Windfall Profits from an Overlooked Energy Source

Fusion, solar, bioenergy… these are all types of energy we’ve covered this week that could radically change the future.

Today, we review two energy sources that go together like hand in glove, and their moment to shine is closer than any of the three we’ve discussed.

That means there are investment opportunities using these sources that are closer to fruition.

The first is wind power.

The biggest criticism wind gets is that it’s a diluted source of energy. In other words, its footprint on the land, and the materials required, are too great to make it cost efficient.

But according to Mark Z. Jacobson, director of Stanford University’s Atmosphere and Energy Program, that theory is dead wrong. Wind involves just the pole touching the ground. If we used 73,000-145,000 5-megawatt wind turbines, we could power the entire U.S. vehicle fleet.

He extends his point in a TED talk debating the power of nuclear energy:

“That would take between 1-3 square kilometers of footprint on the ground, entirely. The spacing is something else. That’s the footprint that is always being confused. People confuse footprint with spacing… The spacing between can be used for multiple purposes including agricultural land, range land or open space. Over the ocean, it’s not even land!”

The idea of wind power offshore uses the same thinking as that of solar in deserts. It makes a lot of sense when you think about it.

Last year, the world’s largest offshore wind farm, located in the Thames Estuary, used 175 turbines to produce enough power to supply 470,000 U.K. homes with electricity.

But according to the whopping tome known as the Renewables 2013 Global Status Report, the U.S. added more energy capacity from wind power than any other technology for the second year in a row.

“At least 44 countries added a combined 45 GW of capacity (more than any other renewable technology), increasing the global total by 19%, to 283 GW. The United States was the leading market, but China remains the leader for total installed capacity…

“Wind power represented as much as 45% of all new electric-generating capacity in the United States, outdoing natural gas for the first time, and the 60 GW operating at year’s end was enough to power the equivalent of 15.2 million U.S. homes.”

Outdoing natural gas… with the current boom going on? I know that’s unbelievable.

Here’s where it gets more interesting…

Right now a prototype of a giant windmill-like object bobs beyond view 20 miles off the coast of Maine in the middle of the Atlantic Ocean.

The VolturnUS 1:8 turbine (rolls of the tip of the tongue, doesn’t it?) has rotors the size of one and a half football fields, while each blade is the length of the wingspan of a 747 jetliner. The turbine can generate enough power for four homes. But it’s merely the working prototype for a much larger project.

Winds are much stronger at sea than on land, with the optimum strength occurring during peak energy usage times in the late afternoon/early evening.

“Within 50 miles of U.S. shores, there’s enough offshore [wind] capacity to power the U.S. four times over,” says Habib Dagher, head of the VolturnUS 1:8 project.

According to Dagher, the goal of the project is to “bring the cost of offshore wind down by 2020, so it’s competitive with other forms of electricity”.

Further out is another form of power that is the perfect supplement to wind. Also off the coast, it’s ocean energy. Ocean energy can be had by using the momentum of waves and tides, which unlike sun and wind obey the constant Newtonian laws of motion derived from the sun and moon.

Hydroelectric is currently the most widely used form of renewable energy, accounting for 16% of global energy generation. The problem is that it’s maxed out in most places, and using hydro for our dams is not so good for the environment. It prevents fish from swimming upstream to spawn, and silt from flowing downstream to fertilize fields. Plus, overflowing of dams can cause surrounding vegetation to rot, producing methane — a more harmful greenhouse gas than carbon.

But unlike our rivers and streams, the oceans can use free-standing “hydro” or ocean power.

The best part, is that some ocean energy designs can be combined with wind energy designs, killing two birds with one stone.

One company that’s exploring this is Ocean Power Technologies Inc. (NASDAQ: OPTT), which spiked up yesterday when news came that it just received a $2.6 million contract from Mitsui Engineering & Shipbuilding.

We’ll continue this theme in future issues.

Have a great weekend!

Best,

Josh Grasmick
for The Daily Reckoning

Ed. Note: After reading Josh’s emerging energy series in this week’s Tomorrow in Review, one thing has become crystal clear: there a plenty of energy sources available to power the planet… and a variety of companies set to profit from them. Josh has made it his mission to discover the companies that are at the forefront of this energy revolution and to pass along that knowledge to his readers. If you want to get a leg-up in this rapidly developing story, your best bet is to sign up for the Tomorrow in Review email edition, for FREE, right here.