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Buffett's Biggest Renewable Investment

Written by Keith Kohl
Posted March 5, 2017

As much as possible, my fellow editors and I try to make Energy and Capital exactly what it says on the tin: a source of information on how to make money in the energy markets.

But that comes with a few caveats, not the least of which is that “energy” actually encompasses a lot of things.

One sector of the market contains a plethora of investment opportunities, and those opportunities can change daily.

It happens faster than ever now in the age of information. Sometimes it seems like what was fact yesterday is old hack today.

It’s our job to not only find the latest and greatest investments in the energy space, but to also make sure they’re not going to burn out before you have a chance to make your money.

In that vein, I’d like to direct you to a trend that not only isn’t going out of style in the foreseeable future, but will make every investment from here on out all the more lucrative...

As I said, the energy market includes a wide range of things. One of those things is, increasingly, connected technology.

Last week, Megan Dailey touched on this topic and took a closer look at one small energy IoT company making its mark on the business: Enphase Energy (NASDAQ: ENPH).

Since January, Enphase’s customer base has grown in some important energy markets, including Mexico (50% growth), India (13%), Europe (11%), and the U.S. (7–10% across the country).

What makes this company stand out isn’t just that it’s supporting the expansion and development of the booming renewable energy industry, but that it’s providing two essential services in one: data collection and energy storage.

Storage, as you know, is the base on which the future of renewables stands. The industry cannot reach its full potential without it.

But data collection gets a lot less attention, perhaps because we don’t see the results as clearly.

Right now, the closest you can get to seeing these results in person is on your monthly energy bill, and if you don’t have a smart device telling you the best time to cut back, maybe not even there!

But that won’t be the case for much longer...

Already, energy IoT has evolved beyond simple home sensors. Today, connected tech can be found on oil drilling rigs, hydropower plants, and the world’s largest solar, wind, and energy storage farms.

You see, the Industrial Internet of Things (IIoT), as this larger connected network is called, is more than just a scaled-up version of today’s smart home networks.

It doesn’t just connect the machines to each other in a closed circuit. It constantly collects data from them and turns that data into usable, shareable information.

Just knowing how an energy process is moving in real time can offer huge benefits to the industry, which trickle down to every single investor, too.

A network of sensors can quickly communicate a problem, anything from a massive mechanical malfunction to a tiny leak that’s actually an oil spill waiting to happen.

But there’s a way the industry is using this system that will end up being an even bigger deal...

Renewable Efficiency

No matter what the die-hards insist, solar and wind tech just isn’t ready to cover global energy demand.

And this is why data collection is going to be the savior of the renewable industry.

You see, with the constant connectivity of the IIoT network, renewable energy companies can start collecting data on what makes the tech tick.

It comes down to more than efficiency: the technology has to be able to weather real-world conditions, and industrial-level connectivity is fast becoming the best way to find out what works and what doesn’t.

In this fast-paced game, Enphase is still a relatively small player.

General Electric (NYSE: GE) has been building connected tech into its wind turbines for years and has become a leader in the renewable space because of it.

GE works with companies like Exelon to optimize energy production and distribution, especially in the renewable energy space.Inner Wind Turbine

And if that’s not a big enough name for you, try this one: just a few days ago, Berkshire Hathaway’s energy branch signed on with data-mining startup Uptake Technologies.

Uptake will be helping Berkshire subsidiaries MidAmerican Energy Company and BHE Renewables improve the performance of their wind turbine designs using custom-designed software.

Berkshire is already known for having spent more than $17 billion on its clean energy projects and plans to double that within the next few years. No doubt its latest project, a $3.6 billion, 2,000-megawatt wind energy farm, will be running with data analytics software from the get-go.

What’s so important about networks like these is that the information gathered won’t just be used to benefit the individual companies.

As the networks develop, information can be shared between platforms. BHE’s latest turbine improvements can be used to improve GE’s, and the industry as a whole will benefit from this data sharing initiative.

It’s already happening as you read this. It’s just a matter of time before the results appear as money in your pocket.

Connected Times

The benefits of IoT in renewables have been likened to the boom in home computers: as soon as the tech hits a certain price point, it’s going to be everywhere.

Of course, the price won’t come down until the efficiency goes up.

Industrial connection and data collection are the only way to finally get renewable energy where it needs to be.

Until next time,

Keith Kohl Signature

Keith Kohl

follow basic@KeithKohl1 on Twitter

A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.

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