Apr

14

Two new trends will likely emerge from the Iranian caper: renewable energy and nuclear power. Smart money will aggressively pursue renewable energy assets (including derivatives). Sovereigns will likely pursue nuclear power assets if they can afford the price tags.

Humbert A. responds:

An interesting thesis, The Economist had an interesting article in their 3/21/26 edition entitled "Burnout" of most interest in your line of thinking was a graph that showed Daily Wholesale electricity prices in 2026 in euros per MWh for France Italy Germany and Spain. The Economist posited Spain and Frances wholesale prices adjusted to the downside more quickly than Germany or Italy based on investments they had made in renewables and diversifying their sources of electricity. Your thesis seems to follow a general trend of dis-integration we have seen for some years now with supply chains. How far up and down stream can we disintegrate? Also BTW what does NFW mean I am assuming Not for web but I am new here.

Henry Gifford writes:

I have heard a lot about investing in renewable energy, but am not clear on how to do it. For actual real renewables I think of hydroelectric (dams with generators turned by the water) and geothermal (heat from hot springs generating electricity or heating buildings, not electricity powered equipment that cools the groundwater to heat a building, which the federal government treats as a form of renewable energy despite it using electricity) and solar panels and wind turbines.

No new rivers are likely to be discovered, and here in the US dams are being removed at a steady and fairly rapid clip to help the fish, etc. No new hot springs are likely to be discovered, as the best way to find them is to check road maps for places with the words “hot springs” as part of the name.

Solar panels can heat water to heat a building or heat water for showers and faucets, but many of them don’t work, especially here in the US, as the technical skills just don’t exist. In Europe they are sold as part of a boiler system, and come complete with electronics and pipe connections and clear instructions. Many of them work. They are installed by local plumbers and manufactured by giant companies such as Viessman and Buderis, who also sell boilers here in the US, but without the solar components, due to lack of demand and lack of expertise. Outside of the US and Europe these solar systems are virtually unknown in some areas, and super popular in other areas, especially areas where outdoor temperatures do not drop below the freezing temperature of water.

Solar panels that produce electricity are of course popular here in the US. The last time there was a market price for those systems, about 15 years ago, the systems cost $9.00 per summer noon watt of capacity. This is for the whole system, including panels, mounting racks, electronics to convert the DC the panels produce to AC at the correct voltage and phase to connect to the grid, wires, labor, permits, etc. If angled at latitude degrees from horizontal, oriented South, and never shaded, these systems produce, on an annual basis, an amount of electricity equal to about 1,200 times what they produce at noon during the summer. Sure, Arizona gets a lot of sun, but the panels don’t like the high temperature there. Seattle gets less sun, but the panels like the temperature there better. Thus for all the lower 48 states the output is fairly close to the 1,200 noon-hour equivalent. After losses in the wires and the electronics, one watt of capacity produces about 1,000 watt-hours of electricity. That 1,000 watt-hours is called a kilowatt hour by the utility company, and sold for an average of $0.09 at the time the systems sold for $9.00/watt. This makes the simple payback (no allowance for maintenance, change of value of electricity, change of value of money, etc.) the result of dividing $9.00 by $0.09. As this is very politically incorrect division, I will leave that to others. But, the payback is frustratingly long, especially as the panels only last for 20 to 25 years and start degrading the day they are manufactured, and the electronics might only last half that long.

One might wonder; if the payback is so terrible, why are they so popular? Because you are paying for them. And, because you are paying for them, very few are installed facing exactly South, angled at latitude degrees from horizontal, and never shaded, which of course makes the payback much longer than the math above implies. Even a small bit of shading, such as from a telephone wire, lowers the voltage of all the panels in an array, and can damage the panels, although the in-laws won’t notice and you will still pay the same amount.

The crazy long payback is why you don’t see them installed on roofs of warehouses and big box stores, where they can be oriented perfectly, angled perfectly, never shaded, and can offset the purchase of electricity at the much higher commercial rates those utility customers pay.

So, with such a horrible payback, the whole arrangement is as financially sound as a soup kitchen or a homeless shelter. Sure, lots of people bring home lots of money from those operations, but how would one go about investing in the soup kitchen “industry”? Solar electric panels are now heavily subsidized at both the installation end and the manufacturing end, thus any investment depends heavily on the winds of politics, not on any actual value added or created.

For wind turbines, the small ones mounted on buildings and lampposts are mostly for show. The only study I ever saw about how much electricity they produce said the measured amount was 0.2% of the claimed amount, but that study was based on a very few measured measurements.

I suspect very large utility scale wind turbines have a very good payback, but I have no idea how to sort out the claims made. Perhaps someone can invest in the companies that make and install those, but recent politics put a halt to large projects when they were 80% complete, which will probably bankrupt companies in that industry.

I still scratch my head when people talk about investing in renewable energy. If anyone has any ideas, please let us know – I think it certainly is the future in the not-too-distant future.

Zubin Al Genubi writes:

In Hawaii lots of people have solar panels. Electricity is .22 during the day but .64 from 5-9pm. I was going to get a battery and charge it with everyone else's panels and harvest the differential. Seems like battery tech is an idea.

Asindu Drileba comments:

Yes, it seems for seasonal renewable energy like wind, solar etc. The overarching strategy is to invest in battery tech (people with relevant patents & Lithium miners). Since the energy needs to be stored anyways. Maybe the FIT etf can satisfy this?

Some people like Lyn Alden have suggested that people have some Uranium ETFs. However, for stuff like hydro and geo-thermal, maybe a copper futures allocation since everything with a turbine has use for it.

The risk with commodities is that a large repository maybe discovered that will make prices fall. Investing in corporations with relevant patents for battery tech seems safer. But I also think a small commodities allocation (Uranium, Copper, Lithium miners) is worth it.

Humbert A. writes:

Our family looked at making an investment in solar. The project was on the small side right under 100 acres we were operating in a state in the U.S. that at the time had very attractive tax incentives. The most attractive option on the menu was a land lease which when the dust settled we decided it still wasn’t worth it. Our thinking was why convert 100 acres of perfectly good mushroom hunting ground into an unsightly solar array? This of course in addition to the actual math already mentioned.

Our experience however in our other operations, automobile retail our utility provider had a very interesting program we did take advantage of. Without going into needless detail it was a program where we had been paying into with our utility and we were able to make an investment in some approved “green project” solar investment was on the menu and with car lots in our region very attractive. Our is region prone to hail and extreme heat solar panels could shade and protect the inventory and in our case potentially reduce insurance cost in an event (it’s not uncommon to carry separate policies on New and Used vehicles thus having to pay two or even three deductibles in an event) we opted however for upgrading to LED lot lighting.

At least in the U.S. I tend to think successful investment in renewables will be more decentralized. For example the recent success of the Generac gas systems. Households through various utility and tax schemes will make emotional decisions to make their families energy use more diverse and secure at great cost to them and great benefit to the retailer. Essentially solving the problem at the household level Europe is trying to solve at the national level. Behind every blade of grass in America is an alternative energy generator.


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