The Disruptors Within the MegaTrend of Electricity Generation
Sustainable Energy Generation- Where We Are Today
About two-thirds of the electricity that we use today is generated by burning fossil fuels. At a high level, this comes from nearly equal amounts oil, coal, and gas. Actually, a little more comes from oil than the others.
Regardless, this method of generating electricity is far from sustainable. Moreover, some say there’s a sort of synergistic feedback loop going on here too. The more fossil fuel that’s burned, the more severe climate change becomes, and the more fuel we need to cool our homes and buildings during the warm months and heat our homes in the winter.
Today, hydroelectric generation produces more renewable energy than any sustainable source we have. Nuclear energy is the next highest, followed by wind energy and then solar. Together, they produce about one-third of the world’s electricity.
About 10% of this is nuclear, 15% is hydroelectric, and wind and solar together make up about 10%. In many places, even in the US, the price of electricity produced with wind and solar is less than that produced using coal.
Even the sustainability of hydroelectric is coming into question. As bigger and bigger droughts become a reality and water sources begin to dry out (as has happened in the US with the Colorado River and with the Danube River in Central Europe, the Po in Italy, and the Yangtze in China), hydroelectric generation may become unreliable and maybe even cease altogether in some places.
The Three Gorges Dam in Central China is the largest hydroelectric plant in the world. (Source: Wikipedia.org)
These four sources are perhaps the more classic routes to sustainable energy. Be sure that wind and solar are growing. The previous paragraph aside, creation of new hydroelectric plants is generally flat, although there are new tidal technologies, coastal wave generation, and open ocean systems coming online. Legacy nuclear is slowly decreasing. However, there are new sustainable sources of electricity on the horizon that may become tomorrow’s savior.
Novel Next-Gen Nuclear
For many years now, both Microsoft (NASDAQ: MSFT) founder, Bill Gates, and The Oracle of Omaha, Nebraska billionaire and Berkshire Hathaway (NYSE: BRK.B) founder, Warren Buffett, have been investing in nuclear energy start-ups Terra Power and PacifiCorp (OTC:PPWLO). These two companies are collaborating on what’s known as the Natrium Project.
Where traditional nuclear involves enormous plants that cost tens of billions of dollars to produce, Natrium hopes to produce smaller reactors that cost closer to a billion dollars.
These smaller units – generally known as small modular reactors (SMRs) – have a uniform design (not unique, custom builds like legacy reactors – and can operate individually or more units can be added as power demand requires.
Natrium believes that by assembling its reactors in precision factories and only building one model, reliability and safety will be dramatically increased.
Generation of electricity using hydrogen is also a current reality and gaining momentum. Hydrogen can be burned or used in a fuel cell to generate electricity.
Regardless of how you want to use it, here in Europe, companies are building hydrogen generating electrolysis plants that take advantage of off-peak electricity generated by wind turbine farms in the North Sea.
Wind Farm in the North Sea off the Coast of Germany. (Source: balkengreenenergynews.com)
There are also hydrogen cars, trucks, and trains that are operating “in the wild”, and China is subsidizing hydrogen filling stations to convert its buses and municipal vehicles.
The Hunt for the Grail: Nuclear Fusion
The holy grail of electricity generation is nuclear fusion. This technology has been the topic of science fiction movies for decades, but it’s starting to look like it’s within our grasp in the next decade or two.
Fusion promises the ability to generate huge amounts of sustainable electricity with zero carbon emissions and no toxic nuclear waste leftover. Scientists and engineers are making slow but steady progress towards making it a reality.
One of the main challenges is that the heat generated when fusing atoms together (usually hydrogen) is so intense that no container exists that won’t literally evaporate under the heat. We are talking about millions of degrees Fahrenheit that would incinerate the most heat resistant ceramics we know of in milliseconds.
Companies working on fusion, such as Massachusetts Institute of Technology (MIT) spinoff Commonwealth Fusion Systems, must levitate fusing materials using strong magnetic fields. These magnets require copious amounts of electricity on their own, and the main challenge is to produce more energy from the fusion than is required to operate the magnets.
MIT and Commonwealth Fusion Systems have succeeded in developing high temperature superconducting (HTSC) magnets that are more energy efficient than ever before.
In fact, they are so efficient that in September 2021, Commonwealth demonstrated for the first time that its HTSC magnets were so efficient that it’s possible to produce a fusion device that can achieve net positive electricity generation. This was a major milestone on the road to fusion.
Illustration of the cross-section of a proposed nuclear fusion reactor being developed by MIT and Commonwealth Fusion Systems. Note how large this device is by comparing it to the man just to the right of center in the bottom part of the image. (Source: techcrunch.com)
Sustainable Electricity Generation is a Megatrend
Sustainable electricity generation will become a widespread reality. Hundreds of companies around the world are heavily invested in it. It’s a Megatrend in motion and investors who can participate will most certainly profit in the long term.
My portfolios are filled with MegaTrend stocks that are led by people that are disrupting their respective sectors, and changing the world we live in.
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