What’s Your Clean Energy Future?

Now that wind and solar power are almost ready for prime time, will your utility bill go up or down?

Jul 6, 2014 at 9:39AM

Do you think it's a good idea to get away from fossil fuels for our energy needs? If so, you'd be one of millions. Fact is, we are totally dependent on energy for our daily lives, especially electricity. (You can't read this post without electric power, for example.)

Where Does Power Come From?
Most electricity, by far, is generated with fossil fuels: coal, oil and natural gas. However, this is unsustainable in the long run, as we all know by now. In recent times, new methods of generating electricity have been taking root with processes that rely on sources which:

  • do not pollute
  • do not contribute to climate change
  • do not deplete a finite resource
  • are not destructive (in terms of damaging the Earth), and
  • are sustainable over the long term.

Three new processes of generating sustainable electricity have been attracting more attention in the past decade (hydro-electricity presently is the oldest and the largest renewable energy source):

  • Wind turbines
  • Photovoltaic (solar cells)
  • Solar thermal

(The difference between photovoltaic and thermal is that the former turns the rays of the sun directly into electricity which can be used for anything, while solar thermal is limited to heating water or air.)

Wind energy output has tripled since 2008, according to the American Wind Energy Association, although it's from an admittedly small base. In 2013, wind energy made up 4 percent of all U.S. electricity generation, but a full 30 percent of all new generating capacity.

In comparison, solar is still small potatoes, as this chart depicting data from the government's Energy Information Administration shows:

Renewable Energy – Wind vs. Solar (quadrillion of BTUs)

reweable energy - wind vs solar

Although wind energy output tripled since 2008, photovoltaic (PV) solar energy generation is growing much faster at the moment because its costs are dropping at the rate of about 15 percent per year.

Speaking of cost, clean energy costs much more than old energy, and that's one of the biggest impediments to widespread adoption of alternative energy generation these days. Hydro-electric power is the cheapest sustainable energy source, but environmentalists have pretty much put the kibosh on the construction of new dams. In addition, wind and solar remain much more expensive alternatives to traditional fuels.

Cost isn't the only deterrent
Then there is the issue of storage. Electricity is generated as it is needed, and what's not used is wasted. That means your utility has to anticipate when you will turn your computer on so the power is there for you. (And yes, they actually do track that. Interestingly, they've noticed that tablets and smartphones have reduced legacy computer current usage.) The point is that any extra power they generate is lost forever. Over the years, utilities have become good at load management, relying on stable, low-cost, fossil-fueled power plants. They have "base load" generators which run round the clock, plus additional generators which come on when more electricity is needed and are shut down when demand subsides. These new renewable energy sources present a problem, however: You may not need the power they generate the moment the wind is blowing. The situation is reversed when a cloud passes over a solar installation, reducing the amount of energy generated and available at the very moment you need it.

Energy storage is the next biggest problem (after cost) for wind and solar power. That's why Abengoa's new Solana thermal solar power plant is significant — it comes with energy storage built in, which allows it to generate power for six hours after sunset. Time will tell if the benefit of storage will outweigh the cost involved and if this becomes the future for clean energy generation.

How does this impact you?
1. Expect to pay more: Clean energy costs more than "dirty" energy, and those costs will be passed on to consumers as clean energy supplants traditional power sources.

2. Expect complications: The lack of storage, and the variability of the new sources of energy, will expose you to more power shortages when the weather conspires to deliver "whammies" every few years. As the nation transitions to cleaner power, your need to prepare for power outages will increase.

3. Become self-sufficient: As the cost of household electricity continues to rise and the price of solar energy continues to drop, it makes more and more sense to consider adding solar (thermal or PV) capacity to your house. Geothermal energy and even residential wind turbines are other options to consider. Whichever technology you choose, this investment will show returns which increase every year.

The biggest downside to adding clean energy to your home is, of course, the initial investment. The numbers range from below $10,000 to over $100,000, and depend on a whole host of variables such as the amount of power you want to generate, how you want to store your energy, whether you want to maintain a connection with the power grid, and so forth. I was intrigued to observe that the number $30,000 seems to pop up more than any other ... for just about any clean energy option.

That's obviously more than your daily Happy Meal at McDonald's. In order to encourage homeowners to make this investment, the government has offered various incentives, and can probably be expected to offer more in the future. That obviously reduces the up-front cost. How quickly you earn that investment back depends on your current energy usage and your passion for a clean earth. Worst case, though, you can probably expect to get the cost back when you sell your home.

If you live in communal housing (condos or tracts with strict homeowners association rules) your ability to make the world a cleaner place may be limited. However, as electricity costs continue to escalate, we can probably expect to see new construction projects that include some form of clean energy, which is actually more cost-efficient on a per-unit basis when installed in clusters, and may significantly increase the marketability of those units.

Bottom line: In 20 years' time, you can expect to see the "cleanness" of electricity generated in America rising significantly and, with that, its cost. That rising cost should make any investment in clean energy sources for your home energy well worth it.

This article originally appeared on FiveCentNickel.com

Warren Buffett is betting on this energy company
Imagine a company that rents a very specific and valuable piece of machinery for $41,000 per hour (That's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report details this company that already has over 50% market share. Just click HERE to discover more about this industry-leading stock... and join Buffett in his quest for a veritable landslide of profits!

Additional money articles can be found on FiveCentNickel.com:

Making time for money

Don't look a gift employer in the mouth

10 tips first-time homebuyers don't consider

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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers