DC to AC and Back Again

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The battle between AC and DC power was decided years ago. When Nikola Tesla and George Westinghouse's AC current became the standard over Thomas Edison's preferred DC current for power distribution, it set the foundation for the electrical infrastructure we have today. And of course that will never change … or will it?

Turn the clock forward 100 years and you will find Ford (NYSE: F  ) and Intel (Nasdaq: INTC  ) testing DC microgrids at locations in the U.S. This doesn't mean we're going to run out and change everything we know about electricity -- but the experiment is noteworthy. Especially when two major companies like Ford and Intel are getting behind it.

One of the problems for AC current is that devices we use run on DC -- so the current needs to be converted. This may not sound like a big deal, but every time you convert electricity or downgrade voltage, you lose a little bit of power. So these microgrids are being built to test whether having a more efficient grid will reduce energy consumption.

The other possible driver is the likelihood that solar power will become a more commonly distributed energy source on roofs of large manufacturing, warehouse, and office buildings. Right now the DC power solar panels generate is converted to AC and back to DC for final use. Staying DC all the way would make a lot of sense if solar power is involved.

This probably isn't welcome news to inverter manufacturers like Power One (Nasdaq: PWER  ) and Satcon Technology (Nasdaq: SATC  ) , which make inverters for solar power, and love it every time we change from DC to AC. But this experiment is likely out of their hands.

This is an interesting development and it will be interesting to see what Ford and Intel find when it is concluded. For now the grid is still under status quo -- but it may be time to shake it up a little bit.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

The Motley Fool owns shares of Ford Motor and Power-One. The Fool owns shares of and has bought calls on Intel. Motley Fool newsletter services have recommended Ford Motor and Intel. Motley Fool newsletter services have recommended creating a diagonal call position in Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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  • Report this Comment On May 20, 2011, at 3:30 PM, liveoilfree wrote:

    There is the Pacific States DC power grid, which connects the dams in Washington with Sylmar (and is used at the Castaic pumper-generator to store cheap energy to meet daytime peak).

    China, which is far ahead of us on energy, has a number of new DC power grids already and is building many pumper-generators.

    The US is sitting on its oily hands.

  • Report this Comment On May 23, 2011, at 11:57 AM, mjtri wrote:

    Unfortunately, our utilities don't have a lot of incentives to innovate to reduce electricity usage. I'm not sure how we fix that problem.

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