Thursday, October 1, 2009

Power of Wind - Coming of Age

In this century, apart from water, we are bound to face tremendous problems in power generation to meet the exploding power requirement? We will have to explore alternative sources to oil for meeting the burgeoning demand. All avenues have to be explored seriously - from nuclear to hydro to even ethanol. I say seriously because that's what the situation warrants. And that is exactly what the West is currently doing - seriously investing mega bucks into developing alternative sources of energy. Why the sudden seriousness? To find answer to that please take note of the following points:-
  • US alone has to import oil worth $ 10 trillion to meet its demand over next 10 years.
  • US economy can ill afford such ugly oil bill with real economy in tatters and debt situation getting out of control.
  • With demand rising the existing oil fields may not be able to cope up with it, which can trigger a runaway oil price situation.
  • The Wall Street Journal reported that output from existing oil fields is dropping by about 4.5% every year and by up to about 18% in some of the biggest oil fields in the North Sea, Alaska and the Gulf of Mexico.
  • New York Times reported that many of the major oil exporting countries may have to begin importing oil within a decade to meet the rising energy demands from within their borders.

The scenario as sketched above has prompted US President Barack Obama to give Wind Energy a top priority for his administration. US is deftly positioning itself in Wind Energy to be ahead of the pack in the next revolution after IT. Researchers at Stanford University concluded that even if 20% of available wind can be harvested, it will meet the global energy demand seven times over. This is how serious US is about wind energy:-

  • Green Chip Review estimates that by 2020 wind capacity in US will have grown by 360%.
  • US Department of Energy recently confirmed that 20 % of America's electricity requirement can be met through wind energy by 2030. Presently only 1% is being met through wind energy.
  • The wind industry in US is about to explode 20 times.
  • New York mayor Michael Bloomberg has unveiled plans to outfit dozens of the city's skyscrapers, waterways and bridges with wind turbines.
  • A cluster of wind farms south of Los Angeles will soon supply a large part of its electricity.

With so much seriousness how can the serious investors stay away. Bill Gates has picked up 9% stake in a wind energy company. Also consider the following investments in US:-

  • British Petroleum is teaming up with Clipper Windpower to build a 5050 megawatt wind farm in eastern South Dakota.
  • The Blackstone group, one of the top US private equity firms, has committed $ 1.6 billion to construct an offshore wind farm.
  • Shell and TXU Energy have joined hands to build a 3000 megawatt wind farm in Texas.
  • J P Morgan has already invested $ 4.4 billion into more than 40 US wind farms.

It seems that wind energy has finally arrived on the scene. Since 1990s cost of generating electricity from wind has dropped by about 80% and it is further getting more and more cost efficient by the day. That is why this industry is growing worldwide at a fast clip of 30% year on year. Experts feel that over next 5 years the number will further go up to 50% per year, thereby generating some $ 300 billion in revenues.

If you believe in this next revolution in offing, then do invest in some wind energy companies for at least 5 years. Returns can be astronomical!