Trends I'm Watching

CIBC Economist: $100 Oil by End of 2008

Trend: Increasing demand and more expensive supplies will increase the cost of oil.

A Yahoo! Finance article describes the causes behind the gradual increase in oil prices. The good news is ... alternative energy technologies will become more attractive as the price of oil rises. Excerpts below.

Link: CIBC Economist: $100 Oil by End of '08: Financial News - Yahoo! Finance.

Oil prices could top $100 a barrel by the end of next year and remain above that point for years to come, the chief economist of Canadian investment bank CIBC World Markets said on Oct 2.

Rubin expects Mexican oil imports to the U.S. will dry up by about 2012. Some of that decline will be made up by imports from other parts of the world, but the lions' share -- nearly a third of all U.S. oil imports -- will come from Canadian oil sands, he predicted.

But replacing relatively easy-to-refine liquid crude with petroleum from oil sands is certain to increase costs, he said. By the end of the decade, Canadian oil sands are likely to represent the world's largest source of new oil supplies, he said.

"We're basically replacing low-cost oil with high-cost oil," he said.

Looking ahead, Rubin expects crude oil prices to average as much as $90 a barrel next year, rising to around $100 by the end of 2008. That would represent an increase of nearly 25 percent over Tuesday's settlement price of $80.05 a barrel for light, sweet crude on the New York Mercantile Exchange.

via John Robb

Remote Car Charging Takes Shape

Trend: The electric car infrastructure is unfolding — smart charging.

GreenBiz News reports that Tesla Motors and Pacific Gas and Electric Co. will join forces to explore smart charging, a form of vehicle-to-grid (V2G) technology in which the vehicle charging rate is controlled remotely in order to support the operation of the grid or to best match load to the availability of intermittent renewable energy resources such as wind and solar.

Link: GreenBiz News | Tesla, PG&E Team to Advance Remote Car Charging.

PG&E and Tesla, an electric car manufacturer, will equip a demonstration roadster with intelligent charging technology, as well as monitoring equipment at Tesla's San Carlos, Calif., location.

The partners will focus on smart charging, which allows remote control of electric vehicles connected to the power grid. It turns electric vehicles and plug-in electric hybrids into remotely-controllable energy storage systems.

"We are focusing our initial V2G implementation on smart charging," said JB Straubel, Tesla Motors's chief technology officer. "Smart charging is a form of V2G in which the vehicle does not provide power back to the grid. Instead, the vehicle charging rate is controlled remotely in order to support the operation of the grid or to best match load to the availability of intermittent renewable energy resources such as wind and solar.

"Tesla Motors' goal in developing V2G is to eventually provide our customers with an option that could reduce their cost of electricity for vehicle charging while supporting greater penetration of renewable energy on the grid."

Similar methods are performed by power plants to balance electricity generation and load, the companies said. If successful, smart charging will be done on a wider scale and will interface with PG&E’s SmartMeter technology, which continuously monitors meters to reward customers who voluntarily use less electricity during critical peaks.

PG&E also is working with Tesla to install charging stations in customers’ homes and businesses.

Thin-film photovoltaics (TFPV) market is forecast to grow rapidly

Trend: Thin-film photovoltaics (TFPV) shows potential for cost-effective solar energy.

The world thin-film photovoltaics (TFPV) market is forecast to reach $7.2 billion by 2015, compared to just over $1.0 billion today, according to a new report from NanoMarkets LC. Additional details about the report are available on the firm's website at http://www.nanomarkets.net.

Link: New NanoMarkets Report Predicts $7.2 Billion Thin-Film Photovoltaics Market by 2015

The market is being driven by the inherent advantages of TFPV including low cost, low weight, and the ability to manufacture them on flexible substrates and embed solar power capabilities into walls, roofs and even windows. Unlike more conventional PV that uses crystalline silicon, TFPV also has the ability to operate under low light conditions. The report notes that to support the growing demand for TFPV, most manufacturers are ramping up production capacity and several -- including First Solar, Fuji Electric, Nanosolar, Sanyo, Uni-Solar and G24i -- are building plants with more than 100 MW in capacity.

Some of the findings of the report include:

Because worldwide energy prices are rising fast and PV prices are falling fast, PV will carve off a big slice of the energy market and could eventually account for as much as 20 percent of the U.S. market's energy needs. 

Conventional PV is expensive to make.  By contrast TFPV can be manufactured using simple printing or other R2R machines; the value of printed TFPV is expected to reach just over $3.0 billion by 2015. Printing PV has the potential for lowering capital costs by as much as 75 percent, reducing waste and increasing throughput.

The fact that TFPV is also much lighter than conventional PV and can be more easily applied to curved and non-planar surfaces, TFPV is easier to install on roofs and walls. 

PV based on organic materials is more ecologically friendly than other PV approaches.

via Alt Energy Stocks via The Energy Blog

Plug-in Hybrids Hold Great Promise, Study Finds

Trend: Plug-in hybrid vehicles (PHEVs) can reduce air polluction and reduce energy costs for transportation.

GreenBiz News describes a report that suggests that plug-in hybrid vehicles (PHEVs) may be a path to energy independence, especially if battery technology can be improved. Excerpts below.

Link: GreenBiz News | Plug-in Hybrids Hold Great Environmental Promise, Study Finds

A comprehensive report released yesterday by the Electric Power Research Institute and the Natural Resources Defense Council finds that widespread use of plug-in hybrid electric vehicles in the United States could reduce greenhouse gas emissions and improve air quality.

The research looks at how popular adoption of plug-in hybrids (PHEVs), both by individuals and as part of large fleets, would affect the environment between 2010 and 2050.

The most striking findings of the report include the estimated 450 million metric tons of GHG emissions removed from the air by 2050; if 60 percent of the population drove PHEVs in 2050, they would only be using 7 to 8 percent of the country's electrical supply; and a potential for reducing daily oil consumption by 3 to 4 million barrels.

Based on an average electricity cost of 8.5 cents per kilowatt-hour, a plug-in hybrid (PHEV) can be fueled for the equivalent of 75 cents per gallon of gasoline, at a time when gas costs about $3 per gallon at the pump.

The groups said their analysis is the first one that combines detailed models of the U.S. electric system and transportation sector with sophisticated atmospheric air quality models, and which accounts for the future evolution of both sectors in terms of technological advances and the growth of electricity load and capacity.

Plug-in hybrids function in essentially the same manner as the gas-electric hybrids on the roads already today; but instead of using the gasoline to charge the electrical battery as the car drives, PHEVs plug into the electrical grid to recharge a high-capacity battery. The high cost of manufacturing these batteries continues to be the main obstacle to widespread PHEV use.

These vehicles also offer the opportunity to power the nation's vehicles by emission-free, renewable energy, if PHEVs are able to charge at solar-powered homes or charging stations. Taking advantage of a cleaner electrical grid will allow PHEVs to emit far fewer GHGs than conventional or current hybrid vehicles, and can help reduce U.S. dependence on imported oil.

Hyper-Growth Niches

Trend: High growth niches include Solid state lighting, Solar power, Wind energy, and High-definition-video.

Tobin Smith of ChangeWave Investing describes four hyper-growth niches at MSN Money. Excerpts below.

Link: Tobin Smith Journal.

...multitrillion-dollar mega-economic, technological, demographic and political ChangeWaves set the fundamental secular engines of growth for the world economy. Now we look inside these engines of transformation for the niche hyper-growth areas (20-40% plus secular annual growth rates out 3 to 5 years):

1. Solid state lighting. The mandated death of the incandescent light bulb. This 100%-plus annualized demand growth wave is HUGE.

2. Solar power. The wave of mandated carbon reduction creates a 40%-plus demand growth wave for the next three to five years.

3. Wind energy. Wind-turbine growth will run at more than 75% a year for the next four to five years, with turbine capacity sold out.

4. High-definition-video. The transformative rise of video-over-IP (YouTube growing 7% per week) and now high-definition video creates the next great wave of infrastructure growth.

Six market waves

Trends: Alternative energy, Mine Resistant Ambush Protected (MRAP) vehicles, clean water, biotech, 'Chindia' middle class, and jetliners could be fertile ground for investing in the near future.

Tobin Smith describes six major waves that ChangeWave Investing has identified for investers looking for market gains. Excerpts below.

Link: Tobin Smith Journal

1. Alternative energy wave

2. Mine Resistant Ambush Protected (MRAP) vehicles wave

3. Clean water wave

4. Biotech wave

5. 'Chindia' middle class wave

6. Jetliner wave

These markets don't come all the time. It's certainly here for the next two to three years, but beyond that I couldn't tell you.

We are guided by our ChangeWave Alliance research as we continue to expand our horizons -- meaning we're on the lookout for the niche companies and sectors in which we can double our money every two to three years.

I've got to be a stock market cheerleader because you're going to hear all sorts of bad news this summer about subprime loans. You know we're going to get a pullback, but it's that pullback that gives you the next great buying opportunity.

The way you make market-doubling and market-tripling returns every year is to be ahead of the crowd.  You've got to be in the right places at the right time at the right price.

PHEVs Gain Momentum

Trend: Plug-in hybrid electric vehicles (PHEVs) appear to be the technology of choice for energy independence in the future.

GreenBiz News describes a partnership between Ford and Southern California Edison to develop PHEVs that will replace fossil fuel-based transportation.

Link: GreenBiz News | Ford, Edison Team Up to Bring Plug-in Hybrids to Market

Ford and Southern California Edison will focus on bringing plug-in hybrid electric vehicles (PHEVs) to the masses, which will not only save customers money on their gas bills, but will also reduce petroleum-related emissions and improve the cost-effectiveness of the nation's electricity grid.

The companies said the partnership is the first of its kind to address PHEVs as a solution to concerns about powering the vehicles and homes of the future, as well as reducing the growing strain on the energy grid. Ford and SCE described the teamwork between energy utilities and automakers as essential to making progress on energy security and climate change.

Among the goals of the partnership is to explore whether the currently expensive batteries in PHEVs, which are a primary reason the vehicles are not cost-competitive, may have other benefits that will increase their value. One idea the companies plan to examine is using PHEV batteries to charge and store energy at night, when the cost to produce electricity is low, and then use that energy during the more expensive peak hours of the day.

Additionally, Edison's has begun testing advanced battery designs at its Electric Vehicle Technical Center in Pomona, Calif., that could bring energy-storing batteries to market sooner, not only to consumers but also for the utility industry.

In addition to lowering drivers' fuel costs by 50 to 75 percent when fueling up at the plug instead of the pump, widespread use of PHEVs will reduce the amount of greenhouse gases emitted on the nation's roads every day, and can more easily use renewable energy sources as transportation fuel. By charging at night, PHEVs can use off-peak electricity to make the electric grid more productive and bring down electricity costs for residences and businesses. A study conducted by the Department of Energy found that if every light duty car and truck in America today used plug-in hybrid technology, 73 percent of them could be plugged in and powered by excess capacity in the electricity grid without constructing a single new power plant.

Under the terms of the multi-million dollar project, Ford and Edison will work in the coming years to evaluate and demonstrate PHEV options.

Smart Metering: Investing in Energy Efficiency

Trend: Providing detailed information to electricity consumers (smart metering) increases awareness and decreases consumption.

Tom Konrad at Alternative Energy Stocks reports that smart metering is essential for reducing our carbon footprint by providing real time feedback on our electricity use. Excerpts below.

Link: Smart Metering: A Smart Investment in Energy Efficiency | Alternative Energy Stocks.

Smart metering is one of the biggest win-wins available when it comes to reducing our carbon footprint by providing real time feedback on our electricity use. It allows us to see how we are wasting electricity and choose to take action. When Woodstock Hydo's customers were given this information (without any other encouragement to save electricity), their average usage fell by 15%.

In addition, Woodstock Hydro discovered that participants complained much less frequently than other customers. By giving people real time information about their electricity usage it empowers them to make their own decisions, and the better information they have (if accompanied by the  tools to manage the new information), the better decisions they will make. 

Xcel Energy (NYSE: XEL) is just completing a year long trial of time-of day pricing, and the preliminary results indicate that when customers have the controls necessary to program or cut their usage of high consumption appliances such as air conditioners, either ahead of time or remotely, their usage decreases most.

Investment Opportunities

... the strong economic case for smart meters means that smart meters could easily be one of the first energy efficiency measures rolled out by many utilities.

The Implications of Peak Oil

Trend: The gap between future energy demand and the supply of oil looms large.

Eugene Linden in Outside Shot at BusinessWeek.com describes the dilemma that the United States faces as demand for oil supplies increases and supplies decrease. Excerpts below.

Link: From Peak Oil To Dark Age?.

The U.S. is completely unprepared for peak oil, as it's called, and the wrenching adjustments it would entail could easily accelerate global warming as nations turn to coal (see BusinessWeek.com, 4/19/07, "Rx for Earth: Sooner Not Later"). Moreover, regardless of the implications for climate change, peak oil represents a mortal threat to the U.S. economy.

Peak oil refers to the point at which world oil production plateaus before beginning to decline as depletion of the world's remaining reserves offsets ever-increased drilling. Some experts argue that we're already there, and that we won't exceed by much the daily production high of 84.5 million barrels first reached in 2005. If so, global production will bump along near these levels for years before beginning an inexorable decline.

What would that mean? Alternatives are still a decade away from meeting incremental demand for oil. With nothing to fill the gap, global economic growth would slow, stop, and then reverse; international tensions would soar as nations seek access to diminishing supplies, enriching autocratic rulers in unstable oil states; and, unless other sources of energy could be ramped up with extreme haste, the world could plunge into a new Dark Age. Even as faltering economies burned less oil, carbon loading of the atmosphere might accelerate as countries turn to vastly dirtier coal.

GIVEN SUCH UNPLEASANT possibilities, you'd think peak oil would be a national obsession. But policymakers can hide behind the possibility that vast troves will be available from unconventional sources, or that secretive oil-exporting nations really have the huge reserves they claim. Yet even if those who say that the peak has arrived are wrong, enough disturbing omens—for example, declining production in most of the world's great oil fields and no new superfields to take up the slack—exist for the issue to merit an intense international focus.

Tech Leaders Go Green

Trend: Technology companies have a plan for reducing energy consumption by computers.

GreenBiz News describes the Climate Savers Computing Alliance. Excerpts below.

Link: GreenBiz News | Intel, Google to Put Computers to Work as Climate Savers

The computing giants have joined forces to create the Climate Savers Computing Alliance, a broad coalition that includes other IT industry companies, government agencies and environmental groups that seeks ways to spread energy-efficient computers and IT power management worldwide.

The list of companies that have already joined the alliance as supporting members reads as a who's-who of the leaders of the IT industry. In addition to Intel and Google, other members include AMD, Dell, Microsoft, IBM, Fujitsu, Lenovo, Sun Microsystems, Hewlett-Packard, and many others. Joining them in the roster are environmental groups including the Natural Resources Defense Council, the World Wildlife Fund and the World Resources Institute, as well as the U.S. EPA. The full list is on the group's website at ClimateSaversComputing.org/program/colleagues.html.

...Google's vice president of operations, Urs Holzle, laid out the two paths that the new alliance will take to achieve the goal, first by increasing the efficiency of computer hardware, and second by encouraging users to use software that uses the power more efficiently.

"Today, the average desktop P.C. wastes nearly half of its power, and the average server wastes one-third of its power," Holzle said. "The Climate Savers Computing Initiative is setting a new 90 percent efficiency target for power supplies, which if achieved, will reduce greenhouse gas emissions by 54 million tons per year -- and save more than $5.5 billion in energy costs."

Businesses and individuals alike are encouraged to join the program. Manufacturers who pledge their support have committed themselves to building energy-efficient products that meet or surpass the EPA's Energy Star guidelines. Businesses must also commit to requiring high efficiency systems for the majority of their corporate desktop PCs and volume server purchases, and take advantage of power management tools on desktop PCs.