Like It or Not, Renewable Energy Is Here to Stay

The debate about renewable energy has been raging for years, and with nuances and unknowns that are very difficult to quantify, there's no doubt it will continue for years to come. What value is there in less pollution? Are we willing to pay more or change behavior for renewable sources of energy? And maybe more importantly, what will fossil fuels cost in the future?

In a series of articles this week, fellow Fool Alex Planes covered the "real costs of alternative energy," asked if alternative energy would go mainstream, and contemplated the future of alternative energy.

Since we Fools often have different opinions, I thought I would share a few things I disagree with.

But first, let's cover what Alex and I agree on completely. The biggest is that biofuels are a pipe dream that will never become reality. I also agree that alternative energy (and I'm talking about solar, with a tip of the hat to wind) is not a one-size-fits-all short-term solution for our energy problems.

Nuclear is not the answer
I love hearing that nuclear power could be our answer, as people dismiss the outsized risks it involves. Nuclear backers will say natural disasters are rare or that meltdowns were the fault of human error. But those are the things that cause problems with risky technology. Eventually, Homer Simpson is going to be left alone at the controls, and something terrible is going to happen.

People also fail to mention that nuclear has the biggest government subsidy of all, limiting liability in the case of a disaster. Without this subsidy, not a single power generator would consider building a nuclear plant.

Another thing nuclear backers don't want to admit is that nuclear is becoming more costly by the day. NRG Energy (NYSE: NRG  ) and a group of backers recently gave up on a planned nuclear expansion in Texas, largely because costs had soared during planning. The Energy Information Administration recently updated estimates for building new nuclear plants at $5.34 per watt, a 37% increase from 2010. Estimates put new nuclear power at $0.25 to $0.30 per kWhr. A California Energy Commission study estimated that new nuclear generation would cost between $0.17 per kWhr and $0.34 per kWhr by the time a plant could be constructed. All of those estimates are above recent utility solar costs.

Nuclear IS NOT the future.

Not all subsidies are equal
As commenter idiotprogrammer pointed out, the EIA even admitted that its subsidy comparisons are flawed against solar and wind. Is it really fair to compare the subsidies given to a natural gas plant in 1950 to subsidies given to solar today?

The subsidy and cost trajectory also need to be considered when making an argument for any energy source. Subsidies are being cut dramatically around the world for solar -- just ask struggling manufacturers LDK Solar (NYSE: LDK  ) and JA Solar (Nasdaq: JASO  ) , both of which have seen sales tumble. Within a few years, the subsidies will evaporate -- something that has yet to happen for coal, oil, or natural gas. And I haven't even covered fossil fuel externalities.

No, we don't have all the answers, but we don't need them yet
Revolutions take time; this is something that most energy analysts fail to appreciate. It was only in the late 1880s that Thomas Edison demonstrated a power grid that could light a neighborhood, and the country wouldn't be connected for decades.

Today, some talk about renewable energy as if it needs to replace oil, coal, and natural gas by the end of the decade. But today, wind accounts for only 1% of domestic electricity production and solar accounts for about 0.1%. Even after a decade of installing solar power at lightning speed, even Germany gets only 3% of electricity from solar power.

It's preposterous to think that a technology like solar, which has only become attainable in cost and scale in the last few years, could make the leap to somehow stretching the grid to breaking in the next few years because of its intermittency. Patience, my friends, patience. The electric grid wasn't built overnight, and neither will solar power. At this rate we have 10, 20, maybe even 50 years to solve the energy storage problem.

A123 Systems (Nasdaq: AONE  ) is working on grid scale storage, but until the grid becomes filled with enough wind and solar to warrant the economic expense of developing and installing energy storage, the problem will not be solved. That's not the way technology works. Technologies aren't developed in the hope that a market will form. A market forms, and a technology is invented to fill the gap.

Look at energy technologies like turbine engines, shale drilling, and ultra-deepwater drilling. These didn't develop just in case they would become economical; an economic need arose as oil prices rose, which combined with lower costs for the new technology, and existing problems could be solved.

Sprawling on useless land
As for the "energy sprawl" argument that renewable energy uses more land than fossil fuels, just take a look at an analysis I did on the subject back in May. Using SunPower (Nasdaq: SPWR  ) modules, we could generate 264.8% of the U.S. electricity demand from the Mojave Desert alone. Just to put "energy sprawl" into perspective.

Are you really going to complain about sprawl on useless desert land?

The bottom line
All of this boils down to a couple of key points from an investment standpoint. First, renewable energy -- solar in particular -- is becoming more economical by the day and, in a broad sense, provides a great place for investors to find growth. Second, energy sources like nuclear, biofuels, and slowly coal are a thing of the past. Sorry, but it's true.

Last, but not least, I like and invest in solar power not because I'm a tree hugger, but because the facts and trends tell me this is energy's future. Disagree? Discuss in the comments section below.

What is the only energy stock you'll ever need? Find out what our analysts think in this free report called "The One Energy Stock You'll Ever Need." Just click here for access.

Fool contributor Travis Hoium owns shares of SunPower. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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.


Read/Post Comments (23) | Recommend This Article (9)

Comments from our Foolish Readers

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  • Report this Comment On January 06, 2012, at 1:13 PM, TMFFlushDraw wrote:

    Let me clarify the statement, "The biggest is that biofuels are a pipe dream that will never become reality."

    What I mean is they aren't a solution that will ever cover a significant portion of our energy needs. They may be around in some places, but they won't replace oil, gas, or compete with solar in the future.

    Travis Hoium

  • Report this Comment On January 06, 2012, at 2:57 PM, seattle1115 wrote:

    I'm not sure I completely agree with your pessimism regarding biofuels. First of all, remember this - just as virtually all of our existing energy resources are, at root, solar (where do you think all the energy in fossil fuels came from? what do you think powers the wind?), likewise all fossil fuels are, at root, biofuels. They all began as biomass.

    Now, then, corn ethanol is properly discounted by most reasonable people as a poor idea. Then again, a lot of reasonable people question whether feeding corn to livestock that is biologically incapable of digesting it properly is a good idea. There are a LOT of problems with the way we use corn, and I'm not sure that corn ethanol is substantially sillier than a lot of the other silly things we do with corn.

    There is a very real long-term possibility, however, that biofuels sourced from algae could become a feasible technology, and a lesser possibility that biowaste could become a helpful element of our overall approach. I emphasize that these technologies are clearly speculative, and almost certainly of only minimal value at best in the short- and medium-term, but that doesn't mean that they won't play an important role in our grandchildren's lives. And, after all - is it not the essence of Foolishness to think long-term?

  • Report this Comment On January 06, 2012, at 3:46 PM, XMFSlydo wrote:

    First, a small correction - all energy is nuclear at root (after all, what is the sun's source of energy). Unless, of course, you want to consider the gravity that causes the nuclear fusion that creates the solar energy.

    Second, I can almost guarantee you that there will be complaints about sprawl on "useless" desert land. It may be economically non-productive for the most part, but that is not the only measure of useful.

    Bottom line, I don't think the answer to our energy challenges are going to come from any one source, but a combination of many. There are no limits on energy available to us, only limits on useful, readily available and affordable energy. Heating a house or powering a TV is one thing. Powering plains, trains and trucks are another, which is why we'll require an array of energy alternatives.

  • Report this Comment On January 06, 2012, at 4:07 PM, seattle1115 wrote:

    @XMFSlydo: "First, a small correction - all energy is nuclear at root (after all, what is the sun's source of energy). Unless, of course, you want to consider the gravity that causes the nuclear fusion that creates the solar energy."

    Fair enough. By the way, I'm not merely trying to be pedantic when I raise the point that fossil fuels are essentially solar and/or biofuel - I think it's helpful to remember that all the fancy stuff we're attempting to do with alternative fuels is really just an attempt to do artificially in short stretches of time what natural forces have been able to do without human intervention over geological time. Maybe I'm being silly (it wouldn't be the first time), but I think that perspective can be helpful.

  • Report this Comment On January 06, 2012, at 6:18 PM, minnjim1 wrote:

    Good article. Revolutions don't happen overnight, patience is needed.

  • Report this Comment On January 06, 2012, at 6:20 PM, colleran wrote:

    "Technologies aren't developed in the hope that a market will form. A market forms, and a technology is invented to fill the gap."

    This is not true in a number of cases. Let me give you an example from the past. There was no market for automatic garage door openers before they were invented. I know this because I thought they were pointless, until I moved into a new house that had one. I have added garage door openers to houses many times, because I could not do without it.

    In other words, technologies often start markets. By the way, I say this having lost money on ENER and many other companies with "great new technology". I still look for them. I can't help myself. I am just more selective now.

  • Report this Comment On January 06, 2012, at 7:01 PM, xetn wrote:

    All those in favor of having a wind or solar farm in your back yard raise your hands. The same question for nuclear or natgas or oil fueled generators.

    The free market should dictate which of the various generators should be at the forefront. Not any subsidies simply because a bureaucrat does not have the knowledge nor do they care what is best.

    The problem with wind and solar cells is that the wind does not always blow and the sun does not always shine. And storage is not very good.

    The problem of large solar arrays in the desert, although they would be fairly efficient, the power would have to sent over lines with huge line losses. So, unless there is a will to replace all the transmission lines with low-loss systems, solar will still not be competitive.

  • Report this Comment On January 06, 2012, at 7:11 PM, IdaAg wrote:

    "Are you really going to complain about sprawl on useless desert land?"

    I may not complain about it but I'm sure there are protected animal species that would complain about it. Also, you are suggesting putting solar panels on the entire mojave desert, while that sounds simple enough the engineering and cost would be astronomical to do that. It would be many times easier, much more cost effective, adn better for the environment to just drill for the gas we have abundantly that we know how to access now.

  • Report this Comment On January 06, 2012, at 7:48 PM, maiday2000 wrote:

    The "renewable versus fossil fuel subsidy" argument is moot. It doesn't matter what kind of fuel source we subsidized in 1950. It is comparing apples and oranges. It's a sunk cost anyway. Besides what was the alternative back then?

    Secondly, this whole "fossil fuel subsidy" argument is almost entirely bogus as well. $15 billion of it is foreign tax credits which EVERY company enjoys. $14 billion of it is for production of "non-conventional fuel sources" which by and large goes to Natural gas companies drilling in shale, which has allowed us to enjoy the current $3 mcf of natural gas.

  • Report this Comment On January 06, 2012, at 9:09 PM, vireoman wrote:

    "Are you really going to complain about sprawl on useless desert land?"

    Travis, really?!! That is such a blissfully ignorant comment, I hardly know how to reply. You either have never been to the Mojave Desert, or any desert, or you are simply incapable of appreciating nature, incredible vistas, quiet open spaces mostly devoid of human-created noise, animal species on the brink of extinction that are entirely dependent on that "useless" land and that are already forced to share it with military-training, off-road recreation vehicles, mining, grazing, etc., etc., etc.,. It is like describing the Mona Lisa as just useless paper with paint on it. Get a clue, my foolish friend.

  • Report this Comment On January 06, 2012, at 9:53 PM, Kiffit wrote:

    The whole energy sprawl thing is a furphy. Wind turbines take hardly any land space at all. They are a godsend in terms of extra income for farmers and the cows get to keep almost all the grass around them. Solar roof energy collection has zillions of square metres of capacity that is presently only used to keep the weather out. And yes, land that is too hot hot and dry to grow anything makes an ideal site for big scale solar collectors. Renewables have sprawl space to burn.

    Renewable intermittentcy is not generally a problem at under twenty percent of the electricity grid supply, especially with good interregional connectors in place. If the wind isn't blowing or the sun isn't shining, or the tide isn't moving or the waves aren't leaping in one region, they will very likely be in others.

    The brutal truth is that if global warming is as much of a problem as climatologists say it is, we need to get out of hydrocarbon burning and fast, even if it is relatively 'inefficient', because global warming will mess with economic efficiency very big time to the max.

  • Report this Comment On January 06, 2012, at 10:07 PM, Chontichajim wrote:

    It is not an "either-or" argument between renewables and fossil since one is not yet commercially viable and the other is finite.

    When a nuclear plant is built the original space required may not be great but it is permanent even if the plant only lasts 40 years, and some early plants only lasted 20 but still are permanent in their land use (e.g. Humboldt Bay).

    I live across the river from a wind farm and cows graze under the mills. The land is limited by having windmills but not permanently unusable for everything else.

    Small biofuel plants or even offshore algae fermenters might be the equivalent of one oil well. Brazil with some American companies is producing commercial biofuels. We need to think small, not just big.

  • Report this Comment On January 06, 2012, at 10:41 PM, williamcmarsh wrote:

    There does not seem to be an appreciation on this thread of the variety of solar technologies currently available and the variety of applications they are suited for. For instance,

    1. Some solar products, such as transparent thin film PV, can be incorporated in buildings by design. They would simultaneously harvest energy and keep out unwanted heat.

    2, Concentrating solar power can and does store heat as molten salts and can produce dispatchable power well into the evening if not over ngiht.

    3. Hybrid solar thermal/PV panels can both generate electricy and provide hot water for heating/cooling and are up to 75% efficient.

  • Report this Comment On January 07, 2012, at 4:52 AM, webmind wrote:

    "It's preposterous to think that a technology like solar, which has only become attainable in cost and scale in the last few years, could make the leap to somehow stretching the grid to breaking in the next few years because of its intermittency. Patience, my friends, patience. The electric grid wasn't built overnight, and neither will solar power. At this rate we have 10, 20, maybe even 50 years to solve the energy storage problem."

    You have obviously never read "The Singularity is Near", which explains how technology and knowledge are now growing exponentially. We are on the cusp of a parabolic explosion.

    In 10-15 years, revolutionary breakthroughs in alternative green energy sources like solar will make fossil fuels obsolete, to a near 100% degree of mathematical certainty.

  • Report this Comment On January 07, 2012, at 3:26 PM, FarmGranny wrote:

    Your article was great until:

    "Are you really going to complain about sprawl on useless desert land?"

    Maybe you could better evaluate the terrain that is "Useless". I am currently being earthquaked by Fracking. (just shut down, but it was inevitable when the uneducated are in charge)

    Sorry-Blowing off Steam-No comments necessary!

  • Report this Comment On January 08, 2012, at 8:12 AM, JeanDavid wrote:

    If there were only one consideration, I would agree with the observation that "patience may be needed" and we may have to wait 50 years to convert to greener energy supplies. But we may not have 50 years of ever-increasing climate change. We may have passed the tipping point already. Or maybe it is tomorrow. Or maybe 10 years from now. Or 25 years from now. Or 100 years from now. We do not know, but to ignore this is risking the habitability of the planet. Climate studies are continually reducing the time to serious climate change. Is it acceptable to just assume we have 50 years to change our behavior when you consider that we may wipe out the human race?

  • Report this Comment On January 08, 2012, at 3:37 PM, devoish wrote:

    Travis,

    Please be more careful about interchanging the terms renewable and alternative energy. Not all energy alternatives are renewable.

    BP runs a commercial where supposedly everyday people are asking for renewable energy, a BP employee agrees and then promotes a nonrenewable energy source as an alternative.

    Best wishes,

    Steven

  • Report this Comment On January 09, 2012, at 8:19 AM, RavenManiac1968 wrote:

    I installed 45 sunpower photovoltaic solar panels on my roof in Feb 2011. I've generated more electricity than I've consumed and I haven't received an electric bill since March 2011. I live in Maryland, hardly a sunbelt state, and this has worked out fantastically. I'm getting solar credits drom my power company (BGE) and I'm selling SRECs on the internet. My payback is 6 years max.

    Those living in San Diego, Phoenix, LA tec... are nuts for not installing solar panels.

  • Report this Comment On January 09, 2012, at 12:39 PM, QuailR wrote:

    In April of 2009 I opted to invest locally in solar by having a local business install a 13 panel 2800 watt system on my unused roof. My out of pocket expense after tax credits was $10,000. Since installation this system has been generating 3400 Kwh per year or approximately 70% of my total electrical use.

    This is all happening in Missoula, MT at 46 degrees North latitude where winter tends to be grey and overcast. I would encourage local investment as the cost of installation continues to fall if you have some unused south facing roof space.

    I will continue to watch the potential to invest in a growth solar company but enjoy my local return on investment with each electric bill. I am still on the grid with a net meter.

  • Report this Comment On January 09, 2012, at 9:25 PM, TMFFlushDraw wrote:

    Thanks for all of the great comments everyone.

    As some noted my use of the term "useless" to describe desert land may have been overstated. I think everyone gets my point that talking about sprawl in solar needs some context when we're talking about sprawl on land that would likely not be developed otherwise.

    Nice to hear such positive stories from those of you who have installed solar modules.

    Travis Hoium

  • Report this Comment On January 24, 2012, at 1:57 PM, arizonamike303 wrote:

    Like it or not, solar is going right down the tubes.

  • Report this Comment On April 05, 2012, at 2:19 PM, rrrr0b wrote:

    What will happens to Mojave Desert when it will be completely shielded from sun by your solar panels

    What it will does to earth climate. How much it costs to utilize old solar panels what not produce any power? Please look on complete cycle: producing panels including mining semiconductors, exploitation -producing and preparation of electric power and utilization old solar panels plus environmental effect on every step. Will solar panels produce more power when req. to make use and destroy them eventually in environmentally friendly manner

  • Report this Comment On April 07, 2012, at 10:30 PM, MrGhrelin wrote:

    I need to challenge you on a couple of points.

    All energy sources (that we know of) are nuclear in origin (either fusion or fission). The sun is a fusion source, and radio active decay and low level fission keep the earths core molten (without which there would be no life one earth, or geothermal power).

    Technology is often created before a market is envisioned. Bell Labs invented the transistor, laser, cell phone, and Unix, before any market need was established. In fact AT&T was pretty poor at marketing transistors, lasers, cell phones, unix... the list goes on.

    The next generation nuclear will be coming from China. They are already building/developing pebble bed reactors, and standardized modular reactors. If they're successful they will leap frog the west with new nuclear technology. And they won't have to sell outside China to be effective. By swapping out their coal plants with new nuclear they will have clean, cheap power in abundance. Couple that with cheap labor and good financials and they will be the worlds economic leader.

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