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Renewable Energy 101: Say Hello To Geothermal

Geothermal energy is simply the use of the heat from the earth we live on.

Generally, it’s captured by pulling hot water and steam from beneath the surface and once the heat energy is utilized, returning it in the form of warm water to be heated again.

Many regions of the world are already capturing geothermal heat for a sustainable source of energy to replace our reliance on fossil fuels. Geothermal plants account for more than 25% of the electricity produced in both Iceland and El Salvador (source).

Like other sustainable energy sources, the main cost for geothermal power is in the initial investment phase of building the plants.

However, running and maintenance costs are minimal because there’s no fuel used, and therefore no purchasing, transport, or cleanup costs involved in the operation of the plants. The cost can be recouped in a few years via a 30%-60% heating bill savings and a 25%-50% savings on cooling costs. (source) Because the hot water and steam utilized is renewable, scientists have surmised that with proper reservoir management of the steam and water levels, the energy potential in geothermal reservoirs will last literally billions of years. (source)

Because geothermal energy is predictable, it is an excellent resource for a base load of power which can be relied upon with remarkable accuracy.

This is not the case with solar and wind, which are weather dependent.

Geothermal capabilities can be harnessed on a grand scale, such as in Reykjavik, Iceland (pop. 118,000), where virtually every building is heated with hot spring water from the earth.

Both large and small systems can be installed depending on the needs of the property owner, and such a reliable source can reduce traditional energy costs significantly. (source)

Geothermal plants are not only beneficial as utility suppliers, but as direct power refineries for industries such as milk pasteurization and agricultural processing, and gold and silver mining facilities, and temperature regulation at fish farms. There’s also the potential for crop irrigation improvements around the western half of the United States, relieving a burden on rural water co-ops, private water conveyors, and the Western Area Power Administration. (source)

Benefits to local and rural economies are also realized through federal and state royalties paid by geothermal plants.

The Department of Interior’s Office of Natural Resources reported in 2013, geothermal power suppliers were responsible for around $15 million in royalties and rents from federal lands used for geothermal production. (source)

While geothermal power may not be as widely available due to location specific requirements such as proximity to volcanic and geyser activity or tectonic plate movement, the areas that are conducive to geothermal power can significantly benefit from the infrastructure advantages of well-paying jobs, influx of property taxes, and reduction of traditional power usage and savings on traditional utility bills through a resource more reliable and potentially more sustainable than fossil fuels—the earth itself.


PETER KRULL IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.

Renewable Energy 101: The Power of Wind

As an option for sustainable alternative power resources, wind energy is in the forefront as a viable choice. It is a renewable resource, so the supply will never deplete, and unlike conventional power plants, wind turbines or wind farms produce no pollutants or greenhouse gases.

Wind energy is captured by windmills or wind turbines, which look like large fans with blades that can be as large as a football field. The wind turns the blades, which generates kinetic energy used to turn turbines attached to generators. The generators convert the motion of the turbines into electricity and feed into the power grid.

Small businesses or private residences can also harness wind energy with much smaller turbines connected to the power grid.

If the business or resident uses less energy than the wind turbine produces, it can actually result in credit from the power company.

Because wind energy is a drought resistant crop, farmers and ranchers have been taking advantage of its production as a way to supplement income alongside their planted crops and keep the land their families have worked for generations.

According to the Department of Labor, “wind turbine technician” is the fastest growing job in America.

As of January 2016, wind energy supports 88,000 high-paying American jobs, 21,000 of which are manufacturing.

The initial investment in a wind turbine, while having drastically decreased in the last 10 years, is still significant, with site preparation and installation of the machinery responsible for 80% of the cost. However, on a life-cycle cost basis, wind turbines are much more competitive than other technologies because there is no fuel to purchase and ongoing operating expenses are minimal.

Perhaps the biggest benefit of all is the projected health benefits of wind energy.

According to the Harvard School of Public Health, as of 2015, wind energy produced $7.3 billion a year in public health benefits by cutting pollutants that contributed to asthma attacks and other lung diseases.

Drawbacks, however, include the weather-dependent nature of wind. The wind doesn’t always blow when electricity is needed, and the way the energy is harnessed, there’s currently no way to store power in times of surplus to be used in times of shortfall.

It is also not feasible for the power to be supplied over long distances. Those benefiting from wind farms are limited to the location where the wind blows strongest.

This, however, isn’t necessarily prohibitive, given highly populated coastal communities can benefit from offshore wind farms, like one being built off the coast of Long Island, just recently approved by the Long Island Power Authority in January 2017.

The goal is to add low-carbon energy sources to the power mix by producing 2.4 gigawatts of offshore wind, enough to power 1.25 million homes and add high paying jobs while combating climate change. (Source)

With current estimates putting wind energy potential at ten times greater than the current US electrical consumption, wind energy, in combination with other forms of renewable energy, could be the wave of the future.


PETER KRULL IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.

Renewable Energy 101: Hydro Power

Hydroelectric power, or hydropower, is the kinetic energy created by moving water captured by turbines and converted to electricity by generators.

Hydropower is actually one of the oldest forms of power production on earth, dating as far back as ancient Greek farmers using it for mechanical tasks such as grinding grain.

Paddlewheels were used in everything from mills and factories to boats built to cruise down the Mississippi River.

Hydropower is the product of damming up a river or lake and controlling the flow of that water through the dam. Used in conjunction with rainwater storage and proper management of the flow, hydropower harnesses a renewable resource that can’t be depleted.

Unlike wind and solar power, hydropower can be stored for times when the burden on the power grid is greatest.

Water can be pumped from a lower reservoir to a higher reservoir during times of low power usage—like overnight, when power consumption is at its lowest—and released again to the lower reservoir during times of high consumption, where the volume of water released can generate more kinetic energy to transfer to the power grid via the generators.

While the infrastructure to build hydropower is extensive, maintenance and technological improvements over time are easily done, making it a heavy investment up front but cost effective in the longer term. With an average lifetime of 50 to 100 years, hydroelectric plants can benefit generations, and have the ability to go from zero power to maximum output very quickly, making them ideal backup systems for sudden changes in demand, such as power supply interruptions due to weather.

All 50 states have some form of hydroelectric capacity already in place, with places like Washington State getting 70% of their entire power supply from hydropower.

Eleven other states get more than 10% of their capacity from hydropower. (source) Dams can also produce recreational opportunities, with the lakes formed by the reservoirs providing ideal destinations for fishing, boating, swimming, camping, and other outdoor activities. Reservoir water can also be used for irrigation, and the dams themselves are often considered tourist attractions, like the Hoover Dam.

While the environmental impact of the placement of dams is a very important consideration, teams of environmental engineers can be brought in to assess how to minimize this impact. The implementation of fish ladders and fish elevators help reduce or eliminate changes to the migratory and feeding habits of those dependent on the water being used in the dam system.  Dams can (and do) control flood prone areas to keep people safe.

Less than 3% of the United States’ dams are set up for hydropower (source).

This leaves room for expansion of already existing infrastructure through renovation rather than new construction that will further impact the environment, and in the long run, hydropower runs far cleaner, is more controllable, and has the potential to provide much more than the 16% of total electricity function it produces today (source).


PETER KRULL IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.

Renewable Energy 101: Get to Know Solar

The first thing to come to mind when the words “clean energy” are used is solar power.  Solar power simply means taking the energy emitted by the sun and converting it to electricity through the use of solar panels. Harnessing the power of the sun was one of the first ways people considered as a power alternative to the traditional power sources derived from coal and natural gas for the purposes of lowering greenhouse gases and our dependence on the finite stores of fossil fuels.

The sun’s rays produce two possible power alternatives to fossil fuels: heat and light.

Heat is best used in thermal systems reliant on temperature to run. The heat produces both hot water and hot air for commercial and residential heating, and can also be used to generate power through steam or sterling engines.

Light is used in photovoltaic (photo = light, voltaic = produces voltage) systems, which convert the light to energy. This conversion is the main area industry leaders are turning to for advancement of the solar power industry today.

As with wind energy, the investment in solar power is heavy upfront.

However, advancements in the technology used to produce more efficient solar panels, coupled with the current tax incentives, energy bill cost savings, and increased market value of the property once panels are installed, the cost is an investment worth considering.

According to The Appraisal Journal, the selling price of homes has increased by more than $20 for every dollar decreased on the energy bills of the properties. Additionally, studies in California through Clean Power Research show over the lifetime of a solar energy system (30 years), homeowners will save an average of $40,000, and the cost of installation of a solar energy system has come down 75% since 2009. The national average purchase and installation price of a solar energy system is between $12,000 and $20,000, with a 25-year warranty. (Source) Maintenance, once the system is installed, basically comes down to cleaning the panels once a year.

Considering the sun emits enough energy in one hour to power the global population for a year, solar energy is perhaps the most obvious way forward in the initiative to replace fossil fuels and our dependence on them. A new report by the US Department of Energy (source) states that solar power employed 43% of the Electric Power Generation sector’s workforce in 2016, while all three fossil fuels (coal, gas, and oil) combined for only 22%. Slightly less than 374,000 people were employed in solar energy, while fossil fuel generation had a workforce of slightly more than 187,000 jobs. The boom in the solar workforce can be associated with construction work focused on expanding solar power. Coal employment has fallen 53% over the last decade, while during the same period, electricity generation from natural gas has increased 33% and solar generation has expanded 5000%.

Solar energy is rapidly becoming the future when it comes to powering our increasingly electronic lives.

Next Economics and Investing: 2017 Message from Green Alpha Advisors

Guest article by Earth Equity’s friend and colleague, Garvin Jabusch of Green Alpha Advisors


Happy New Year & Welcome to 2017! 2016 was an interesting year, to say the least, and 2017 probably won’t be any less so. We [at Green Alpha Advisors] like to send out an update to clients and investors in our LLC at the beginning of each year, and we think long and hard each year about what is most important to convey in the overwhelming sea of information in which we swim.

When thinking about Next Economics™ and investing, it’s worth asking two questions: “What will the world’s economy look like in 10 and 20 years?” and” What would I like it to look like by then?”

Our answers should, at a high level, inform how we invest. In arriving at a well-informed thesis hinged on the efficient economy’s ongoing evolution-rather than the economy of the past-we can position ourselves to take advantage of high-growth areas, and have the effect of advancing a far more efficient economy, one with a better chance of thriving indefinitely. As a pop star once wrote (not the one who won a Nobel Prize), “If it’s a future world we fear, we have tomorrow’s seeds right here.”

Every year since founding Green Alpha, we’ve observed innovations emerge and compound like a fast-rolling, rapidly-accumulating snowball. Each innovation, improvement and tool in the economy is smarter than the last and is immediately put to work in the development of a new generation of smart tools. We’d write a book with a title like Special Topics in Next Economics 2017, but the pace of progress is so fast that it would be out of date before we could get it done. Still, within the larger context, there are a few trends and observations that stand out. Here are some of our focus areas for the coming year and beyond.

Renewable energies

They’re cheap and getting cheaper. In 2016, we saw the price of solar-generated electricity fall below that of wind, making it the least expensive source of power generation available – half the price of new coal. Wind and solar, being tech-based energy (as opposed to commodity-based), will continue getting cheaper, and generate more and more of the world’s energy until they ultimately have most of the energy market share. At some point, markets will understand solar for what it is and begin to value it appropriately. Companies like First Solar, Inc., and Canadian Solar Inc. are leading the transition in world energy, and if they continue to work on innovation, growth and maintaining strong fundamentals, they could find themselves among the world’s leading power companies.

Is renewable energy adoption at scale for real? President Obama just wrote about the “irreversible momentum of clean energy” in Science, and many of the world’s largest companies are on the same page, working towards running all operations on wind and solar. The poster firm for this is Geegle Alphabet Inc., which says it will hit its goal of 100% power from renewables this year. The company is a huge consumer of power, and its transition to wind and solar is resulting in large emissions cuts for the economy, as well as business stability and cost controls for their operations.

China is doing more to develop and install renewable energies than any other nation. Already the world leader in wind and solar capacity, China now says it will “plow $3618 into renewable power generation by 2020, and create more than 13 million jobs,” (via Reuters) leaving the U.S. in the dust. According to The Guardian, “China now owns five of the world’s six largest solar-module manufacturing firms and the largest wind-turbine manufacturer.” It’s also far and away the world’s leader in electric vehicle production and sales. What else? China is spending over $500 billion to expand high-speed rail. Its war on pollution and commitments to mitigating global warming are real, and China clearly is happy (and even excited) to accept the leadership mantle in sustainable economics, a title many perceive the U.S. has abdicated. Having taken the reigns on renewable energy and technology leadership, China is now shoring up its moral leadership as well, made apparent by Beijing’s recent announcement that it will now ban all imports of ivory.

Renewable energy – adoption, transportation, storage

What about renewable energy adoption, plus zero-emissions transportation, plus energy storage? Well, Tesla Motors, Inc. We don’t mention this company as a stock or investment recommendation, but rather as a primary catalyst and the firm at the nexus of the Next Economy. It’s close to impossible to overestimate Tesla’s importance. Tesla re-introduced, made sexy and popularized electric cars at a time when major automakers and oil companies were trying to prevent that from happening. Tesla’s ambitious approach to battery storage for cars and renewable energy has resulted in their Gigafactory, capable of doubling the world’s current annual output of lithium-ion batteries and lowering costs commensurately.
Don’t think storage is a particularly big deal? Consider just one example: after the massive Porter Ranch natural gas leak, the city of Los Angeles decided to invest in battery backup for its electricity supply instead of gas, and has hired Tesla in part to provide the systems. This is safer, more cost effective and promotes the use of renewable electricity generation. LA was among the first big cities to make this move.

Further, Tesla’s acquisition of SolarCity and subsequent launch of the solar roof-which will generate power for your house and cost about the same as a traditional high-end roof-may result in far more widespread adoption of distributed solar generation in the U.S. and finally break our dependence on coal and gas electricity generation. Who knows what innovations Tesla will announce next, but it is already safe to say that Tesla’s emergence has been a watershed event for the future of the global economy.

What of Tesla’s plan to scale up mass-market electric cars? Will that become huge or remain
niche? Consider these developments: Germany, Holland and Norway have all taken steps to ban internal combustion engine-driven passenger vehicles between 2025 and 2030; more major economies surely will follow. India, for example, is now considering a similar move. Yes, these are ambitious goals that could easily be missed, but even if these nations get only halfway to their targets, it is not only incredibly bullish for any car maker selling EVs, it’s bearish for oil since ground transportation is its primary source of demand.

Farming

A New Yorker article said it best, “Vertical farming can allow former cropland to go back to nature and reverse the plundering of the earth.” Vertical farms are revolutionary for a number of reasons:

  • They use a fraction of the water required for traditional farming.
  • They’re close to or within urban centers meaning no need for long-haul transport.
  • Their indoor location eliminates the need for pesticides and herbicides, thereby mitigating multiple systemic risks (e.g. ocean pollution from agricultural runoff).
  • They can be maintained at a lower cost than conventional farming.
  • They’re more resilient to climate change.

No question, vertical farming is what’s next. Business Insider has posted a nifty photo essay of an indoor farm in Brooklyn if you’re interested in how that looks.

Additional key areas

Computing power. It’s becoming so massive that our collective ability to assimilate data is now and will increasingly be unprecedented. The question will become, what can we do with this power? And let us not forget the key related areas of cybersecurity and fast-emerging artificial intelligence and robotics, all of which are ushering in an era of heretofore unimagined economic efficiencies. What about the Internet of Things? After a slow start, it is coming into its own: “The falling cost of sensors and connectivity means the internet of things is finally a reality.” Lots of opportunities there. In medicine? Don’t even get us started on CRISPR-Cas9, a technique to edit genomes, thus opening up endless possibilities in medicine and biology, with equally endless humanitarian, ecological and commercial applications.

Okay, enough. We’re overwhelmed with innovations and breakthrough after breakthrough. We get it. For those of us trying to assimilate these changes and find the best path forward, the most important point is this: it’s in seeing the world for what is is becoming and not for what is was that investors and markets are going to allocate capital to manage risks and profit from new opportunities. This all leads, not accidentally, in the opposite direction from fossil fuels.

Lord Nicholas Stern recently said, “Strong investment in sustainable infrastructure–that’s the growth story of the future. This will set off innovation, discovery, much more creative ways of doing things. This is the story of growth, which is the only one available because any attempt at high carbon growth would self-destruct.” More pointedly, the Investment Bank division at Morgan Stanley in 2016 advised clients that long term investment in fossil fuels may be a bad financial decision, writing, “Investors cannot assume economic growth will continue to rely heavily on an energy sector powered predominantly by fossil fuels.”

What both Lord Stern and Morgan Stanley understand is that the world has changed and our approaches to investment need to change with it. This is the heart of Next Economics and Next Economy Portfolio Theory.

It is funny and yet poignant that some astrophysicists classify humans as constituting merely a Level Zero Civilization, with nearly infinite scientific and technological prowess yet to be realized. Well, we’re not qualified to evaluate that theory, but what we do know is there is so much progress being made in so many areas, that we wake up every day excited to think about the world anew and uncover opportunities.


This article should not be construed to be investment advice. At the time we’re distributing this article, some Green Alpha client portfolios hold long positions in First Solar (FSLR), Canadian Solar (CSIQ), Alphabet (GOOG), and Tesla (TSLA). These holdings do not represent all of the securities purchased, sold or recommended for advisory clients. You may request a list of recommendations made by Green Alpha in the past year by emailing a request to any of us. It should not be assumed that the recommendations made in the past or the future were or will be profitable, or will equal the performance of the securities cited as examples in this document. Not all Green Alpha separate accounts or our sub-advised mutual fund hold the stocks mentioned in this article. No Green Alpha investment portfolio holds a position in Morgan Stanley (MS).