Energy Independence

Soaring oil and gas prices have finally persuaded US industry and government to get serious about renewable energy -- and solar thermal energy looks particularly promising.

Energy Independence:

The dirty little secret of the energy biz these days is that exploration executives don't want to see $130 oil, $12 natural gas or $4 gasoline any more than we do. For they fear two words that strike terror into the hearts of oilmen everywhere: demand destruction.

Energy Independence

Nobody really knows where the tipping point of energy prices is -- that last straw on the camel's back that makes ordinary citizens and business planners decide enough's enough and, in masses, stop using so much -- but it sure seems close. From where I stand in California, it's already here.

It's that moment when a soccer mom decides not to drive across the state in her Chevrolet Tahoe for a youth tournament, letting her daughter carpool with teammates. That moment when a father in Tucson decides to just keep the home windows open in 95-degree heat instead of turning on the air conditioner. That moment when a regional food-products salesman decides to call his customers on the phone, rather than spend $200 on gas to visit them in person.

It's almost as if you can hear the balance tip, conversation by conversation. And once long-held habits beginning to change, the effects can be like a dam burst: shocking, widespread and long-lasting, movement towards energy independence. On the consumer side, we can just look at the report out of General Motors (GM, news, msgs) last month, that shows sales of its macho, gas-guzzling trucks were down 87.5% in May compared with a year ago. Now that is what I call demand destruction.

NASA Climate Report on Global Warming

And yet it's the business side of the ledger that is far more important, as industry uses an order of magnitude more energy than the public. It may have taken a quintupling of oil prices in five years to ring the alarm bells, but the nation's industrial giants and their lackeys in government have finally decided to get serious about renewable energy and energy independence and not just talk about it in PR campaigns.

Nothing typifies the renewed focus on renewable-energy sources and energy independence, more than solar energy, as authentic, large projects are just now getting under way in California, Nevada and Texas. This makes sense, as the U.S. Southwest is our Saudi Arabia of sunshine -- meaning it has the greatest need for cooling as well as the best stretches of open desert land for collecting, concentrating and distributing rays.

Saving Energy with Solar Power : Using Homemade Solar Panels

The rap on solar energyhas always been that big arrays of photovoltaic cells are too expensive, too hard to maintainand produce a stream of energy that is too variable with the sunlight for intense industrial exploitation and can't be easily stored for use on rainy days. And in many ways, the photovoltaic story is still a challenging one because of a confounding worldwide shortage of the specialized chips that make it work.

But the real focus these days is on a much more low-profile and, let's face it, duller application: solar thermal energy, or STE if you'd prefer the hip shorthand version. You can forget all the fancy electronics and hippie jokes with solar thermal. Stripped to its core functionality, all that STE producers do is reflect sunshine off a mirror to boil a pressurized liquid that turns into bursts of steam that turn a turbine.

Energy Independence:

Though a California government mandate demanding that the state's utilities generate 20% of their energy from renewable sources by 2010 has been key in getting the ball rolling for solar thermal, the skyrocketing cost of natural gas and coal is really giving this business a spark. Just check the headlines: In May of this year, FPL Group's (FPL, news, msgs) Florida Power & Light announced it was asking state regulators to OK a whopping 16% increase in residential bills -- just to keep up, not for added profits.

Real Story - Energy Independence

Florida Power, it turns out, happens to be one of the country's leaders in developing solar thermal energy, as well as wind farms. It's pure economics, not a green dream anymore. Nathaniel Bullard, a senior analyst at think tank New Energy Finance in San Francisco, told me that utilities see STE as their best hedge against fuel price variability and a step towards energy independence.

If you build a natural-gas or coal plants to help you generate electricity for customers, he said, you are a "price taker" in that you have to accept the world-market cost of natural gas, over which you have no control. In contrast, if you build a wind or solar thermal farm, you are exposed to the cost of steel and labor at the time of construction, but you are never exposed to an increase in the cost of wind or sun.

"This is not science fiction anymore -- this is real stuff," Bullard said. Again, it's all business. Once a wind or sun farm has been built, you see, the entrepreneur or developer contracts with an "off-taker," or utility, to provide a certain number of megawatts of electricity at a certain price for the length of the contract.

The problem with solar up until now has been an inability to guarantee a base load, or steady amount of electricity, at all times. But new tweaks of technology from companies such as well-financed Silicon Valley start-up Ausra have changed that. Its Compact Linear Fresnel Reflector, which sounds like something Doc Brown might have created in "Back to the Future" with a flip of his flux capacitor, uses some trippy "molten salt" and an ingenious heat storage system to store sunlight for up to 20 hours.

ELECTRIC VEHICLE SURGE TECHNOLOGY NO BATTERIES NO GAS

Companies Leading the way Towards Energy Independence

Ausra, which is hellbent to be the Cisco Systems (CSCO, news, msgs) of solar -- which is possible, I suppose, since it is financed by computer networking pioneer Vinod Khosla -- believes that since seasonal and daily patterns of solar rays correlate strongly with electricity use, its inexpensive generation-and-storage system can create enough electricity from a few square miles of Nevada desert to supply half the country with power for electric vehicles. That would be an especially neat trick because it produces virtually no air pollution.

It looks to me that price and need have come together to finally make solar thermal a normal and fast-growing part of the national energy budget. The industry likes to point out that between 1996 and 2005, U.S. utilities built 250 gigawatts of natural-gas-fired plants, now producing a quarter of the nation's total. There's now nothing standing in the way of building another 250 gigawatts of power using pollution-free solar thermal.

Acciona Solar Power, a big Spanish company, has already begun operating a 64-megawatt solar thermal plant near Las Vegas. Solel Solar Systems, of Israel, has built a 550-megawatt solar thermal plant in the Mojave Desert of California and will send most of its capacity to power company PG&E (PCG, news, msgs) of San Francisco. Bright Source Energy, of Oakland, Calif., is building a 400-megawatt solar thermal plant in the Mojave Desert. And Stirling Energy Systems, out of Phoenix, has drawn up plans to build two big solar thermal plants in conjunction with Los Angeles-area utilities. And just announced last week, Palmdale California has plans to build the first Methane Gas plant at the Palmdale Dump

Most of these companies are private or foreign, and the parts involved are pretty mundane, so thus far there's not a lot for independent investors to buy to take advantage of the boom in solar thermal. At the rate the US is losing jobs to foreign countries, the Unemployment Rate soaring, and the newly added $5 Trillion dollar bailout (and growing larger every day!) for Wall Street and foreign banks, you'd think our government could have added some funding for Alternative Energy. But I'll keep looking and keep you posted.