Investment Shastra

Clean Alternate Energy: ‘No-cost fuel’

In the modern era, power (energy) is one of the most critical elements for economic growth. Every household & corporate use it, according to their requirements. We cannot even think of driving the growth of the economy without it. Unfortunately, it is not available cheap because of depleted natural resources and environmental and security challenges.

What is the solution of this problem?

Yes… it is ‘Alternate sources of energy which are cheap and based on Clean-tech’ which can be the next big engine of business and economic growth.

This is being driven by the huge demands placed by all the developed as well as developing nations. Clean-tech covers four main sectors: energy, transportation, water, and material. Let’s understand the meaning of ‘clean tech’ first

What do you mean by ‘clean-tech’?

Clean tech refers to any product, service, or process that

  • Delivers value using limited or zero nonrenewable resources; and/or
  • Creates significantly less waste than conventional offerings

It cuts or eliminates pollution & toxic wastes and delivers equal or superior performance compared to conventional one.

What are the major sources of alternate energy which are based on Clean-Tech?

In this peer ‘Wind Energy’ has the largest market in the world. It is expanding very rapidly. During the last 13 years, it has expanded from less than 5000 MW (in 1996) to more than 150000 MW (2009) i.e. 30 folds. As of May 2009, 80 countries around the world are using wind power on a commercial basis. Currently, Denmark generates about 19% of their electricity from wind, Spain and Portugal 13%, and Germany 7%.

Solar Energy, one of the greatest opportunities among its clean-tech peers, is growing by 35-45% per year. This industry is being leveraged by the same technologies that enabled semi-conductor and computer revolution. It is expected that the solar power will be cost-competitive with the conventional retail electricity rates before 2020.

The third largest source of alternate energy which is based on clean-tech is Bio-fuels. Today, Brazil gets more than 30% of its automobile fuels from sugarcane-base ethanol. The world is trying to distill fuels and create materials from cellulosic nonfood crops such as Switchgrass and Jetropha.

Is ‘Nuclear Energy’, as an alternate source of energy, based on Clean-tech

Though nuclear energy is an alternate source of energy, it is not based on clean-tech because of following problems:

  • Radio-active waste disposal and storage challenges
  • The security threat of nuclear power stations; can be a target of terrorists’ attack
  • Nuclear plants use huge amount of carbon-incentive energy and materials such as cement in their construction
  • They also require large amounts of water in their cooling operations – constraint for development and operation

So, Nuclear Energy, due to its radio-active waste disposal and security threat, does not solve the problem of environmental and security challenges. Also, nuclear plants are not cost-effective because they require huge amount of energy and water for their operation.

No cost fuel – the main growth driver of clean alternate energy.

Traditionally, fossil fuel costs have been known to be lower than the clean-energy costs. However, trends show that the costs of clean-energy are falling while the costs of fossil fuel energy are moving up. This convergence of costs is expected to make clean alternate energy competitive in coming years. Along with huge demand, the major reason for this is: The future of clean alternate energy is being powered by ‘no-cost fuels – the sun, the breeze, the heat of the earth, the tides and waves’- which arrive free of charge, daily. This gives this industry the great advantage of price stability. Once you pay for a solar PV array on your rooftop or install a wind farm, there are no costs for fuels.

In fact, all the costs involved in clean alternate energy are associated with its technology. These costs are also consistently going down, with improved efficiencies and expanding markets. Currently, this industry is in the phase of scaling up manufacturing, which will finally drive down the overall costs.

This industry also has the advantage of less volatile costs compared to fossil-fuel costs which are very volatile. With some exceptions, such as temporary shortage of silicon for PV cells and rising global steel prices, clean-energy costs are relatively less volatile than their conventional counterparts

In nutshell, clean alternate energy is expected to give cost advantage as well as price advantage in the near future. These expected advantages have made clean alternate energy the cornerstone of investment for individuals, corporate, and government which is bringing these technologies to the commercial forefront.

A few Indian companies have successfully developed or are in the process of developing Green/Clean technologies. These include companies like Suzlon Energy, Praj Industries, Mosaerbaer, Jain Irrigation, Thermax Ltd. etc. Their unique technology driven growth also offer good investment opportunities for investors interested in Green technologies

You can read more about these companies here.

Supria Sony - Team MoneyWorks4me