if solar, wind, and geothermal will someday comprise the primary sourcing of electricity in certain regions, fossil fuels will still be required as backup. Similarly, where oil, gas, and coal remain as the essential power sources, renewables will serve in a similar secondary role.

Here is what is going to happen when this balance takes place. For the first time, the complete spectrum of energy needs will be able to factor in availability, efficiency, production/generation cost, and end-user price whenever an energy selection is made.

Availability, efficiency, cost, and price are the essential ingredients in determining the real impact energy has on economic development (or recovery). The overall scheme of energy application still places primacy on preferred energies either by region or by use. Coal is still the source of choice in Appalachia and China; meanwhile, oil still runs our vehicles.

Therefore, having a number of sources is not enough. Integrating sources is only half of the problem. We need to be able to exchange them in market use. There, transportation is still the primary shortcoming.

Natural gas is making a move to reduce dependence on gasoline and diesel. The persistence of the electric car, the end use integration created by the hybrid, the rise of biofuels, and even gasification, are all movements afoot on the vehicle fuel side.

There is still much that needs to be done for the integration to work.

But it has started.

On the power generation side, however, the expected grid moving forward will continue significant revisions already underway. The network from which we obtain electricity will undergo changes that are more dramatic over the next two decades than in the previous three or four generations. Several of the major ingredients are already in operation. With nuclear, geothermal, and even weave power thrown in for good measure, the balance prospects are encouraging.

The key in all of this remains integrating sources in an ongoing energy balance – requiring a number of different sources, exchangeable as to use and selectable as to availability, efficiency, cost, and price.

Of course, it is not simply the identification and operationalizing of the sources. We also require a multifaceted infrastructure to produce, distribute, store, and transport. This is likely to be the most expensive component of the mix.

We are witnessing the rise of new “midstream” components in many energy sectors paralleling the advent of limited partnerships in gas and oil. Each new demand of this expanding and revising energy infrastructure will also create opportunities for companies to explore new niches in the production-to-use sequence – creating new profit centers for investors along with them.

The market needs to understand that the expansion of wind farms and photoelectric fields is not a sign that oil and gas are dead. Nor is a booming shale gas basin a reason to short solar stocks.

The coming integration will establish a new way we power our lives, but it is one on which there will be ample room for sources mutually to benefit.

Sincerely,

Kent

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  1. Jasper2
    December 17th, 2012 at 13:30 | #1

    I hope you are not suggesting “renewables” continue to be subsidized. If they cannot meet the test of marketability and reliability, they will never have a “part in the energy equation.”

    (There IS no energy equation, in fact. Who thought that meaningless phrase up?)

    Our standard of living depends on reliable and reasonably priced energy. That is easily within our grasp within decades if not less. The US can be a net exporter of energy…we have more carbon based fuels than any other country in the world. That does not mean it needs to be as cheap as it has historically been. Market price drives energy efficiency up to a point. But paying 10 to 15 times the price per KW for “renewables” is not a solution.

  2. Annabelle Herbert
    December 17th, 2012 at 14:00 | #2

    Kent,

    When the 3D PV cells hit the market (nearly 3X the present output), why shouldn’t the government extend the homeowner’s subsidies to provide every home with it’s own power and the means to store it. With energy decentralized, there would be no more fears of subversive attacks on our power grids. Wouldn’t it also be an enormous savings in the long run? Sadly, I suppose it’s too much to ask our government to do any long range planning.

    Thanks

  3. enthusceptic
    December 17th, 2012 at 20:37 | #3

    It’s very interesting to know that the shift to renewals and integration of them is not far off in the future. This is only starting, and I believe that technology will develop very rapidly, not only making renewables really viable, but also improve the efficiency of burning fossil fuels.
    Wouldn’t clean coal for heating/electricity production be wonderful? It would be such a shame to leave such a plentiful resource unused…

  4. Annabelle Herbert
    December 17th, 2012 at 22:37 | #4

    Clearly my comment about subsidies was misconstrued. I suggested that homeowners buying PV’s (or any other renewables) for the purpose of creating energy for their own household needs- be given a tax break or some other form of government subsidy, NOT subsidizing the companies themselves. I firmly believe that companies need to stand on their own or fold.

    But since the price of PV arrays has come down substantially, and given a possible 250%+ efficiency increase with 3D solar, they should soon be in the ballpark of competitiveness. Many more homeowners will opt for a greener source even if slightly more costly. This is already happening. I for one do not see a loss in our standard of living as a result of using renewable energy, in fact, quite the opposite.

    The price of consuming carbon based fuels is already enormously high in myriad ways. We are looking at more Hurricane Sandy’s to come, more expensive and debilitating health problems in the worldwide population and a rapidly accelerating degradation of the planet just for starters. THERE’S your loss in the standard of living!

    Natural gas is certainly “cleaner” than oil and is definitely an excellent interim solution to declining oil reserves. It is not one of the long-term solutions. Focusing solely on natural gas as our next big thing after oil is short-sighted in the extreme. Renewables must and will come into play, sooner or later.
    I very much doubt that the government’s centralized energy solution will “pencil out”. ..except for those few companies making money on it. I can confidently predict cost overruns practically ad infinitum. Guess who pays in the end?

    It doesn’t take an economist to see the savings in NOT building more enormous power grids, NOT erecting thousands more poles, NOT stringing millions of miles more wires, NOT building thousands more High Tension towers and erecting them for thousands of miles. The cost of upkeep alone on all that infrastructure boggles the mind. Short term solutions are nearly always more costly in the long run.

    In my opinion, the homeowners already “opting out” and producing their own electricity are simply in the forefront of a sensible solution.

  5. Genozee
    December 22nd, 2012 at 01:39 | #5

    Kent…
    Not sure I have facts about this correct, but I read an article just recently read a about new process (don’t recall exactly what) that will produce a energy product , like from what I do not remember. that will fuel needs for vehicle, powr plants, industrial needs etc. and virtualy delete the need for oil and/or nat, gas and be very cheap to produce (maybe something like from a biological or other like base source) and that some of the biggie oil corps are already delving into this process with gusto.

    HAVE YOU HEARD OR KNOW SOMETHING OF THIS???

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