Friday, January 02, 2015

Alternative Energy Adoption

The turn of a new year begins with resolutions and predictions.  I have personally resolved not to make any predictions.  However, permit me the opportunity to ask a question:  how much longer will we have to wait for alternatives to fossil fuels to become the norm and not just the technical eccentricities of odd-balls panicked over a little bit of warming ice?  Let’s take a cue from the adoption of the automobile.  After all, has been cars and trucks powered by gas and diesel that have gushed out a good share of the greenhouse gases thought responsible for the warming planet.

The horse and buggy was the principal means of personal transportation during much of the 1800s.  A single good horse with a two- or four-seat buggy could be driven along even crudely graded paths.  Longer trips or delivery of goods could be accomplished in horse drawn stage or lorry. We all know the horse and buggy was unceremoniously replaced by the automobile. 

Could the adoption of the automobile with its internal combustion engine provide us with some clues about adoption of alternative energy sources?

The first car had been produced in 1886, by a German inventor named Karl Benz.  Then in 1908, the Ford Motor Company began mass producing the Model T.  Henry Ford must have been very when by 1910, the number of automobiles surpassed the number of buggies in use in the U.S. and Canada.  Granted buggies remained in use for some years in rural areas.  In the 1930s when gasoline prices increased, buggies were dusted off and put back into use, at least temporarily.  However, the fate of Old Nellie and her buggy had been sealed.

Twenty four years.  It took twenty four years from the development of the first automobile to the point that it began to dominate its market. 

Consumers have been much slower to embrace alternative energy than they were slip behind the wheel of a car.  Bell Labs invented the first silicon solar cell in the mid 1950’s.  It has taken six decades, but   Granted those first Bell Labs cells were only about 6% efficient, but by the end of the first decade of this century solar cell efficiency has reached 30% and the cost per watt has reached as low as $1.25 in China.  Worldwide total installed solar power generation capacity reached 136,697 megawatts.

Hydrogen is the most abundant element on the planet and it offers significant energy potential.  The first fuel cells were developed in the early 1800s but it was not used commercially until over a century later when NASA started using fuel cells to power space capsules and satellites.  The first hydrogen fuel cell power car was introduced in the 1990s, but the first commercially available fuel cell powered car will not be available for purchase until later in 2015. 

Wind power generation has been even slower to win popularity.  Total world installed capacity was about 318,105 megawatts at the end of 2013.  It cannot be the matter of technology challenge.  Wind mills have been traced back to the first century AD when a Greek engineer used wind to power a machine attached to wheel.  In the twelfth century the Europeans began perfecting the vertical wind mill that ultimately inspired the tower wind mills in use today.    

Rather than providing clues about the pace of adoption of alternative energy sources, the automobile as a replacement for the horse and buggy my provide some insight into why solar, wind and hydrogen alternatives have taken so long.  All three technologies were known long before gas and diesel found widespread use for transport fuel in the early 1900s.  However, each required further refinement to achieve large scale energy production.  The gas powered automobile with its seductive convenience and simplicity came along at a pivotal point.

Simplicity may be that crucial element that has been missing in alternative energy.  Perhaps what alternative energy needs today is the Henry Ford of the last century.  Ford was quoted as saying, “Failure is simply the opportunity to begin again, this time more intelligently.”    


Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.


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