Buylyst

Published on 01/19/18 | Saurav Sen | 5,022 Words

The BuyGist:

In the US, the power sector is economics-driven - the most economical power plants are called upon to generate the most electricity.
Traditionally, Coal Plants have been the most economical. Lately, since the US Shale revolution, Natural Gas plants have eaten into Coal's share of the "power pie".
But the economics of Wind and Solar Power prove to be more compelling every year - with or without subsidies.
The key to massive growth in Wind or Solar, however, lies in the evolution of Electricity Storage (Battery) technology. This presents us with 2 scenarios: the worlds as it is today OR the world with cheap, scalable Battery technology.
The chances of the second scenario - if/when Battery Technology becomes economical enough to deploy on an industrial scale - is high enough to strengthen the investment case for Renewable Energy.
Onshore Wind Energy, in particular, seems to be the safest sport to play consider the 2 scenarios and their (subjective) chances of actually happening.

Power Struggles

Since the US Shale revolution started a few years ago, there has been a battle for the title of “#1 Source of Power”. The two contestants have been Natural Gas and Coal. In 2016, Natural Gas usurped Coal’s long-standing title. In the summer of 2017, Coal snatched it back. The tussle is on. The X-factor in this battle, however, is a scrappy upstart: Renewable Energy. Wind and Solar Power have been growing at a rapid pace – partly due to legislative help and partly due to good ole Economics. The pace at which they’ve been growing can not only sustain itself, but accelerate in a massive way if Battery Technology makes significant progress. Battery Technology is the game-changer – that has the power (pun intended) to make it a 3-way race to domination between Coal, Natural Gas and Renewables. Politics will unfortunately play a role in this tussle. Eventually, however, Economics will decide their fate.

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