Menu Close

Emerging Energy Balance Offers New Opportunities to Profit

This is a syndicated repost published with the permission of Money Morning - We Make Investing Profitable. To view original, click here. Opinions herein are not those of the Wall Street Examiner or Lee Adler. Reposting does not imply endorsement. The information presented is for educational or entertainment purposes and is not individual investment advice.

The coming year promises to have energy markets move further into renewable energies on the back of both technological advances and political pressure, such as the recently concluded COP21 conference in Paris.

But in the short term, contrasting results from this transition are emerging from both sides of the Irish Sea. These developments are a reminder that the path toward greater reliance on wind and solar power will not be without short-term problems.

In Ireland, wind power now accounts for a full 25% of power moving to the national grid. That puts the country right on track for its declared targets by 2020 – 40% of electricity supplied by renewables.

The results across the sea, however, are more mixed. And they point to what the transition to a new energy balance will look like… and what this means for energy investing

Bad Weather Is Increasing British Energy Volatility

renewable energyAfter a heavy investment of more than £1.25 billion ($1.84 billion), wind power has generated some criticism in the UK. True, there are few these days who oppose wind power on principle. But it is the degree to which wind in particular, and renewables in general, can reliably contribute to meet overall energy demand that is becoming the issue.

For several periods over the past three months, UK wind power has operated at only 10% of its generating capacity. That resulted in yet another call for a more developed energy supply network with a broader range of power sources.

The GMB, an English union supporting greater use of natural gas and nuclear power, released a report last week that claims no fewer than 12 days in the past three months resulted in wind power being able to provide only a tenth of its capacity.

Nov. 4 turned out to be a pivotal date in the findings. That’s when a combination of low wind power production, high demand, and power plant malfunctions at one point pushed wind power down to less than 0.5% of its capacity.

In response, the government was forced to introduce what are now called “last resort” measures to keep the lights on. These include requests to major industries that they close down or decrease power usage. Of course, such a remedy has its own problems for the broader economy.

Later in November, the arrival of Storm Barney necessitated that much of the wind power-generating network close down over concerns that the 85-mile-per-hour wind gusts would damage turbines and the distribution network while providing a dangerous power overload to the national grid.

This has once again intensified the debate over the reliability of renewables in all demand situations, which is especially urgent as the UK rapidly departs from its historic reliance on coal power. The GMB’s call for a more integrated combination of energy sources is now receiving additional support from other quarters.

Ireland, on the other hand, continues to move toward less reliance on traditional energies. The position of environmental interests in the country is one factor, while the commercial mix of energy demand is another.

Yet mainland England may well be a test case for the further rapid increase in wind power…

Integrating Power Sources Is the Key to the New Mix of Energy Sources

Similar concerns have been raised about solar – especially with regard to the ability to generate sufficient power during cloudy days. However, in the case of solar, huge projects are under construction in regions of the world where sunlight is the norm – the Middle East, North Africa, and Southeast Asia, among others.

The key for solar elsewhere – and wind in most locations – remains twofold, as shown by the transition to renewables on both sides of the Irish Sea.

First, there needs to be a better way to retain power generated at one time for use at another. Here, advances have taken place in battery technology allowing for energy to be retained for up to 12 hours. While these advances have been encouraging, greater scope in application and more cost-effective networks are still required.

Second, better ways of balancing loads are essential to avoid putting broader grids at risk from spiking power generation during certain periods. This obliges remedies that extend across the spectrum of traditional and renewable sourcing, as the British experience shows.

It comes down to better “integration” of different power sources…

Opportunities Abound in the New Energy Balance

Once again, we are pointed toward a position I have maintained for some time. The goal has to be an expanded energy balance. When the GMB calls for reserve natural gas or nuclear sourcing, or environmental groups urge greater reliance on solar and wind (provided the footprint of generating facilities don’t present their own problems), we are reminded of the bigger picture.

Modern economies require energy that is affordable, reliable, and provided at minimal damage to the environment and lifestyle. This means the objective is not a silver bullet, not a single all-encompassing energy remedy.

Rather, the target needs to be a balance among a widening number of sources, allowing interchange when necessary and directed toward the dual benefits of energy availability and low cost.

The current situation in the UK is simply the latest reminder of that.

And within the mix, there will be plenty of opportunities for energy investors to make some hefty profits.

About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.

Disclaimer: © 2016 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201.

The post Emerging Energy Balance Offers New Opportunities to Profit appeared first on Money Morning – We Make Investing Profitable.

Join the conversation and have a little fun at Capitalstool.com. If you are a new visitor to the Stool, please register and join in! To post your observations and charts, and snide, but good-natured, comments, click here to register. Be sure to respond to the confirmation email which is sent instantly. If not in your inbox, check your spam filter.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

RSS
Follow by Email
LinkedIn
Share

Discover more from The Wall Street Examiner

Subscribe now to keep reading and get access to the full archive.

Continue reading