Renewable Energy Market Strengthening

Another Solyndra?

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$529 million.

More than a half billion dollars.

That's how much the electric car manufacturer Fisker Automotive was initially promised by Uncle Sam. That was a few years ago, and since then the automaker has delivered about 1,500 vehicles to customers.

But this outfit is far from being in good shape...

leokarma
Leonardo DiCaprio and his Fisker Karma

Truth is Fisker has had a number of public relations blunders along the way, despite some high-profile celebrities driving the streets of LA in this luxury car.

And in fact, today the company is actively looking for potential partners because, as company spokesman Roger Ormisher said, “Without a partner, it would be difficult for Fisker to survive.”

That's not too reassuring for a company that's already drawn down $192 million of the government's loan. Fortunately, the remainder of that loan has been suspended due to delays with the company's first model, the Karma.

Of course, $192 million is peanuts compared to the more than $1 billion in private equity the company has managed to raise. But it's still enough to piss tax payers off (rightly so) — and ignite yet another firestorm against electric cars and alternative energy.

Not Ready for Prime Time?

I have to admit the shrapnel from Solyndra and A123 has been tough for a modern energy supporter like me to handle — not because these two companies represent the modern energy industry as a whole (because they don't)... and not because taxpayers footed some of the bill for these failures (although to say that doesn't bother me would be a lie)...

No, the reason this kind of stuff is so frustrating is because all those modern energy detractors out there use these examples of failure as a way to attack the transition of our energy economy. A transition, by the way, that is absolutely necessary if we have any intention of maintaining any kind of economic advantage in a rapidly-changing world.

Now, I'll be the first to admit there are few things I like more than the government picking winners and losers in the energy game. It's thanks to this type of interference that many of the superior energy technologies available today struggle to swim upstream against a heavily-subsidized and lopsided energy market.

When you figure all the costs associated with every type of power generation and transportation fuel available for use today — I'm talking subsidies, externalities, wealth transfer, debt, national security, etc. — you will find that modern energy solutions like solar, wind, energy efficiency, green building, natural gas, and electric cars offer superior economic benefits.

I've gone down this road plenty of times before in these pages, so I won't dwell on this...

However, there is one thing that should be very clear to Americans today: Any media whore or bumbling bureaucrat who says modern energy technologies aren't ready for prime time is nothing more than a parrot reciting the empty rhetoric that lures fools to the polls like drooling zombies following the sweet tune of a delusional pied piper.

No Turning Back

Much to the chagrin of those still celebrating the invention of fire and the wheel, the transition to modern energy is well under way.

There's no turning back.

According to a new report from the folks over at Bloomberg's New Energy Finance, the past three years have served as a launching pad for the new energy economy. Here are a few key points from the report:

  • Natural gas-fired generation met 31% of U.S. electricity needs in 2012, compared with 22% in 2007.

  • Non-hydro renewable energy capacity virtually doubled from 2009 to 2012 to 85.7 gigawatts.

  • Gas and renewables combined (including hydro), represented 58% of the total U.S. generating capacity.

  • The levelized cost for large-scale solar dropped from $0.31/kWh in 2009 to $0.14/kWh in 2012.

  • The levelized cost for large-scale wind dropped from $0.09/kWh in 2009 to $0.08/kWh in 2012.

  • From 2007 to 2009, the amount of coal-based energy consumed fell from 22.5% to 18.1%.

  • Hybrid and plug-in electric vehicles sales in the US totaled 488,000 in 2012, representing 3.25% of U.S. passenger vehicle sales.

Interestingly, the Federal Energy Regulatory Commission (FERC) released its yearly report about a week or so before Bloomberg's report.

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According to FERC, renewable energy sources accounted for 49.1% of all new domestic electrical generating capacity installed in the twelve months of 2012. That's actually more than natural gas, which accounted for 33.15% of new capacity.

Meanwhile, nuclear saw a 0.47% drop and coal lost 17.09% of the market.

A spokesman from FERC commented on these numbers, saying, “If there were still any lingering doubts about the ability of renewable energy technologies to come on-line quickly and in amounts sufficient to displace fossil fuels and nuclear power, the 2012 numbers have put those doubts to rest.”

Our Top Three Picks

Of course, despite the impressive gains we've seen over the past few years in the modern energy space, we're still in the earliest stages of this transition.

And along the way, I have no doubt the government will still meddle where it doesn't belong. We'll see more government-funded failures, more empty rhetoric from self righteous pundits, and more special interest groups funding attacks on better mousetraps.

But none of that matters... because this ship has already sailed. Solar, wind, natural gas, and hybrid and electric vehicles are witnessing the kind of steady and impressive growth that will continue to increase market share.

It's a marathon, not a sprint. And those who invest accordingly are in line for a very long string of winners.

Here are some of our top picks for 2013:

To a new way of life and a new generation of wealth...

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Jeff Siegel

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Jeff is the managing editor of Energy and Capital and contributing analyst for the Energy Investor, an independent investment research service focusing primarily on stocks in the oil & gas, modern energy and infrastructure markets.  He has been a featured guest on Fox, CNBC, and Bloomberg Asia, and is the author of the best-selling book, Investing in Renewable Energy: Making Money on Green Chip Stocks. For more on Jeff, go to his editor's page.


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