Is Alternative Energy A Black Hole For Investors?

I just read the article, Is 2007 the Year of Tech?, at Red Herring. Honestly, I didn’t read anything earth shattering. But one statement made by Paul Wick got my attention: “Alternative energy continues to be an absolute black hole for investors, in spite of Vinod Khosla and all these other people hyping the crap out of it. It’s always five years away from turning the corner. Whether you are talking fuel cells or solar power, it just isn’t there. It’s not economical. These people are kidding themselves if they think it’s just around the corner.” I think the problem is that people are looking for a silver bullet, one thing that will replace all fossil fuels. That’s just not how it’s going to happen. When it comes to most things variety is good. The same goes for energy. When you become too dependent on one source of energy you are setting yourself up for trouble. Becoming too dependent on any one thing, no matter what it is, is never a good thing. This is why you diversify your investment portfolio. This is why local economies suffer greatly when they become too dependent on any one industry or employer if market dynamics change and facilities close. I think we need to apply this same line of thinking to our energy policy. There needs to be variety. We are starting to see this happen with automobiles and I think it is good. For instance some municipal vehicles are running on natural gas or biodiesel. Individuals are using hybrid cars and are reconsidering electric cars. Hopefully in the future you’ll have more options that 87, 89, and 93 octane unleaded gasoline or diesel. Perhaps you’ll also have a choice of propane, methane, hydrogen, or an electric quick charge where the electric is pulled from a grid supplied with a combination of nuclear, coal, wind, and hydroelectric. This is not a far off reality, it’s happening right now. It will start with a lot of small companies then when the market matures consolidation will take place. The same happened for the oil and railroad industries (among others) it will happen here again. This time, though, we will be left with a more sustainable and less vulnerable way to power our world.

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