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When I think about energy and national security, the first thing that comes to mind is usually a disruption in oil imports or some sort of nuclear disaster. The form and function of the electrical grid itself wasn't at the top of the list -- until now.
Recent comments from David Crane of NRG Energy (NYSE: NRG ) have made me think that maybe solar energy could play a role in national energy security. Speaking at The Wall Street Journal's ECO:nomics conference late last month, he said that solar energy may be a national security issue. When you step back and think about it, he's probably right.
Solar energy is the first energy source we're able to generate economically at home. A roof filled with solar panels can power an entire house, assuming it has some energy storage or grid backup. This is problematic for utilities, because solar owners will be using the grid only for backup, potentially adding cost to other consumers, but from a security standpoint it may be a step forward.
Look at the Fukushima disaster in Japan last year. The country shut down all nuclear reactors, which added to fossil fuel imports and disrupted service. A similar disaster or attack on major power plants in the U.S. could leave portions of the country without power for weeks. It took weeks to get power back to parts of New Jersey after Hurricane Sandy and the Northeast blackout of 2003 left millions without power without any notice.
Solar energy changes the landscape. A blackout would be more manageable for consumers if they have solar power during the day and may go unnoticed if they have battery backup. Maybe it's true that solar power could be a piece of improved energy security.
The military is on board
We know that the U.S. military is already seeing solar as a powerful energy source. SunPower (NASDAQ: SPWR ) built a 14 MW plant at the Naval Air Weapons Station China Lake, generating 30% of the base's annual power needs.
On a smaller basis, the Army has introduced portable power solutions for forward bases and is testing other solar technologies and energy storage. If distributed energy on the grid doesn't make you feel safer for the energy grid, giving usable power to our troops in the field should. Solar will not only be a useful tool for soldiers, but it will also save cost, since transporting fuel is an expensive and dangerous task on the battlefield.
The winners in distributed solar
Distributed solar is one piece of a more secure energy grid, and investors can get onboard in a few different ways. NRG Energy owns large solar plants and is getting into the distributed solar business as well. SolarCity (NASDAQ: SCTY ) is the dominant player in residential solar, and panel manufacturer SunPower is expanding its reach through a leasing program. Finally, MEMC Electronic Materials (NASDAQOTH: SUNEQ ) is transforming itself into a project developer and is putting a big effort behind distributed solar power generation.
These four companies should benefit as solar, particularly distributed solar, grows in coming years. Maybe we'll even begin viewing these installations as a key part of our national security.
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