Energy Technology Investing

Jeff Siegel

Written By Jeff Siegel

Posted December 7, 2012

It was modeled after the same group that brought us the Internet and modern fighter aircraft.

A replica of the Defense Advanced Research Projects Agency (DARPA), the Advanced Research Projects Agency for Energy (ARPA-E), was developed under the Bush administration to advance energy research and innovation.

Just think of it as a meeting place for some of the most disruptive energy technologies ever developed, the kind of stuff that makes most skeptics cringe — and science fiction geeks swoon.

Personally, I love this stuff. I love having the opportunity to see tomorrow’s energy technologies today.

And I love seeing how these new technologies develop over time.

Since ARPA-E first came on the scene, we’ve witnessed some game-changing technologies enter the market place:

  • A 400 Wh/kg lithium-ion battery that could completely change the cost structure for electric vehicles
  • Wind turbines inspired by jet engine designs that deliver 300% more power than existing turbines of the same size and cost
  • And a high-power laser drilling system that can penetrate hard rock formations over long distances — and is ten times more economical than conventional drilling technologies

Of course, that was three years ago, when things were just getting started.

Today ARPA-E has more than 280 projects in its portfolio. And earlier this week, we got a look at 66 new projects that are now being developed under the ARPA-E umbrella.

Let’s take a look…

Rare Earth Reliance

It’s no secret that China pretty much controls the rare earth game, producing roughly 95% of all rare earths on the planet.

And it’s no secret that this has resulted in a number of companies scrambling to redesign certain technologies that rely heavily on rare earths.

You may remember back in 2011, when I wrote about Toyota developing new electric motors for its hybrid cars that don’t depend on large supplies of rare earths…

According to Toyota engineers, they’re working on an inductive motor that’s much more efficient (and lighter) than the type they’re using now in the Prius.

There’s also a company called NovaTorque, which developed an electric motor that uses ferrite magnets in place of rare earth metals like neodymium. The motor design also requires about half as much copper and 40% less steel than competing motors.

And German auto parts maker Continental AG came up with its own motor that doesn’t require any rare earths just a couple of years ago.

I have no doubt this trend of developing new technologies that require less rare earth dependence will continue…

In fact, there are a couple of new ARPA-E supported projects that are offering a few more alternatives to technologies that historically have relied on rare earths.

The first is a new manufacturing process for high-performance magnets.

Developed by Electron Energy Corporation, the company is focusing on the production of permanent magnets that are stronger and cheaper than those available today. Using a friction consolidation extrusion process, the technology could supply the wind turbine generator and electric vehicle motor markets with higher-performance materials than those that currently rely on rare earth magnets.

The second is an additive manufacturing process for electric car motors developed by United Technologies Research Center. To put it simply, they use a laser to deposit copper and insulation layer by layer, instead of winding wires. The resulting motors can reduce electricity use while requiring less rare earth material.

I realize some of this stuff may sound kind of boring… But the end results are beyond exciting —  and will ultimately lead to new opportunities for investors.

By the way, I can pretty much guarantee that no one on Wall Street is paying attention to any of this stuff. But they’ll be sure to tell you about it in a few years, after we’ve moved on to the next big thing.

It’s All About Game-Changers

ARPA-E also announced a few renewable energy technologies that could offer yet another opportunity for wind and solar to increase power conversion while decreasing costs.

As I’ve mentioned in the past, the United States will never be able to compete with the Chinese on production costs on panels and cells. However, the Chinese can’t touch the U.S. on the tech side. Hell, it’s mostly U.S. technology they’re using today to pump out those cheap solar panels!

In any event, there are some very exciting technological advances coming out of this most recent round of ARPA-E projects…

This is the kind of stuff that continuously puts the U.S. at the forefront of game-changing energy technology. These include:

Photonic Structures for Solar

Researchers are now developing a new approach to enhance the efficiency of low-cost plastic solar cells using specially engineered photonic structures to capture a larger part of the solar spectrum.

There’s been a lot of hype over these plastic “organic” solar cells, mostly due to the fact that, if successful, they could drastically reduce the production costs of solar and pretty much allow anyone to put solar on nearly any kind of structure: walls, roofs, cars — you name it.

Problem is the efficiencies are incredibly low, and little improvement has been made over the past ten years. However, these specially engineered photonic structures could triple the efficiency of this stuff.

If that happens, you’re looking at a monumental game-changer. It could actually put plastic solar on par with conventional solar on the basis of efficiencies. This is huge.

Fabric Wind Blades

Today wind turbines rely on hard fiberglass blades that tend to be a chore when it comes to manufacturing and transportation. So GE Power and Water is now developing new wind turbine blades using fabric stretched across a frame. These fabric-based blades could be manufactured in sections and assembled on-site, enabling the construction of much larger wind turbines with higher efficiencies and lower costs.

Dust Devils

With ARPA-E in tow, the Georgia Institute of Technology is now developing technology that captures wind vortices that harvest a thin layer of hot air along the ground, which are actually created by the sun. Known as “dust devils,” these are random and intermittent examples of one of nature’s many phenomenons.

If this technology pans out, we could see a 25% cost reduction compared to conventional wind, and 60% cost reduction in comparison to traditional solar power.

At Light Speed

Of course, all of this stuff is in the earliest of developmental stages. But in this day and age, sometimes it doesn’t take more than three or four years before we start seeing this stuff in the field.

Although there are still plenty of folks fighting the inevitable transition of our energy economy, mark my words: Alternatives to a strictly fossil fuel-based energy mix are being developed at light speed.

And we’re going to capitalize on this stuff every step of the way.

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

Jeff Siegel Signature 

Jeff Siegel
for Modern Energy Report

P.S. Earlier this week, the Federal Energy Regulatory Commission announced renewable energy sources accounted for 41.14% of new electrical generating capacity installed in October 2012, and 46.22% for the first ten months of 2012. Renewable sources now account for 14.93% of total installed U.S. operating generating capacity. That’s more than nuclear and oil combined. There is no doubt we’ll be at 20% renewables by 2020 — and that’s figuring conservatively.

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