Greenlight’s Einhorn Said to Back Solar Stocks at Robin Hood – Bloomberg 10-20-14

Salient to Investors:

David Einhorn at Greenlight Capital is believed to have recommended renewable power companies on the declining cost of solar energy and rising price of electricity, while betting against French sovereign debt.

Read the full article at http://www.bloomberg.com/news/2014-10-20/greenlight-s-einhorn-said-to-back-solar-stocks-at-robin-hood.html

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Four Numbers Say Wind and Solar Can’t Save Climate – Bloomberg 09-20-13

Salient to Investors:

Robert Bryce at the Manhattan Institute writes:

Any transition away from our existing energy systems will be protracted and costly. Energy transitions occur over decades, even centuries. Coal use in the US is declining, but it is soaring in the developing world and booming in Europe.

Global carbon dioxide emissions have increased 32 percent since 2002, nearly all in the developing world – 86% in Asia, 61% in the Middle East, 35% in Africa, minus 8% in the US (largely due to shale gas reducing coal use), and flat in Europe. Coal use, more than any other factor, is the driver.

Developing countries, particularly fast-growing economies such as Vietnam, China and India, cannot continue to grow if they limit the use of hydrocarbons. Roger Pielke Jr. at the University of Colorado says economic growth wins out over policies focused on emissions reduction every time.

Carbon dioxide emissions have soared because 2.6 billion people still live in dire energy poverty, with more than 1.3 billion having no access to electricity.

The power density of wind is 1 watt per square meter, meaning enormous tracts of land must be set aside to make it viable, along with a backlash from rural and suburban landowners who don’t want 500-foot wind turbines near their homes. To replace the power the US got from coal in 2011 would require placing wind turbines over an area the size of Italy and in which no one could live because of the noise. Offshore wind turbines cost about 3 times as much as turbines on land.

Global production of electricity from wind in 2012 was a 5-fold increase over 2005 output, and more than 5 times the contribution made by solar.

Global energy use is about 250 million barrels of oil equivalent per day, or the output of 30 Saudi Arabias.  On a scale of 30, 10 comes from oil, 9 from coal, 7 from natural gas, 2 from hydro, 1 1/2 from nuclear, and 1/2 from all renewable sources, not counting hydropower. We get 50 times as much energy from coal, oil, natural gas, nuclear and hydropower as we do from wind, solar, geothermal and biomass.

The only sources of electricity production that can compete with coal on price and can be deployed all over the world fairly rapidly and not take up too much land is natural gas and nuclear.

Read the full article at  http://www.bloomberg.com/news/2013-09-20/four-numbers-say-wind-and-solar-can-t-save-climate.html

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The Race of Our Lives – GMO Quarterly Letter 04-26-13

Salient to Investors:

Jeremy Grantham writes:

  • The world, in its reckless use of resources and natural systems, shows many of the indicators of potential failure that brought down many prior civilizations. However, we have two saving graces that may save us – declining fertility rates and progress in alternative energy.
  • People, especially investors, prefer good news and wishful thinking to bad news. Good news is an easier sell, especially in investing.
  • There is near complete control of government by the powerful beneficiaries of the current system.
  • Malthus observed that population had always kept up with food supply, meaning even successful societies were only a few bad growing seasons away from starvation.  Malthus predicted this would always be the case but was wrong on two counts since. Coal and oil, and declining fertility.
  • Our hydrocarbon interlude will end either when economic resources are exhausted or when we have ruined our climate and environment.
  • Nobody before 1960 ever dreamed we would voluntarily decide to have fewer children even as we became richer.  The  remarkable decline in fertility is our last best hope for our civilization and the well-being of all life and I believe we succeed on this front.
  • Our second great hope is renewable energy – solar, wind, etc, plus electric grid efficiencies and improved energy storage.
  • By 2025 to 2030, both solar and wind power will be cheaper than coal, a hopeless choice for electricity generation in 20 years, especially when fully costed for externalities like pollution and climate damage.
  • Personal average wealth and income has been rising only 1% to 3% a year for the last 30 years. Solving our long-term energy problems may not only be the most critical economic problem, but one of two most critical inputs into our future viability as a civilization.
  • Once the capital is found and the project is built, a wind or solar farm delivers far cheaper energy than a coal-fired utility plant, at around one-third of the marginal cost of coal.
  • California gets almost twice the amount of sunshine as London.
  • Energy storage is now being worked on by scores, if not hundreds, of research teams. Caution, a lack of expected progress in energy storage could materially slow down the rate at which alternative energy is adopted.
  • Expect China to set a brilliant example on alternative energy. They could smooth out their potentially dangerous transition from 50% capital spending to a more reasonable 35% over the next 20 years or so by managing a giant program of alternative energy. This would potentially give them global dominance in the most important industries of the future, relieve them of their greatest single worry, energy security, and lower the chronic air pollution of their major cities. Such a program would leave them as the low-cost energy player in global trade, which when added to their lower labor costs, rising educational standards, rapidly improving infrastructure, and capital deepening, should put the fear of God into US capitalists.
  • Our population is likely to start declining in a few decades, slowly but surely, and the fertility rate of 1.8% or less would allow global population to fall back more or less gracefully by 2200 to a probably sustainable level of 4 billion.
  • Natural gas in 5 years will rise to  $6 to $7 mcf.

Read the full article at  http://www.gmo.com/websitecontent/GMO_QtlyLetter_1Q2013.pdf

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Merkel Losing Allies in $700 Billion Shift to Renewables – Bloomberg 04-05-13

Salient to Investors:

Marc Nettelbeck at DZ Bank said the entire energy switch has derailed – the difficulties connecting offshore wind farms to the power grid reduces their profitability and renders the original investment calculations of utilities invalid.

Marc Oliver Bettzuege at Cologne University said the offshore expansion in Germany is much slower than anticipated by politicians, and without a focus on wind from financially strong investors such as EON and RWE, Germany will need to import a large amount of clean power to reach its goals.

Chris Rogers at Bloomberg Industries said the decision to rein in spending is not anti-renewable, just focusing on best projects, but the prioritization is not helpful to Merkel’s energy policy, which is not doomed, but may struggle to attract investors as cash-strapped utilities invest in fast-growing markets such as Brazil and Turkey.

Read the full article at http://www.bloomberg.com/news/2013-04-04/merkel-losing-allies-in-700-billion-shift-to-renewable-energy.html

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