This year, the New York Times bestseller American Gods was turned into a fantastic TV series, the first season of which just ended.
There was one episode in the series that I found particularly poignant, and it contained one of the most striking lines in both the show and the novel:
“The more abundant the blessings, the more we forget to pray.”
Obviously, within the context, it’s a religious admonition. But beyond that, it’s a commentary on a pretty common facet of human nature.
When things are good, we don’t always remember to plan for when they’ll be bad again.
The Story of Cia
I am a terrible car mom, and in this way I am the epitome of that quote above.
I don’t bother checking the oil until the light comes on the dashboard. I haven’t the slightest idea when I last had my tires rotated. And more often than not, I’ll drive around with a troublesome car for a long time before I decide it’s bad enough to take it to a garage.
I know I’m not alone in this, either. The cars I hear screeching down my road early in the morning are a testament to that.
But my last car was… particularly bad.
First, Cia the little red Chrysler had just a few electrical issues. The door locks were iffy, and the A/C had two settings: HIGH and OFF.
Then she overheated, which meant not only an existing problem but also a few newly melted and warped parts in the engine.
Finally, I gave up on her when the transmission, which had been skipping for months already, stalled out on me in the middle of a busy Baltimore intersection.
It wasn’t prayer that would have saved me a lot of grief here, but a few simple checkups early on.
We often forget the importance of maintenance in many parts of our lives until it’s too late.
“We’re like the wind. We blows both ways.”
Sometimes, that maintenance extends beyond keeping cars up to code. We can forget the upkeep on a home, a relationship, a stock portfolio, or even an entire industry.
The energy industry is facing one such lack of prior preparation, and it’s holding many of our most valuable stocks back.
You see, the U.S. energy grid is failing. It’s old, faulty, and originally built to deal with energy sources that are either evolving faster than the grid itself or being phased out entirely.
Worse, this means it’s ill equipped to handle the new energy sources coming online.
Of course, I’m talking about solar and wind energy.
The problem is that today’s grid was built to transport energy from coal, natural gas, and nuclear plants.
But, as I’m sure you’ve noticed, coal and nuclear are on their way out.
Nuclear is just too expensive these days (yet another technology lacking vital upgrades), and coal is going the way of the dinosaur as the clean energy movement ramps up.
Even just a few decades ago, no one had to pray to the gods of energy to keep these things running. It seemed like they’d always be there.
Now, our old grid has to deal with more and more intermittent energy sources.
Wind and solar aren’t half as constant as coal and nuclear were. This puts a lot more strain on the grid, which has to compensate for the inconsistencies. Our grid isn’t failing purely due to upscaling renewables, but they certainly aren’t helping matters.
And, as with most problems with energy, the solution comes down to a question of efficiency.
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There are a few different ways to measure efficiency in energy resources. One of the most comprehensive, in my opinion, anyway, is called the heat coefficient.
I talked about this a bit earlier this year:
That means what makes a power plant efficient isn’t how much energy it produces, but how much energy it doesn’t waste in the process.
You’ve already seen this process in action on most of your electronic household appliances. “High efficiency” means the appliance uses more energy than it loses when it converts electricity into mechanical action.
In the case of power plants, this usually has to do with heat.
Using this metric, the Energy Information Administration concluded that natural gas power is the most efficient (43% efficiency), followed by nuclear, coal, and oil (all around 33% efficiency).
Renewables are finally catching up. The most efficient commercial solar panel today runs at about 22.5% efficiency, though this is far from the industry standard. As for wind, the average turbine runs at about 30% efficiency, though this varies wildly.
How efficient these things are can either solve or create a plethora of problems.
For instance, in addition to being able to connect a wind turbine to an existing grid, the company building the turbine has to find space for it.
The nameplate capacity (how much energy the plant would produce in an ideal situation) of a single natural gas plant can be upwards of 1,000 MW. The largest in the world reaches more than 5,500 MW.
Your average wind turbine only produces about 1.5 MW, meaning it would take several hundred of the best turbines out there today to entirely replace a single gas plant. And those turbines take up a lot of space, often on land people don’t want to let go of.
Which is why cheap, reliable natural gas is currently covering the deficit as we replace more coal and nuclear.
Leave a Crumb
It’s also why we’re keeping such a close eye on energy storage tech.
The lithium revolution is no joke. Improving the technology now is like maintenance to prevent some of tomorrow’s most troubling energy problems.
Better still, metals like cobalt and graphite have even more room to grow and even more profits to offer investors.
Don’t get too caught up in the blessings of today. Make sure you’re well positioned to catch tomorrow’s gains, too.
Until next time,
Megan Dailey
Energy and Capital
