Investor Column | Renewable energy markets see strong support from new administration
When I first moved to Manatee County in 1998, Florida Power and Light was in the late stages of their failed multiple-year attempt at selling to the state of Florida the idea of retrofitting their Parrish power plant to burn a heavy crude oil called Orimulsion. It was supposed to save consumers money and was touted to be just as clean as the current fuel of the time. In hindsight, we really dodged a bullet on that plan! One utility company in North America did the retrofitting and started to burn the Venezuelan fuel. By 2004, Venezuela nationalized their petroleum industry and stopped selling Orimulsion. That company lost millions on a failed venture.
Based on recent changes via executive orders and potential future legislation, renewable energy projects appear poised to build on an already strong past year. It is no surprise that on the surface, the Trump administration’s position on energy centered around independence and support for existing jobs in traditional energy markets. What is surprising is that 70% of all new energy generation capacity in the past year came from renewable energy sources. Clearly private markets continued to choose the construction of renewable energy plants over the construction of traditional fossil fuel plants.
One of the big reasons is the grass roots efforts by large corporations, especially tech companies like Amazon that are pledging to utilize power that is 100% produced from renewable energy in the years to come. Politics aside, private investment and consumer support for energy transition is where REAL change will occur in our energy options. When you see a 1,000-horsepower electric SUV commercial on tv with prices starting at $100K, you realize that the market is already there for electric trucks and SUVs and it is moving beyond the novelty of a popular decade old electric car.
Another huge reason for those changes is the decrease in prices of items like solar panels and lithium batteries. Both items have dropped in price over 80% in the last 10 years. Those price reductions in the battery arena become a game changer for improving power grids that lack enough power to handle high use times by allowing for massive battery back-up systems to send stored power to where it is needed.
While on the topic of our old, fragmented, and mismanaged power grid…we have yet to truly update our systems to be able to transport our renewable energy. The possibility to send power to where it is needed most at the right time from places in the country that have excess capacity and have produced that energy at a low cost would truly be a game changer.
You do not have to look far to find examples of life changing shifts in society tied to power and energy that were controversial. Those changes always created extreme winners and extreme losers. I believe that we are seeing that shift speed up as our awareness increases. We are now starting to realize the benefits of renewable energy. Energy independence is necessary for national security and renewables still only represent a small percentage of our energy today. It is expected that we will see renewable energy sources represent up to 25% of our energy usage annually by 2050.
Danny Wood is a principal and founder of SeaCoast Financial Partners. To learn more visit MySeaCoastFinancial.com. The opinions expressed in this material do not necessarily reflect the views of LPL Financial. Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC