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    oil prices

    Whenever oil prices drop, everyone wonders how it will affect wind and solar power.

    It follows from the traditional assumption that renewables are only competitive when oil and natural gas prices are high. After all, the early stages of wind and solar power came with a hefty front-loaded price tag, requiring huge government subsidies to producers and end users to get off the ground.

    But those days are coming to an end...

Renewable Energy

This Solar Power Breakthrough Will Be a Game Changer for the Sector

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The great stumbling block for solar power has always been storage. Conventional batteries, even the most high-tech ones, are inefficient, expensive, and don't last more than a few years.

But this week, researchers announced a breakthrough battery that's 20% more efficient and 25% cheaper than anything else on the market.

It’s the game changer that could finally make solar energy competitive…

Has Solar Power Finally Arrived?

Solar panel

Solar power has three major benefits: It's renewable, it's great for the environment, and it can be produced right here at home.

There has always been one big problem with solar, however - the price. For years now, its high cost has always been the biggest weapon in every critic's arsenal.

But a study released last week suggests this objection is about to fall by the wayside for good.

Here's what it means for the energy sector, and for investors.

Energy Investing: This "Secret Ingredient" Generates Solar Power at Night

As solar power enthusiasts know all too well, renewable energy has the same problem that the "normal" generation of electricity does: how to store all of the energy produced so that it can be used when it's needed.

For solar power, that means even at night.

To date, this conversation has always centered around discovering new battery technologies.

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The U.S. Navy Loves This Micro Cap

As a concept, tidal power seems straightforward enough:
The ocean moves continuously without incurring any problematic conditions like lack of wind or sun, as is the case in the best-known renewable energy sources. With a constant source of motion, all that's needed to generate power is a drive shaft connected to a dynamo.
But a concept - by itself - doesn't make any money... especially in the "renewable energy" space. You need an effective product to make an impact.
That's why the U.S. Navy loves this little company...

The Path to Energy Independence is More Rocky Than It Seems

You might have seen yesterday's headline in the Wall Street Journal: "U.S. Redraws World Oil Map."

As the article explains, U.S. oil production is now on pace to surpass Saudi Arabia by 2020. This would make the United States world's largest oil producer. We're already the second-largest natural gas producer, according to 2010 EIA estimates.

It's all thanks to the U.S. shale boom that has unlocked billions of barrels of oil and trillions of feet of natural gas from the Appalachian Mountains to the Pacific Coast, from the Bakken in North Dakota to the shale fields of southern Texas.

But all of this fracking has caused some serious economic and environmental problems.

And while I greatly advocate increased drilling and domestic production, we still must address a wide-range of problems now plaguing the shale oil and gas sectors.

After all - with apologies to Voltaire and Spiderman - with such great fortune comes greater responsibility.

That's why I am in the third day of what has become a very interesting conference here in Pittsburgh. It was convened to set the agenda moving forward to deal with the almost invisible aspects of shale oil and gas drilling.

In fact, for the first time, the conference's primary focus will be on the negatives caused by the drilling.

We also have questions surrounding the amount of water required to frack these formations (the process needs a lot of water to break open rock and release hydrocarbons), as well as the ongoing public health fears from the chemicals used.

Now, we are seeing parallel economic problems as well.

In the Marcellus basin, researchers are now recording some of these shortcomings and placing them in four basic categories.

The real concern is that these four problems - in infrastructure, labor, local inflation, and the environment - will remain well after the drilling (and the revenue) has moved on.

So before you decide to declare "energy independence", take a look at some of the downside that may come along with it.



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Oil Prices are Higher, But It Won't Be Much Help for Alternative Energy

Normally, when gas and oil prices accelerate on both sides of the Atlantic, alternative energy sources come into focus and become a big part of that "energy independence" discussion.

Well, not this time.

During the run up to mid-$4 gas and $147 a barrel oil in 2008, many assumed these costs would continue to advance. That made alternative sources - especially renewables such as solar, wind, biofuels, and geothermal - more attractive to investors, politicians, and energy enthusiasts.

Alternative sources are more expensive than conventional oil, gas, or coal. They are, however, more environmentally friendly. Paying those higher costs was regarded as a tradeoff for cleaner energy sources and a reduction in emissions.

Today, that view has changed.

U.S. Oil and Gas Squeezes Alternative Energy Prospects

It's part of the reason why I've recently avoided alternative energy companies like First Solar (Nasdaq: FSLR), Canadian Solar (Nasdaq: CSIQ) or SunPower Corporation (Nasdaq: SPWR) in my Energy Advantage portfolio.

The economic downturn has made reliance on more expensive energy sources a difficult proposition to accept. Renewables are hardly a convincing argument anymore, especially during a sluggish economic recovery.

Yes, increasing oil and gas prices should reduce the spread between conventional and renewable, thereby providing stronger arguments for change. And proponents argue that alternatives provide an enhanced advantage given that they can also be domestically produced.

Just don't bet on these arguments holding up this time. Here's why.

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The Problem with Renewable Energy is the Price

I haven't written about renewable energy in recent months for a very specific reason.

The market for sources such as solar, wind, and biofuel has collapsed.

There are two reasons. Both involve price.

First, while crude oil is beginning to move upward, and natural gas prices have increased by about 57% over the past three months, both had fallen to unusually low levels.

That means the primary ally of alternative sourcing - the acceleration in the price of hydrocarbons - has been absent.

Of course, there are environmental, lifestyle, and social considerations that would benefit from renewable energy. Taken by themselves, however, these do not have more than a marginal impact on the energy balance.

Price remains the main ingredient.

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The Truth About $6 Gas, $200 Oil and the Quest for Energy Independence

No one needs to tell the average American about the impact of oil and gas prices. If they don't feel it in their wallets every day, they hear about it on the news every night.

But surprisingly, amid all the rhetoric, there have been no real answers to some of the key questions driving the energy debate... until now.

Is President Obama truly responsible for high gas prices, and can his opponents really bring them back down?

What role has Federal Reserve Chairman Ben Bernanke's loose monetary policy played in soaring energy costs?

Is more domestic drilling the answer?

Renowned energy expert Dr. Kent Moors answers all of these questions - and more - below.

Dr. Moors, an adviser to six of the world's top 10 oil companies and a consultant to governments around the world, also talks about the effect political turmoil in the Middle East could have on energy prices in the immediate term and how North America will gain energy independence in 15-20 years.

Here's what else Moors - a bona-fide energy expert - had to say...

Dr. Moors on Gas Prices

Can a U.S. President actually impact gas prices- at least enough to get gasoline back to $2.50 a gallon? Or is this just talk? I don't know whom to believe anymore...



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Germany Set to Invest $260 Billion in a Renewable Revolution


The moment Germany announced its highly publicized decision to phase out nuclear energy in the wake of the Japanese triple disaster; observers began to ask one very important question.

Just what energy source would replace such a huge swath of power in Europe's dominant economy?

The short-term solution had to be natural gas.

But this would make Germany more dependent upon imported energy, especially from Russia.

In that sense, the nuclear phase-out made the Nord Stream pipeline - from Russia, under the Baltic Sea, to northern Germany - absolutely essential.

Today, the first line of the twin pipeline is already in operation. The second should be on line at the end of next year (if not sooner).

Then there is the other Russian project - South Stream. This one intends to move Russian and Central Asian gas into Southern and Central Europe.

Much of that will also reach Germany.

In addition, several pipeline projects are vying for the excess production from the second phase of the Azerbaijani Shah Deniz offshore development in the Caspian Sea.

Included among these is Nabucco, a venture to bypass Russia and transport gas into the Baumgarten hub in Austria for ongoing distribution.

Nabucco has long been the European Union favorite, but it has been unable to attract sufficient supplies. Three other pipeline proposals also are attempting to secure the Caspian gas for transit to Europe.

But there is a problem for Germany in all of this.

It does not want to form an increasing dependence upon imported gas to power its economy.

And this sentiment is driving one of the biggest alternative energy revolutions in recent memory.

The German Push Toward Wind and Solar Power

The 17 currently operating nuclear reactors in the country provide about 20% of the national electricity needs. Any replacement of those plants (where capital expenses are already sunk) will add significantly to the end costs of energy.

That means a political decision following the Fukushima Daiichi disaster one year ago ends up costing the average German citizen even more to secure what is already among the most expensive electricity in the world.

Germany does have shale gas.

But the furor over nuclear power is paralleled with a similar environmental concern regarding the dangers of fracking, a process of pumping water and chemicals under high-pressure to break open the rock and free the gas.

There are now four U.S. examples of seismic anomalies resulting from the combination of fracking and deep horizontal drilling.

And they have not instilled much confidence for the markets.

Instead, what the Germans are deciding to do is already being called the biggest restructuring of the national energy landscape since the end of World War II.

The government will initiate a campaign valued at more than $260 billion to harness wind and solar power.

The price tag is staggering. It is already pegged at more than 8% of the nation's entire gross domestic product (GDP). And it could move even higher.

This will involve huge wind farm areas in the Baltic and massive new high-power transit lines nationwide. The goal is to have at least 35% of the nation's power needs generated from renewable sources by 2020.

However, the developments of this massive policy shift are even more exciting.

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An Unlikely New Supporter for Alternative Energy

During a biofuels conference at Mississippi State University last week, Navy Secretary Ray Mabus announced that his branch would be leading the charge to lessen the U.S. Department of Defense's (DOD) dependence on fossil fuels.

This involves a rather large chunk of traditional fuel usage.

On average, the federal government consumes about 2% of the fossil fuels used in the United States - and the DOD accounts for about 90% of that.

With the Obama administration emphasizing a move to alternative and renewable fuel sources, Mabus is signaling that the military is on board - sort of.

The Trouble with Foreign Oil

As a former governor of Mississippi and ambassador to Saudi Arabia, Secretary Mabus knows something about the position of oil in American foreign policy.

He noted during the conference that, for every $1 rise in the cost of crude oil, the Navy has to come up with at least $32 million.

So when the Libyan crisis hit earlier this year, and oil spiked $30 a barrel, that translated into almost $1 billion of additional costs to the Navy. It's no wonder, then, that Mabus is committed to meeting 50% of the Navy's onshore and fleet fuel needs with non-fossil sources by 2020.

Additionally, in what is now mantra from both sides of the political aisle, reliance on foreign oil sources presents a national security problem.

"When we did an examination of the vulnerabilities of the Navy and Marine Corps, fuel rose to the top of the list pretty fast," Mabus said. "We simply buy too much fossil fuel from actual and potentially volatile places. We would never allow some of these countries we buy fuel from to build our ships, our aircraft, our ground vehicles - but because we depend on them for fuel, we give them a say in whether our ships sail, our aircraft fly, our ground vehicles operate."

The push seems serious enough, and it does reflect similar statements coming from other branches of the military.

But questions remain: What are the alternative sources? How much volume can each genuinely give to the effort? And what are the possible drawbacks of such alternatives?

Biofuels to the Rescue

From the Navy's perspective, biofuels have shown some serious promise.

In certain theaters of operation, bio additives are already in use for both jet fuel and lighter vessel options. And the initial results have been quite encouraging.

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Renewable Energy and Government Subsidies Go Hand in Hand (for Now)

The Obama Administration is coming under fire for providing subsidies to renewable energy sources, such as solar, wind, and geothermal.

And not for the first time.

The latest tiff results from a $528 million loan to Solyndra LLC. Despite receiving federal funds, the private, California-based solar panel maker went belly up on Sept. 1, filed Chapter 11 bankruptcy protection, and laid off every one of its more than 1,100 workers.

U.S. Secretary of Energy Steven Chu has gotten more political flak from the loan program in recent months. Political opponents claim it's an example of government waste in the making.

Since 2009, Washington has doled out some $16 billion in 28 loans. The Energy Department says this loan money has resulted in 60,000 jobs.

However, with $6 billion being committed in only the last few weeks (to beat a Sept. 30 budgetary deadline), disasters like Solyndra are something best avoided when Chu speaks on renewables.

Just as predictably, they are likely to figure prominently in the rhetoric coming from the other side.

But the current debate that the Solyndra failure has prompted brings a broad question: Can renewable energy sources make it in the market without a significant push from the government?

Not initially.


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