Alternative Energy Source Investing

by Wes Bridel on September 8, 2010

in Stewardship

Most alternative energies are still incredibly inefficient for real world use.  We’ve been discussing asset management in a crazy economy.  We’ll continue the series on energy that we’ve been at for many posts in a row.  Even though alternative energy is inefficient, some governments of the world try to fix this by giving subsidies to make these technologies more affordable.  Still most of them pale in comparison to hydrocarbons (oil, gas, coal, etc.) for producing a unit of energy at a low price.

It is possible that as hydrocarbons become more and more scarce, that prices will rise and these alternative energies will become more competitive.  It also seems sure that as time goes on, the technology of these methods will improve and they will become more and more efficient.  Hopefully these companies bring this technology to the market so that plentiful clean energy is readily available.  But that day is not today.

Because of this, we feel like most types of alternative energy are a scary speculation because we believe more difficult times are coming.  When people are hurting financially, we don’t believe they will turn to expensive energy sources.  We also see it as being more difficult for Governments to force people into this usage when it will surely damage the economy.

One other problem with many kinds of Alternative energy is that they are dependent on the weather.  Wind energy requires wind.  Solar requires sunshine.

Nuclear Energy

One alternative energy that works very well is nuclear energy.  This form of energy has seen its popularity move all over the place in the US.  It used to be hated by environmentalists, but now seems to be much more revered.

A few high profile accidents decades ago brought negative attention to nuclear energy in the US and its growth here mostly came to a standstill.  However, there have been continually operating nuclear facilities here without incident.  Other countries, such as France, thrive on nuclear power.  This energy source has become far safer in the decades since the early accidents.

Building a nuclear energy facility is incredibly capital intensive.  However, once built, it is one of the cheapest to operate.  The fact that the US government has begun subsidizing this industry also helps their profitability.

Geothermal Energy

Another alternative energy which is one of the most efficient (lowest cost) is Geothermal energy .  Geothermal comes from heat escaping from the earth.  Because of this, Geothermal is not dependent on the weather. The earth’s core is always hot.  Thus, it has the consistency that many “clean energies” lack.  It is also one of the cheapest sources of energy which makes it highly competitive with others.

If you have any thoughts or questions on this or other topics, please let us know.  In the next post in this series, we’ll look at agribusiness investing.

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