renewable energy Archives - Servant Financial

Controlled Environment Agriculture: the Inside Scoop on Indoor Ag

Written August 19, 2021 by Olivia Glunz

Raging wildfires. Extreme droughts. Violent hurricanes. Rogue tornadoes… Nature is unpredictable.

2020 was a record-setting year for natural disasters, and 2021 has already witnessed numerous extreme weather events. Meanwhile, experts predict that the frequency and severity of storms is only rising.

California’s Dixie Wildfire, August 2021.

Nature is unpredictable, yet her whims govern our most fundamental need: food. Worldwide, droughts, flooding, and famine are an all too familiar story. One in every nine people is hungry, while one in three is malnourished.

As our global population nears 8 billion, it is imperative that we create a reliable, resilient agriculture system, one insulated from nature’s caprices. A solution may lie in CEA.

What is CEA?

CEA, or Controlled Environment Agriculture, wields cutting-edge horticultural, engineering, and computer technologies to produce high-quality crops in efficient, indoor environments. Bringing crops indoors shields them from pests, disease, and extreme weather, permits year-round growth, and facilitates cultivation of plants in any climate zone.

A rapidly evolving field, CEA nevertheless started simply: beginning in the first century A.D., the Romans used rudimentary greenhouses to protect crops during the winter. Over time, greenhouses became more sophisticated: their walls were built of glass, warm water heated them in winter, and electric light bulbs provided supplemental lighting. Today, advanced greenhouses optimize plant growth conditions: computer systems control brightness, temperature, humidity, and even carbon dioxide levels.

Vertical Farming: the Up- and Downsides

Traditional greenhouses, however, are only the beginning of CEA’s many techniques. Global population projections—over 10 billion people (80% of whom will live in cities) by 2050—encourage scientists to develop new, compact farming methods like vertical farming. Vertical farms turn traditional farms sideways. In vertical farming, plants are stacked one atop another as they grow. The resulting farm is both space efficient—vertical farms can be placed in basements or old shipping containers—and water efficient—vertical farming’s water use is 5% that of standard agriculture.

Nevertheless, vertical farming has downsides. One major challenge is lighting. Each plant contained in a vertical stack requires adequate light to grow. Because the uppermost plants shield lower plants from overhead light, each individual layer of a vertical farm must also be lit. The resultant need for numerous LED lamps increases input costs (and, in turn, crop prices) and lowers vertical farming’s energy efficiency. Additionally, vertical farms pose challenges to workers, who often spend their days ascending and descending costly, cumbersome scissor lifts to complete tasks like planting and harvesting on each layer.

A vertical farm.

The benefits of indoor horizontal farms, therefore, should not be underestimated. One innovative horizontal farming operation is Pure Green Farms. Located in South Bend, Indiana, Pure Green Farms’ horizontal greenhouse relies on natural light and uses minimal artificial lighting to increase energy efficiency. Additionally, the entire planting and harvesting process is automated, creating a more uniform product and labor savings compared to traditional production.

Horizontal farms also offer opportunities to combat microclimates, unintentional byproducts of CEA. One greenhouse contains numerous microclimates—slight shifts in location can significantly alter plants’ growing conditions. For instance, a plant directly beneath a growth lamp may be subjected to higher temperatures and brighter light than the plant beside it. Such inconsistent growing conditions in turn produce inconsistent crops.

Purdue University researchers recently constructed an automated horizontal greenhouse to address this problem: plants constantly circulate around the greenhouse on conveyor belts. Consequently, no plant remains in one microclimate for too long, and all plants are exposed to nearly uniform conditions. This innovation allows horizontal farms to produce more consistent crops.

Hydroponics

In both vertical and horizontal CEA agriculture, farmers are looking beyond soil. For instance, many CEA farms are hydroponic: plant roots are submerged in regulated, nutrient-rich water solutions rather than soil. Hydroponics not only allows detailed regulation of nutrient and pH levels but also minimizes water usage by recirculating water. Further, hydroponics allows plants to grow more quickly and closer together.

A hydroponic greenhouse.

One variation on hydroponics is aeroponics: plant roots are placed not in soil but simply in the air. Surrounded by oxygen, vital for cellular respiration, plants are frequently sprayed with mist containing water and dissolved nutrients. This process not only reduces water usage by up to 98% but also increases plant nutrient levels, offering potential health benefits for consumers.

Another twist on hydroponics is aquaponics, in which a plant growth environment is coupled with a fish tank. Fish provide nutrients for the plants, which in turn clean the water for the fish. Nevertheless, the aquaponic system is not perfectly self-sufficient: aquaponics requires significant electricity to heat and circulate water and often utilizes supplemental water filtration systems.

Cost-Benefit Analysis

The benefits of CEA are numerous. By growing plants inside, CEA minimizes or even eliminates the need for pesticides, which are not only potentially detrimental to human health but are highly water-intensive to produce. Additionally, grown in optimal conditions, plants mature faster and more consistently. With CEA, crops can be grown in population-dense urban areas; thus, fresh, nutritious, locally grown crops can be delivered at reduced transportation costs.

CEA’s advantages, however, come at a high monetary cost. CEA technology is expensive. Simply building a modern greenhouse equipped with LED lights, O2 and CO2 monitors, and ventilation systems is a costly enterprise. Additionally, CEA requires a constant supply of electricity, which is both expensive and poses environmental risks. Even greenhouses powered solely by renewable energy create challenges: solar panels, for instance, are expensive. Further, using solar energy to simulate sunlight for indoor crops seems convoluted, especially considering that outdoor crops simply use free, natural sunlight. CEA also requires space. In urban areas, where CEA offers great potential, real estate is especially expensive.

The many costs of CEA often translate to higher prices for consumers, especially for commodity crops. For instance, producing a loaf of bread with CEA-grown wheat costs roughly $11. Currently, CEA is most economically viable for expensive, highly perishable specialty crops, such as tomatoes and lettuce, grown on a large scale.

Investment Opportunities

Although CEA is not set to replace traditional agriculture in the near future, investors are nevertheless exploring CEA’s potential for feeding our growing population sustainably. There exist several private fund investments in the space. Ceres Partners, for instance, is investing in greenhouses, aquaculture, and specialty crops as well as CEA artificial intelligence systems. Equilibrium Capital, a sustainability-focused investment company, manages an extensive CEA private equity fund platform.

An exciting new investment opportunity in this area is Global X AgTech & Food Innovation ETF – KROP, first listed on Nasdaq in July of 2021. KROP identifies and invests in trailblazing companies in the food and agriculture sectors. The focus of these companies ranges from food waste minimization to agricultural robots to dairy alternatives to CEA. KROP has only $2.3 million under management today, but we will continue to monitor its development as a potential purposeful investment in the essential food and agriculture sector.

As the global population continues to grow, nature’s unpredictability poses a hazard to the traditional agricultural system. Boasting efficiency and reliability, CEA offers a promising niche complement to traditional outdoor agriculture and an exciting opportunity for sustainable innovation for the benefit of humanity and the planet. To learn more about sustainable, ethical investing, contact Servant Financial today.

Solving the Renewables Riddle: Investing in Energy Storage

Written March 6, 2021 by Olivia Glunz , John Heneghan

Imagine a world powered totally by renewable energy. One still, winter night, you nestle in your favorite chair, switch on the lamp beside you, and turn up the thermostat before watching a classic movie. The sun is not shining, the wind does not blow, and coal and natural gas have been out of use for decades. Still, you have access to the electricity necessary for light, heat, and playing an old film. How?

Energy storage is the key to this supply-and-demand riddle. Renewable energy can be supplied by the sun and wind only intermittently. The wind blows sporadically, and demand for energy often peaks when the sun is not shining. By reserving excess energy when output from renewable sources is high, energy storage systems create a reliable supply of energy when output is low but demand is high. Eliminating the need for carbon-based backup generators, energy storage systems are critical to a future of renewable energy.

Home energy use and solar energy production over one day. Although home energy use peaks when production is low, energy storage provides a reliable source of power at any time of day.

What is Energy Storage?

Energy storage is important to our everyday lives. Consider your cell phone–you do not always have access to a charger. Instead, you might charge your phone at night when you are not using it. The next day, you can use this stored energy. Even more fundamentally, your body stores energy. You cannot constantly eat and sleep. Instead, you perform these crucial activities to supply yourself with energy for future use.

Likewise, renewable energy sources fluctuate greatly based on time. Sunlight and wind supply vary greatly from season to season, day to night, and even from minute to minute. No human technology can control the weather. The flexibility of energy storage, however, makes up for the rigidity of renewable energy supply.

The National Renewable Energy Laboratory projects that in 2050, if the US uses 80% clean energy, 120 gigawatts of energy storage will be needed across the nation. A myriad of energy storage systems are being developed to fulfill this need.

Lithium-Ion Batteries

Best known of all energy storage systems are batteries, which are improving in efficiency and declining in cost rapidly. Lithium-ion batteries create an electric current by moving lithium cations from the battery’s anode to the cathode. When the battery recharges, the lithium cations return to the anode.

Commonly used for electric cars, laptops, and cell phones, lithium-ion batteries can also supply large-scale power grids. Racks of batteries are stored beside a monitoring system within a compact unit. These units are remarkably efficient, storing vast amounts of energy and leaving a minuscule footprint.

Lithium-ion batteries are fast and reliable. Crucially, they are reversible: they can both store and release energy. Additionally, storage and release can occur in fractions of a second. The speed of lithium-ion batteries is especially useful in emergencies. A disruption in the power grid in cases of natural disasters (think ice storms in Texas), computer disruptions, or human error, can easily and quickly be remedied with energy stored by lithium-ion batteries. The affordability of these batteries, however, means that they are advantageous for regular grid operation and not just as emergency backups.

Lithium-ion batteries are already slated to replace aspects of the modern power grid based solely on efficiency. The current power grid generates power when it is cheapest and then releases the power throughout the day as it is needed. However, when the demand for electricity is too high for the regular system to support, peaker plants supplement the needed electricity. Peaker plants house large, speedy natural-gas generators which typically run for only a few hours each month. Thus, the energy they produce is not only the priciest but the dirtiest on the power grid— for every one unit of energy, peaker plants emit up to twice as much CO2 as normal power facilities. CO2, a leading culprit in climate change, air pollution, and acid rain, is detrimental to environmental and human health. Lithium-ion batteries provide a viable alternative solution to peaker plants. During costly, high-demand periods, efficient, inexpensive lithium-ion batteries can supplement power (peak shaving) or totally meet the high demand (peak leveling).

Already, lithium-ion batteries have proven to be significant competitors against costly, CO2-spewing peaker plants. For instance, Tesla, known for its lithium-ion battery-powered cars, constructed a 100 megawatt (MW) lithium-ion battery, known as the Hornsdale Power Reserve, to store energy in South Australia. (100 MW can fuel about 75,000 homes per year.) In just 140 milliseconds, the battery can go from off to full capacity. After only one year, the Hornsdale Power Reserve saved nearly $40 million. Its tremendous success led Tesla to expand the battery’s capacity to 150 MW. Tesla also has plans to build another Australian battery, this time with a 300 MW capacity. Additionally, Tesla has developed a residential lithium-ion battery to store excess energy captured from home solar panels.

Lithium-ion batteries do have disadvantages. They can overheat and even catch on fire in extreme circumstances. Additionally, lithium-ion batteries lose capacity and frequency over time from repeated charging. After about 2-3 years, they require complete replacement. However, their energy density is almost unparalleled and makes them an ideal choice for energy storage.

The lithium-ion storage market has seen significant growth in the past decade. Between 2013 and 2018, global sales of lithium-ion batteries doubled. In 2019, the lithium-ion storage market was worth $36.7 billion; experts project that number will rise to $129.3 billion by 2027.

Anticipated lithium-ion energy storage in all markets.

Flow Batteries

Another promising battery is the flow battery. Flow batteries consist of two tanks, one positive and one negative. Ions are exchanged through a membrane connected to the two tanks; this process creates electric current.

While lithium-ion batteries are preferred for electronic devices and electric vehicles, flow batteries are suitable for stationary, large-scale functions. Although lithium-ion batteries are less costly and more energy dense than flow batteries, flow batteries have a much longer lifespan. Flow batteries last for about 30 years, 10-15 times as long as lithium-ion batteries. Over time, the large initial investment in a long-lasting flow battery pays off. The parts of a flow battery can be individually replaced, while a lithium-ion battery must be totally replaced when it ages. Additionally, flow batteries can operate in a wider variety of climates and are less susceptible to starting on fire. Finally, flow batteries can easily be scaled up. Therefore, flow batteries are especially suited for large-scale, long-term energy storage: the initial cost of flow batteries pays off in the long run.

While many flow batteries use expensive metals, such as vanadium, researchers are developing less costly flow batteries. USC scientists utilize iron sulfate, a cheap waste material from mining processes, for their novel flow battery, which could last for up to 25 years. Other researchers are exploring sulfur, manganese, and zinc-bromide flow batteries.

The market for flow batteries, worth $130.4 million in 2018, is expected to grow. Demand for lithium-ion batteries, widely used for electric vehicles and personal electronics, will likely cause lithium prices to increase. Innovative flow batteries using inexpensive materials will be viable competitors. Additionally, flow batteries are more easily recyclable than lithium-ion batteries, giving them an environmental advantage. Consequently, experts project that the flow battery market will grow, reaching $403.0 million in 2026.

Projected flow battery usage for energy storage, charging, and distribution.

Thermal Energy Storage

Thermal Energy Storage (TES) is another method of caching energy. TES stores heat rather than electricity. Both the sun and the earth release heat, and waste heat is a byproduct of industrial and other processes. Rather than losing this heat, TES allows it to be captured and stored. Eventually, the heat is released to supply energy (to thermovoltaic panels, for instance).

There are three major methods to store thermal energy: sensible heat storage, latent heat storage, and thermo-chemical storage. In sensible heat storage, heat is stored by raising the temperature of a solid or liquid with high heat capacity and a high boiling point. (Molten salts are one commonly used substance.) When the heat is released for use, the solid or liquid correspondingly drops in temperature. Sensible heat storage is commonly used for Concentrated Solar Power. Although this heat storage technique is less efficient than the other two TES methods, its low cost and straightforwardness make it the most widely-used method.

Latent heat storage harnesses thermal energy to convert a solid to a liquid. This phase change requires considerable energy. Conversely, reversing the phase change releases this heat energy. Latent heat storage is much more compact than sensible heat storage due to the high enthalpy of fusion (heat required for melting).

Thermo-chemical storage is the most efficient and storage-dense of all thermal energy storage methods. In thermo-chemical storage, heat is an input into a chemical reaction (an endothermic reaction). The input energy is then stored within the bonds that hold molecules together. When these bonds are later broken and the reaction is reversed, the heat is then released (an exothermic reaction).

TES has numerous applications; it is especially useful in business and heavy industrial uses because it captures waste heat and allows it to be reused to supply more energy. Efficient and relatively inexpensive, TES is expected to grow in the coming years. In 2019, the TES market was valued at $4.204 billion; by 2025, it is projected to grow to $8.466 billion.

Projected TES usage by region. The Asian-Pacific region is particularly promising due to growing demand for air-conditioning as well as government incentives for clean energy development.

Pumped-Storage Hydropower

Most widespread of all energy storage systems—95% of energy storage in the US—are pumped hydroelectric facilities, which consist of two reservoirs at different heights. When demand for electricity is lower, electrically-powered turbines pump water from the lower to the higher reservoir. In the process, the input energy is converted to potential energy. At peak-demand hours, the water is released, and energy is harnessed. (Check out our recent article on hydropower here.)

Pumped-storage hydropower is able to store vast amounts of energy. Currently, pumped hydroelectric facilities account for 22 gigawatts—88%—of all US energy storage. However, the large scale of these facilities has disadvantages as well. Large water reservoirs cannot easily be constructed in densely populated areas, where the demand for electricity is highest, and therefore have less opportunity for expansion.

Pumped-storage hydropower ultimately operates at a net loss of electricity: more electricity is consumed in moving the water uphill than produced in releasing the water. For instance, US pumped storage plants consumed a total of 29 billion kilowatt-hours (kWh) in 2011 but produced only 23 billion kWh. This loss of energy, however, ultimately makes the energy grid more reliable through load shifting–energy is used when demand is lowest so it can be released at peak-demand times.

Pumped-storage hydropower consumes more electricity than it produces but increases cost-effectiveness and grid reliability.

A new variety of pumped-hydro storage could offer even greater flexibility. Underground pumped-hydro storage facilities, like their surface-level cousins, pump water from a lower to a higher reservoir and then release the water when electricity is needed. Located beneath the earth, however, underground pumped-hydro facilities do not rely on topographical features, can be placed closer to population centers, and are less likely to disrupt ecosystems.

Although no large-scale underground pumped-hydro storage facilities exist, they show tremendous potential. Existing hollows in the earth, including former mines, are promising locations. Downsides to this burgeoning energy storage method include a high initial investment and lengthy construction times. Additionally, the physical movement and stress of rocks could cause difficulties.

Water, Flywheels… Even Bitcoin

Other forms of energy storage also utilize water. Researchers are developing systems to pressurize water in underground cisterns. Electric energy is used to pump water underground. The water is eventually released to power a motor and create electricity.

Another energy storage method uses electricity or solar power to break apart water, H2O, into its constituent hydrogen and oxygen gases. Hydrogen gas is a valuable fuel that is totally clean. Alternatively, the hydrogen produced from the breakdown of water can be used in battery cells.

Flywheels are yet another technology to meet the growing demand for energy storage. Flywheels convert electric energy to mechanical energy (energy of motion): electricity is used to spin a nearly frictionless rotor. When this energy is eventually needed for consumption, the rotor slows down as mechanical energy is then converted back to electricity.

Flywheels are extremely efficient, have almost no negative environmental impact, can operate for long stretches of time, and can go from zero to full charge in just seconds. They can even recover energy that would otherwise be lost. For instance, they can capture braking energy from electric trains. Flywheels are especially useful for stabilizing the energy levels on wind farms and as backup energy sources at manufacturing plants.

Interestingly, Bitcoin can be considered a method of energy storage. (Read our most recent article on Bitcoin here.) Bitcoin mining is notoriously energy consumptive. In the past year alone, Bitcoin mining has consumed about 14.84 gigawatts of power (the equivalent of nearly 47 million photovoltaic panels). Bitcoin advocates argue, however, that Bitcoin can actually “store” energy by using excess renewable energy from remote locations to mine Bitcoins. Transporting electricity is costly and inefficient, so rather than letting energy from isolated places go to waste, mining can convert this excess energy into coins.

Investing Opportunities

The transition to renewable energy is accelerating. Congress and President Biden consider the climate an urgent issue. The White House recently proposed plans to promote clean energy investment and development. Congress will continue the clean energy momentum with climate change legislation, and several states, including New York, California, and Massachusetts, have revealed clean energy initiatives.

Crucial to the success of these policy efforts are energy storage systems. The US Energy Storage Association projects that the US will install 100 gigawatts of new energy storage by 2030. In 2020 alone, a record-breaking 1.2 gigawatts of new energy storage were installed in the US. This figure will grow to almost 7.5 gigawatts in 2025.

COVID-19 lockdowns have especially accelerated the demand for energy storage. As the pandemic forced many to work, learn, and socialize from home, awareness of our dependence on electricity rose. Meanwhile, major storms, natural disasters, and disruptions in the power grid reminded us that the present energy grid is not always reliable. The demand for home energy storage systems is therefore rising. In just four years, Wood Mackenzie projects, the residential energy storage sector will be six times larger.

Energy storage investors will also benefit from federal incentives. The US government has enacted an investment tax credit (ITC) and the Modified Accelerated Cost Recovery System (MACRS) for privately owned energy storage systems. Individuals and businesses with personal or commercial solar panels and energy storage systems may benefit from these incentives, which will fuel the demand for more energy storage.

As the world shifts to renewable energy, investing opportunities in energy storage will continue to grow. The ALPS Clean Energy ETF (ACES), mentioned in previous posts, is our favorite renewable energy fund. With its exposure to energy storage and fuel cells as well as smart grid and residential energy optimization technologies, ACES is a diversified, innovative fund that will help you to contribute to the renewables revolution.

To learn more about how you can invest with purpose in energy storage, contact Servant Financial today.

Soak Up the Sun — Investing in Solar Power

Written November 25, 2020March 27, 2024 by Annie Dysart

Solar photovoltaic (PV) energy is 2020’s fastest growing renewable energy source. According to the National Renewable Energy Laboratory, the United States installed a record-high 7.2 gigawatts (GW) of direct current PV in the first half (H1) of 2020, up 48% from H1 in 2019. Gains in the solar industry are making PV power sources increasingly competitive with fossil fuels.

The solar utility sector saw more growth than the commercial and residentials sectors in 2020. Solar in the utility sector saw 89% year-over-year growth in H1 2020. Commercial sector PV installations decreased 14% and residential PV installations were relatively flat.

Almost 60% of US PV capacity installments this year took place in California, Texas, and Florida. Environment America’s Shining Cities 2020 report found Honolulu has the highest solar PV installed per capita, with 840.88 watts per person in 2019. Los Angeles leads the nation in total installed solar PV capacity, with 483.8 MW by the end of 2019.

Solar energy provided about 2% of the total electricity produced in the United States in 2019. Last year, the solar industry employed around 250,000 people and generated $18.7 billion of investment in the U.S. economy. The country has over 85 GW of installed solar capacity, enough to power 16 million homes.

U.S. electricity generation from renewable sources — *U.S. Energy Information Administration*

Solar power is now one of the cheapest sources of electricity. In the past decade, the solar industry has seen a 90% drop in the cost of solar modules. From 2010 to 2019, electricity costs from large-scale solar PV installations dropped from about $0.38 per kilowatt-hour to $0.07 per kilowatt-hour.

Despite higher upfront installation costs, solar power is less expensive than carbon-based power in the long-run. The cost of a residential solar system depends on its geographic location, size, and brand. Installed residential solar systems in the U.S. have an average price of $2.57 per watt and total costs ranging from $10,250 to $12,528 after the solar Investment Tax Credit (ITC).

The ITC is a 26% tax credit for solar systems on residential and commercial properties. Since the implementation of the ITC in 2006, the U.S. solar industry grew by more than 10,000%. Furthermore, the industry saw an average annual growth of 50% over the last decade alone.

U.S. tariff policy also plays an important role in the success of the solar industry. According to the Congressional Research Service, 98% of solar cell and module production occurs outside of the United States. The cost of imported panels has decreased significantly, enabling record-high levels of solar imports despite continued tariffs: 14.2 GW of PV modules and 1.3 GW of PV cells in H1 2020.

*These leading five markets collectively installed 24 GW of PV in the first half of 2020, approximately the same level as in 2019 (NREL 2020 Solar Industry Update)*

Gains for solar in the early 2020 stock market diminished with the COVID-19 induced economic downturn in March. At the time, the solar sector experienced stronger than expected demand and good financial performance from companies. Consequently, solar stocks outperformed the rest of the market.

According to the MAC Global Solar Energy Stock Index, solar stocks bounced back since spring 2020 due to affordability, the viability of solar-plus-storage, and Joe Biden’s apparent presidential victory and clean energy agenda. Bloomberg New Energy Finance (BNEF) forecasted U.S. solar installs in 2020 will grow by +21% to 13.4 GW.

The Invesco Solar ETF (TAN) represents solar stock performance very well. In September 2020, TAN outperformed the broader market with a total return of 77.3% over the past year. In comparison, the Russell 1000 Index saw a total return of 13.8%. Expectations about Joe Biden’s election victory and increased investment in renewable energy drove TAN up over 120% from the beginning of 2020 to date.

Sunrun (RUN) and Tesla (TSLA) are the largest solar installation companies in the United States. Sunrun spiked over 300% this year and acquired Vivint Solar for $3.2 billion in July — a deal that merged the nation’s two largest rooftop solar companies.

Companies' % of Residential Installs — *Source: Corporate filing, SEIA/Wood Mackenzie Solar Market Insight Q3 2020 (NREL 2020 Solar Industry Update).*

In June 2020, Tesla announced they will deliver the lowest price for solar of any national provider with a price-match guarantee. The company currently charges $1.49 per watt of solar on existing roofs and installed over 3.6 GW of clean solar energy across 400,000 roofs—the equivalent of 10 million traditional solar panels.

Tesla CEO Elon Musk expects Tesla Energy to eventually grow to the size of Tesla Automotive. Musk believes energy storage will play a key role in that process. “In order to achieve a sustainable energy future, we have to have sustainable energy generation… so you need to have a lot of batteries to store [renewable] energy because the wind doesn’t always blow and the sun doesn’t always shine.”

Tesla’s lithium-ion battery energy storage business has a new publicly traded competitor, Eos Energy Enterprises. Eos developed the Znyth® aqueous zinc battery to “overcome the limitations of conventional lithium-ion technology.” Eos promotes their Znyth® battery as a more sustainable, scalable, efficient, and safer energy storage alternative to lithium-ion batteries.

Solar Power’s Bright Future

Solar power converts sunlight into electricity. It is a clean energy alternative to fossil fuels, with a smaller environmental impact and carbon footprint. Solar panels are most effective in direct sunlight. However, they can still generate electricity in cloudy weather or cold temperatures.

The sun is a promising energy source that can produce billions of years of electricity. On the contrary, fossil fuels are finite resources that could be used up within the next few centuries. The U.S. Energy Information Administration estimates the United States has enough dry natural gas to last about 92 years and enough recoverable coal reserves to last about 357 years.

Greater investment in solar power can lead to greater national energy independence and less dependence on foreign fossil fuels. There are plenty of regions in the US, especially the Southwest, with sufficiently high annual percentages of sunlight.

Individual homeowners can attain a degree of energy self-reliance by buying into solar for its increasing efficiency and decreasing costs. Many solar array warranties cover about 25-30 years and arrays often last longer due to their durability. The median average photovoltaic degradation rate is a 0.5% loss of energy efficiency per year, so the solar panels on a roof could still be operating at 88% of their original capacity after a 25-year warranty.

According to EnergySage, the typical solar panel payback period in the U.S. to break even on a solar energy investment is 8 years. After 20 years, a solar panel investment on your home or business can accrue savings ranging from $10,000 to $30,000.

Solar’s Dark Side

Solar power is an intermittent energy source because the sun does not shine at all hours of the day. The intermittent nature of solar power makes it a non-dispatchable energy source. This means the electricity produced cannot be used at any given time to meet electricity demands.

Electricity storage solutions address the intermittent nature of renewable energy like solar, wind, and wave power. MAC Solar Index believes solar-plus-storage will become even cheaper in coming years. Lithium-battery prices already dropped by 85% from 2010 to 2019. MAC predicts they will drop by another 52% by 2030.

*Kauai Island Utility Cooperative solar plus storage plant (PV Magazine*)

Photovoltaic cells contain rare earth metals like cadmium, gallium, and indium. These metals are limited resources — their extraction for solar panels and other electronics must be carefully monitored in order to prevent total depletion.

Solar modules are hard to recycle. Their components — including plexiglass, metal framing, wires, glass sheets, and silicon solar cells — must be separated in order to be recycled. This is a tedious process that requires advanced machinery. Complexity and cost increase the risk that a landfill becomes a solar panel’s final resting place.

Improper disposal and breakage of solar panels can cause toxic chemicals like lead and cadmium to leach into the soil. The International Renewable Energy Agency (IRENA) in 2016 estimated there was about 250,000 metric tonnes of solar panel waste in the world at the end of that year.

IRENA projected solar waste could reach 78 million metric tonnes by 2050. Many experts are pushing for mandatory recycling of solar panels to curb future solar panel pollution. The cost of the recycling process currently exceeds the value of the materials that would be recovered. Policies that ban or incentivize solar recycling will be critical to the long term sustainability of solar operations.

Soak Up the Benefits of Solar Power and Invest in Solar Energy

If you’re looking to invest in solar energy, TAN is the best pure solar ETF. To invest in solar and other clean energy companies, the ALPS Clean Energy ETF (ACES) suggested in our previous blog continues to be our favorite diversified renewable energy play.

For those wanting to invest closer to home, you can install solar panels on your own roof. Residential solar is a sustainable energy option that can increase the value of your home. In addition, solar panels pay for themselves after approximately 8 years of savings. Calculate how much you can save with solar here.

How Does Community Solar Work? — *Clearway Community Solar*

If you don’t want to install solar panels on your home, consider subscribing to a community solar project. Subscribers receive cost-reducing community solar credits on their electric bills for the renewable power produced.

Trajectory Energy Partners and Clearway Energy is one such community solar project that offers Illinois residents with a ComEd or Ameren electric bill a 20-year community solar contract with no upfront investments. The program helps subscribers support local renewable power operations and save up to 50% on annual electricity supply costs.

The future of solar energy is bright. Solar power is an indispensable element of the transition to a net-zero carbon emissions future. Solar energy’s marginal cost of production is zero — we simply need to capture its rays. By letting solar PV soak up the sun, the more sparkling our environment will be for future generations.

To talk more about investing in solar, or other investment opportunities, contact us today. Together, we can find the right investments for you, the ones that align with your values and help you to reach your financial and life goals.

Blowin’ in the Wind

Written October 14, 2020March 27, 2024 by Annie Dysart

The History of Wind Power

Seven thousand years ago, the Egyptians and Phoenicians used wind to power sailboats. This was the first recorded instance of humans putting wind to work. Centuries later, the mechanical energy of windmills helped people pump water and mill grains.

Charles F. Brush invented the first electricity-producing wind turbine in 1888. To convert wind into electricity, wind spins the blades of a turbine around a rotor. The rotor then spins a generator, which creates electricity.

The average wind turbine has a capacity of 2  megawatts (one megawatt (MW) equals 1 million watts), yet innovations in technology are paving the way for wind turbine productivity to exceed 10 MW in the near future.

The Increasing Popularity of Wind Power

The global installed wind capacity from 1982 to 2017 (International Energy Initiative 2019)

Over the past four decades, wind energy grew faster than any renewable technology. The industry employs over 1 million people across the globe with installations in over 100 countries. The U.S. has six of the ten largest onshore wind farms in the world.

By the first quarter of 2020, the United States reached an installed capacity of approximately 107 gigawatts (GW), enough energy to power over 32 million American homes (one GW is equivalent to 1,000 MW and can power 750,000 homes annually). The U.S. has the second largest wind energy capacity in the world, still trailing far behind China’s installed capacity of 221 GW.

In 2019, wind power provided 7% of the United States’ electricity, making it the most prevalent source of renewable energy in the country. The U.S. installed an additional 9 GW of wind power that year. Those installations represented 39% of the nation’s new utility-scale power.

The U.S. wind industry installed 1,821 MW of new wind power capacity in the first quarter of 2020, a 117% increase over the first quarter of 2019 (American Wind Energy Association)

Texas has an installed wind power capacity of 29 GW. Texas wind power represents 27% of the nation’s installed wind capacity, over three times greater than any other U.S. state. Its large capacity can be attributed to its location within a wind corridor — a region characterized by high-speed winds stretching from the upper Great Plains to western Texas.

Non-hydro renewables in the U.S. increased from less than 1% in 2005 to nearly 10.1% by the end of 2018. This growth occurred during a time of relatively stable electricity demand. Such growth illustrates renewable energy’s disruptive effect on the electricity industry. The Center for Climate and Energy Solutions projects that the national energy share of the United States’ renewable energy — including hydroelectric — will increase from a value of 17.1% in 2018 to 24% in 2030.

Growth Potential of the Offshore Wind Sector

Wind turbines can be constructed on land, offshore in the ocean, or on big lakes. In 1991, Vindeby Offshore Wind Farm in Denmark became the world’s first offshore operation. Offshore wind power is more powerful than onshore wind power because of exposure to more consistent coastal winds. The largest, most powerful offshore wind turbine is GE’s Haliade-X 12 MW turbine.

The United States has an enormous opportunity to capitalize on coastal territories and grow its tiny offshore wind sector. The Block Island Wind Farm is the nation’s only offshore wind farm: a 30 MW, five turbine operation established in 2016 off the coast of Rhode Island.

According to the Office of Energy Efficiency & Renewable Energy, over 2,000 GW of wind power could be accessed along the coasts of the United States and the Great Lakes. This 2,000 GW potential represents an electricity generation capacity that doubles the current capacity of all U.S. electric power plants.

The Department of Energy allocated over $200 million dollars towards competitively-selected offshore wind research, development, and demonstration projects. Over 58% of U.S. offshore wind resources are located in deep waters. Without a doubt, a key focus area will be development of offshore wind platforms suitable for deep waters.

Floating vertical-axis wind turbine platforms (Office of Energy Efficiency and Renewable Energy)

Advantages of Wind Power

Wind energy is a sustainable, emissions-free power source that does not depend on fossil fuels. In 2019, approximately 42 million cars’ worth of yearly emissions was avoided through wind energy generation. Typical wind projects can offset their carbon footprint in six months or less (carbon offsets work by reducing emissions of carbon dioxide or other greenhouse gases in order to compensate for emissions made in manufacturing and citing the wind farm).

In 2018, carbon dioxide (CO2) emissions from fossil fuel combustion for energy represented about 75% of total U.S. anthropogenic (originating from human activity) greenhouse gas emissions and about 93% of total U.S. anthropogenic CO2 emissions. Greenhouse gases (GHGs) like CO2 trap heat and alter the transfer of infrared energy through the atmosphere. The earth’s global average temperature is rising because of increased atmospheric concentrations of GHGs.

According to NASA, there is greater than a 95% probability that Earth’s current warming trend is the result of human activity since the mid-20th century — a trend accelerating at a rate unmatched over millennia. Zero-emissions energy sources like wind power are necessary and urgent solutions to mitigate climate change.

NASA: Based on the comparison of atmospheric samples contained in ice cores and more recent direct measurements, atmospheric CO2 has increased since the Industrial Revolution (NOAA)

Wind power saves water and is better for the environment. Conventional fossil fuel plants use billions of gallons of water a year. In addition, contaminated water from fossil fuel plants pollutes nearby waterways and marine ecosystems. On the contrary, wind power is a clean energy source that does not need water to produce electricity.

According to the Wind Powers America Annual Report 2019, the expansion of wind power in America has generated positive economic benefits. It has provided jobs to over 120,000 people across all 50 states, supported 530 domestic factories, and generated $1.6 billion a year in state and local taxes and landowner lease payments.

Growing wind and renewable energy operations in the United States will contribute to energy independence and national security. Renewable power presents a dependable, domestic energy source free from the risks associated with foreign energy sources or supply chains. It will also help support more self-sustaining, domestic microgrids. This technology can provide electricity in natural disasters or situations that require power for national defense operations.

Wind power is less prone to harmful, life-threatening malfunctions than other energy sources. Some examples include nuclear disasters like Chernobyl in 1986 or Fukushima in 2011, the 2009 accident at Sayano Shushenskaya Dam, petroleum oil spills, and coal mining accidents.

Drawbacks of Wind Power

Though no emissions are produced during wind energy operations, there are still negative environmental impacts incurred during manufacturing, transport, installation, and maintenance processes. A circular economy approach can help mitigate environmental burdens by using cleaner and higher quality recovered carbon fiber building materials that can be recycled and reused.

Wind turbines pose a risk to birds or bats that might collide with the sharp, fast-moving blades of the turbine. The U.S. Fish and Wildlife Service estimates that between 140,000 and 500,000 bird deaths occur at wind farms each year. One solution being used to decrease bird fatalities is painting one turbine blade black.

This chart shows the annual estimated bird mortality for selected anthropogenic causes in the U.S. (US Fish and Wildlife Service)

Wind turbines are not the largest threat to the survival of birds and bats. In fact, collisions with buildings, communication towers, vehicles, powerlines, and other manmade installations cause more bird and bat deaths. Other risks associated with wind turbines include blade icing and oil leaks. However, proper maintenance and technological innovations help avoid these problems.

Wind turbines have generated noise complaints from nearby homeowners. However, a typical wind turbine produces a noise level of about 50 decibels (dB). This noise level is similar to that of a midsize window air conditioner or a car going 60 km/h. It is uncommon to build a wind turbine within 300 meters to the nearest home.

The Not in My Backyard, or NIMBY, Syndrome is another consequence of wind turbine installation. Many homeowners support renewable energy yet resent nearby wind turbines. Turbines can decrease property values or block surrounding views.

This graphic by GE provides context about wind turbine noise (decibels) versus distance (meters)

Investing in Wind Energy

Global investment in renewable energy hit a record high of $282.2 billion in 2019. This represented a 1% increase from global spending in 2018 and an additional 180 GW of global renewable energy capacity. Furthermore, declining costs of wind and solar bolstered renewable energy growth.

The International Renewable Energy Agency (IRENA) claims investing $130 trillion over the next 30 years towards renewable energy systems would provide economic benefits three to eight times the amount of those investments.

IRENA’s 2020 Global Renewables Outlook report highlights sustainable investment options and policies that will pave the path towards a cleaner energy system. Its recommendations align with goals set by countries involved in the 2015 Paris Agreement to limit global warming to well below 2 degrees Celsius above pre-industrial levels and hold it to 1.5 degrees Celsius.

IRENA’s report predicts that increased investments on renewables could quadruple global jobs in the industry to 42 million by 2050. Energy efficiency measures would create 21 million jobs and system flexibility measures (measures that support the capability to change power supply and demand of the system as a whole or a particular unit such as flexible generation, stronger transmission and distribution systems, increasing storage capacity and demand-side management) could produce 15 million additional jobs.

Wind and solar projects represented 99% of the $55.5 billion invested in U.S. renewable energy capacity investment in 2019. Renewable energy companies scrambling to qualify for federal tax credits were key players in the nation’s clean energy investment growth.

Wind energy projects are very competitive from a levelized cost of production standpoint. Over 50% of the renewable energy capacity added in 2019 had lower electricity costs than new coal. The global weighted-average cost of electricity of new onshore wind farms in 2019 was $0.053 per kilowatt hour (kWh). The most competitive projects can dip to as low as $0.030 per kWh, without financial support from the government.

Investing in Wind, Renewables, and Clean Technology with ACES

Increased utilization of wind power and renewable energy will be one of the most critical steps towards carbon neutrality. Renewable energy alone will not suffice in achieving global decarbonization goals: innovations in energy efficiency and storage like lithium ion batteries and smart grid technologies will be essential in making strides towards comprehensive clean energy.

The future of wind power and renewable energy presents compelling investment opportunities. In addition, these opportunities align with client ESG preferences. We believe ALPS Clean Energy ETF (ACES) is the most efficient, broadly diversified approach to play the decarbonization megatrend of the next decade and beyond.

ACES contains two categories of constituents in the U.S. and Canada that operate in the clean energy sector. Renewable energy is the first category, including companies that focus on wind, solar, hydro, geothermal, biomass, and biofuel. The second category is clean technology. It includes companies that develop electric vehicles, energy storage, efficiency, light-emitting diode (LED), smart grid, and fuel cells.

These charts summarize ACES’ portfolio composition based upon sector (utilities, industrials, etc.) and decarbonization themes (wind, smart grid technologies, etc.)

ACES is a differentiated, pure-play approach to the decarbonization trend. ACES concentrates on companies whose primary operations focus on the clean energy sector. It is an ETF that diversifies across sub-segments and aligns with ESG standards.

Invest with purpose. If you want to invest in a healthier planet for current and future generations, we encourage you to invest in renewables like wind power through ACES. Your next investment opportunity might be blowing in the wind.

To talk more about investing in wind power, or other investment opportunities, contact us today. Together, we can find the right investments for you, the ones that align with your values and help you to reach your financial and life goals.

Go with the Flow — Investing in Hydropower

Written September 8, 2020December 11, 2020 by Annie Dysart , John Heneghan

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What is Hydropower?

Hydropower is a type of renewable energy that uses the force of flowing water to produce electricity. Its energy comes from the water cycle: the continuous movement of water on, above, and below earth’s surface.

Hydropower is a renewable technology because it captures naturally occurring energy from the water cycle and produces electricity without reducing or using up water. The marginal cost of production for hydropower — and renewables like solar, wind, and geothermal energy — is zero.

Check out this 3-minute video on hydropower.

The most common type of hydropower production is an impoundment facility. Impoundment dams hold river water until its release through a turbine that activates a generator and produces electricity. The U.S. has over 90,000 dams, yet only 3% are active hydropower facilities. The majority of dams in the United States were built for irrigation or flood control purposes.

In 2019, conventional hydroelectricity’s generation capacity in the United States was 79,746 megawatts (MW) — or about 80 million kilowatts. This is enough electricity to fuel 32 million homes a year. The state of Washington produces the most energy from impoundment. It is home to the Grand Coulee Dam, the largest U.S. hydropower facility. The dam is also the largest U.S. power plant in generation capacity.

Dams are controversial because of potential harmful environmental impact. They destroy carbon sinks in wetlands and oceans, deprive ecosystems of nutrients, reduce biodiversity, cause habitat fragmentation, and displace poor communities. Fish ladders — a series of ascending pools that allow fish to circumvent a dam — are a solution to impoundment facilities that would otherwise hinder the migration of species like salmon up and down rivers.

Another type of hydroelectric power is diversion, also known as a run-of-river facility. This method diverts part of a stream through a canal or penstock. The water then spins a turbine and produces electricity before rejoining the main river. The typical capacity of a diversion facility is less than 30 MW.

Both small individual operators and large utilities own run-of -river facilities. In some cases, large utilities view these facilities as low value assets due to old equipment, inefficient operations and low power prices.

Pumped storage facilities store energy for later use by pumping water uphill when electricity is cheap to a reservoir at higher elevation. When there is high electricity demand, they release water to a lower reservoir and through a turbine to generate electricity.

Hydro operations can operate under federal, public, or private ownership. There can also be public-private and public-federal partnerships. Federal agencies operate about half of the total installed hydropower capacity in the U.S.

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Hydropower accounts for around 6.6% of the electricity generated in the United States. Hydropower was the nation’s largest source of renewable energy until wind power surpassed it in 2019. According to the U.S. Energy Information Administration, total annual electricity generation from utility-scale non-hydro renewable sources (wind, solar, biomass, etc.) has been greater than hydropower generation since 2014.

Total renewable energy resources represent 17% of U.S. electricity generation. Dirty coal still represents 23% of generation and is a major contributor to greenhouse gases. Renewable energy sources are poised to take coal’s market share aided by technological advances in energy storage.

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Advantages of Hydropower

Hydropower offers the lowest levelized cost of electricity across all major fossil fuel and renewable energy sources. Hydro is a reliable, cost-effective energy source due to low-maintenance equipment and longer facility lifespans that amortize significantly large upfront capital costs over time.

The total conversion efficiency of a hydropower plant ranges between 90-95%. Conversion efficiency is the useful energy output divided by the energy input. For hydro, it is the hydroelectricity output divided by the kinetic energy of flowing water input. Hydropower’s conversion efficiency is greater than the conversion efficiency of both wind and solar, with wind at a rate of about 45% and solar at 25%.

Hydropower has high diversification potential with other renewable energies. A portfolio with hydro, wind, and solar energy that is diversified across energy sources and regions can have a stabilizing effect on asset portfolios.

Hydroelectric facilities provide baseload power; they run continuously to meet the minimum level of power demand. This consistency makes hydropower complementary to intermittent renewables like wind and solar that can only generate electricity when the sun is shining or the wind is blowing. Hydropower depends on the more reliable flow of water to help meet baseline electricity demands while other renewables can supply peak demands.

Hydropower and Renewable Energy Storage

The push for decarbonization through renewables will require innovation in energy storage technologies that addresses the intermittencies of wind and solar energy. While pumped-storage hydropower accounts for 95% of U.S. utility-scale energy storage, lithium-ion battery storage has seen tremendous growth. The price of lithium-ion batteries has fallen by about 80% over the past five years, enabling the integration of storage into solar power systems.

NREL’s Renewable Electricity Futures Study estimated that if 80% of the United States’ electricity is powered by renewables by 2050, 120 gigawatts of storage would be needed across the nation. The U.S. currently has 22 gigawatts of storage from pumped hydropower and 1 gigawatt from batteries.

Another opportunity looming on the hydro horizon is the potential coupling of hydropower and Bitcoin mining. Bitcoin mining lacks an eco-friendly reputation as an energy-intensive process with a large carbon footprint. However, this can change if miners use electricity from renewable sources.

Much like energy storage utilizing lithium-ion batteries, Bitcoin and other cryptocurrencies are an energy storage technology. Converting energy into bitcoins and storing it for future purchases can help contribute to the storage needed for the renewable energy revolution.

Bitcoin miners can choose their location based on the cheapest cost of electricity. Cheap electricity happens to come from cleaner baseload energy sources like hydro, geothermal, and natural gas. If Bitcoin miners settle near renewable energy plants, they could reduce their emissions and soak up extra energy that would go to waste.

Go with the Flow — Investing in Hydro

Current trends show wind and solar energy assets are more frequently represented in institutional investors’ portfolios than hydropower assets. Hydropower facilities tend to have high upfront costs, complex installation processes, and absence from the market due to a history of public ownership and project sponsorship. These are some of the factors that create a scarcity of hydroelectric investment opportunities.

Brookfield Renewable (BEPC: NYSE) is one of the world’s largest investors in renewable energy. Its strong ESG practices support global decarbonization and create long-term value for stakeholders. In addition, it is geographically and technologically diversified.

There is 19,300 MW of renewable capacity located across North America, South America, Europe, India, and China. Hydro represents 7,900 MW (53% in U.S. & Canada), or 41% of capacity, followed by 4,700 MW of wind (52% in U.S. & Canada), 2,600 MW of solar, and 2,600 MW of energy storage and distribution assets.

Brookfield has an investment grade, BBB+ balance sheet. It has diverse, high-quality cash flows and a strong financial position. In effect, it can pursue growth opportunities and make distributions to shareholders. Brookfield targets annual equity deployment of $800 million in high-quality assets.

Their investment strategy involves acquisition and development of high-quality renewable power assets and businesses below intrinsic value. They also recycle capital from mature, de-risked assets, optimize cash flows through operating expertise to enhance value, and finance businesses on an investment grade basis.

Brookfield partners with governments and businesses to achieve their decarbonization goals. It has an 18,000 MW development pipeline diversified across multiple technologies and geographies, including approximately 2,400 MW under construction.

Since 2012, Brookfield EPC has grown its annual distribution by 6% compound annual growth rate. Brookfield expects to continue distribution growth by 5% to 9% annually. In addition, they deliver total returns of 12% to 15% to unitholders over the long-term.

Brookfield is the best way to go with the flow on the decarbonization megatrend and invest in the inevitable transition to renewable hydro, wind and solar energy.

To talk more about investing in hydropower, or other investment opportunities, contact us today. Together, we can find the right investments for you, the ones that align with your values and help you to reach your financial and life goals.