Two recent eye-opening announcements prove that renewable energy is no longer at the mercy of the price of oil.
Both involve solar power, which I find increasingly attractive in today's markets.
The first is a major test of a joint project between Tesla Motors Inc. (Nasdaq: TSLA) and SolarCity Corp. (Nasdaq: SCTY) involving 500 California homes.
Sources have told me they expect this test to be the final "proof of concept," followed by wider applications in both residential and commercial uses.
The lynchpin between the two is a family connection.
Tesla's CEO is Elon Musk, one of the most innovative entrepreneurs of our time, while his cousin Lyndon Rive is the CEO of SolarCity. Musk is also SolarCity's biggest shareholder.
Now the two are coming together in hopes of solving the industry's biggest roadblock…
Solar Power Comes of Age
Tesla, of course, needs very little introduction. The California-based company has a very visible position in cutting-edge electric cars.
SolarCity, on the other hand, is the market leader in installations. In the third quarter of 2014, SolarCity led the pack in this portion of the business by grabbing 39% of the market. Meanwhile, SolarCity's next-closest competitor came in at 16%.
The two market leaders are now combining some of their operations in a very serious attempt to bring solar power into more consumer areas. In short, SolarCity is working with Tesla to make rooftop panels that are fitted with Tesla batteries.
Now a major test is underway in California that may usher in a new age of residential solar battery use.
The California test will utilize a solar battery with the ability to power a home for two days in the event of a blackout. In everyday use, the unit is expected to allow homeowners to store solar-generated power for use during high-cost periods, giving them the flexibility to use the conventional grid for cheaper, off-peak electricity.
Storing generated power for use at other times – in short, perfecting a new line of cost-effective batteries – has been the industry's single biggest hurdle.
So the California residential test may well usher in a whole new ballgame. Considering the batteries from the Tesla-SolarCity venture (involving more than the California test) utilize a new generation of silicon batteries, rather than relying on rare earth metals or lithium, is also a plus. This type of approach is already well advanced, and is based on considerable familiarity and history.
It also doesn't hurt that Tesla is building the biggest battery factory on the planet right now. Dubbed the "Gigafactory," the plant is expected to have a dramatic effect on the energy storage market, helping to bring battery costs down by as much as half by 2020.
So while the initial price of these installations may come in high, as with any generation-changing new technology, the cost will eventually come down. What's more, there may be some credits and other inducements provided by the companies to stimulate usage.
This development, combined with the recent decisions by Apple Inc. (Nasdaq: AAPL) to power its new Pentagon-like headquarters via solar and Google Inc. (Nasdaq: GOOG) opting for wind power for its San Francisco Bay Area base, show that renewables are now moving into all aspects of electricity end use here in the States.
India Breaks Ground on the World's Largest Solar Plant
The second major development for renewables is unfolding halfway around the world.
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Dr. Kent Moors is an internationally recognized expert in oil and natural gas policy, risk assessment, and emerging market economic development. He serves as an advisor to many U.S. governors and foreign governments. Kent details his latest global travels in his free Oil & Energy Investor e-letter. He makes specific investment recommendations in his newsletter, the Energy Advantage. For more active investors, he issues shorter-term trades in his Energy Inner Circle.
The Tesla Motors project is very interesting.
To get reasonable range in an electric car, for further-than-commute journeys, the battery has to be twice as big as is necessary for the commute. If half the battery could be dropped into the garage floor and get auto-connected into the house main, the solar panels could charge this whilst the car was at work, ready for a longer trip at the weekend, or to power the house through dark weather or consumption peaks.
The gear for lowering and re-installing the battery would allow charged batteries to be rented from gas stations in an emergency. Where the employer had installed panels or windmills, an employee could re-charge his battery cheaply whilst at work, then bring it back to power his house.
I have always been puzzled why the car manufacturers have not installed electric-assistance in vehicles, as an alternative to a complete and more expensive hybrid. With a rare-earth-magnet dynamo/motor in place of the alternator (and preferably mounted directly on the crank shaft), regenerative breaking would allow the wasted power to be recouped at the next acceleration from standing, allowing the gas engine to be much smaller and give better consumption figures. A super-capacitor trickle-charged from the main battery would allow the latter to be much smaller and cheaper, whilst still supporting high current during 4 seconds of acceleration. I understand that disconnecting an alternator can give 20% better consumption figures, so to charge up your car battery from the mains should result in better economy. Much lighter lithium batteries are now available to replace lead-acid, at around 3 times the cost, so battery size can be increased. The existing starter-motor is then no longer needed.