Non Oil Energy Investment Is Exploding

In my

Feb. 18 article

, I discussed

how to invest in oil

given today's fast-changing energy market.

Today, I'd like to talk about a range of fantastic new

energy investment

opportunities outside of crude.

The reason is simple: The big picture in energy will have less

and less to do with crude.

As I have discussed many times before, we are quickly moving to

a new model based on a new energy balance.

That doesn't mean oil is going to disappear. But the future

demand for energy is so daunting that every viable source of power

will have to contribute if we have any hopes of keeping the world

humming.

In this case there are no "silver bullets" either.

To continue to meet demand there will be an increasing reliance

on "non-oil" sources of power, namely from alternative and

renewable forms of energy.

This restructuring is still in its early stages.

But one thing is already certain: "non-oil" energy investment is

exploding

A NEW PARADIGM OF ATTRACTIVE "NON-OIL" ENERGY INVESTMENTS

Of course, this new energy balance will require a restructuring

of our own. As a result, "non-oil"

energy investments

have become incredibly attractive - starting with solar power.

As several editions of

"Oil and Energy Investor"

have indicated over the last month, solar power is coming on fast.

In fact, solar has now achieved grid parity in many regions of the

country, meaning it's no longer more expensive than the traditional

ways of generating electricity.

That's true even in the absence of government subsidies. Wind is

likewise following suit.

Then there is the resurgence of nuclear usage worldwide. As of

January 2015, 30 countries worldwide are operating 437 nuclear

reactors for electricity generation and 71 new nuclear plants are

under construction in 15 countries. These reactors are very

expensive to build, but offer the cheapest way to generate

electricity once they become

operational.

Now, it's one thing to be able to provide power at an affordable

price. It is quite another to apply that energy in ways that offer

a true energy balance. That requires a real exchangeability with

traditional sources.

Of course, electricity is one thing; fuel for transportation is

quite another. Here's why

As long as the market relies on crude as the primary transport

fuel (either gasoline or diesel) the new energy balance will remain

tilted in favor of oil by default.

But the use of liquefied natural gas (

LNG

) and compressed natural gas (CNG) to run entire fleets of high-end

trucks throughout Canada, to an increasing extent in the U.S., and

in much wider applications elsewhere, is one way to diminish oil's

longstanding grip.

Natural gas-powered passenger vehicles haven't been a big hit in

North America, but they have received better support globally.

Natural gas powers about 150,000 vehicles in the United States and

roughly 15.2 million vehicles worldwide. The primary stumbling

block for these vehicles remains the cost of the engine overhauls

and the development of an adequate distribution and retail

network.

Electric cars and biomass additives to fuels also provide an

alternative to crude. But electric cars continue to have range

concerns (a game-changing battery technology is needed here), while

biomass additives pose power limitations that are well known to

those using gasoline with higher percentages of ethanol.

However, this new paradigm will require using all of the

available sources, each providing a certain portion of the energy

needed.

A combination of traditional gasoline/diesel, electric, natural

gas, and biodiesel-run vehicles will be the norm in transport,

while an already existing range of sources for electricity will

provide for better electricity distribution worldwide.

WHY THE "SMART MONEY" IS POURING INTO RENEWABLES

In this case, there are two keys to a winning "non-oil"

investment approach.

One involves technical breakthroughs, while the other revolves

around increasing the efficiency of the end-usage.

And for some time now, I have been tracking a series of

breakthroughs that could literally change the playing field

overnight in both of these categories.

On the technical side, they involve solving the two main

bottlenecks that are preventing solar and wind from pricing under

coal and natural gas.

The first is the need for better batteries, which would allow

for the efficient storage of generated electricity. Storing

generated power for use at other times - in short, perfecting a new

line of cost-effective batteries - has been the industry's single

biggest hurdle.

As I discussed in another article on Feb. 18, a major advance in

batteries is potentially unfolding in a significant residential

test in California that could change usage patterns in renewables

rather quickly.

Meanwhile, when it comes to the battery needs for electric and

hybrid cars, the main challenge is to develop more compact

applications that do not require lithium or expensive rare earth

metals.

In fact, a small company I have been following closely for some

time now has just patented two approaches that may just be the

advance in this technology that everybody has been waiting for.

I'll have more on this opportunity as it develops.

The second technical challenge is solving the inversion problem.

Solar cells and wind turbines produce direct current (DC), which

must be "inverted" to alternating current (AC) before it can flow

onto the grid. Unfortunately, as much as half (or more) of power

produced is lost in the process. But a promising new approach has

shown a significant improvement, attracting the interest of some

heavy hitters in the renewable space.

Either one of these developments - a battery or an inversion

breakthrough - would be an absolute game-changer, providing solar

and wind with a pricing advantage.

That's why the smart money is pouring into renewable power. Led

by solar, worldwide capital investment in "clean" energy surged by

more than 16% last year.

In fact, spending on renewable energy was so strong in 2014 that

some have begun to label the recent rush into renewables as a

"turning point" in the energy balance. According to a recent report

in Bloomberg New Energy Finance (BNEF), the total invested in

renewable power jumped to 310 billion, just 17 billion shy of the

all-time record in 2011.

But here's the real kicker

Since renewable energy is now much cheaper to generate, last

year's investment brought in almost double the clean electricity

capacity versus only four years earlier. That's undoubtedly a

bullish sign.

As for end-use applications, the opportunities are all about

smart grids, efficiency networks, and better bridges between peak

and off-peak generating prices. Several attractive plays have

already emerged in these areas.

What's more, the upstream-midstream-downstream sequence so

familiar to oil and natural gas is now offering similar

opportunities in electricity. Traditional utilities are changing

rapidly and both renewable sources of power and new technologies

are going to be "plugged in" to a more effective (and seamless)

network.

All of energy investment opportunities will hand us some nice

profits no matter what happens to the price of crude.

LOOKS LIKE THE PUNDITS NEED CHILL PILLS

There's all this television talk surrounding global oil

supply and the onslaught of oil from unconventional sources. Take

a few deep breaths, talking heads! Oil prices are virtually

guaranteed to rise in 2015. We've done our research, and

HERE'S WHAT WE FOUND

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