America’s Largest Source of New Power May Surprise You

David Fessler
by David Fessler, Energy & Infrastructure Strategist, The Oxford Club
wind turbines

Question: Which alternative energy source contributes more money to the American economy than the annual revenue generated by Major League Baseball?

The answer may surprise you...

It’s wind power.

With oil prices getting crushed, coal companies dying and natural gas demand taking off, little attention has been paid to the U.S. wind industry. But over the last five years, wind has pumped an average $13 billion a year into our economy.

That’s more than the annual revenue of the MLB - America’s favorite pastime!

Even more impressive, U.S. wind’s annual projects are about equal to the annual revenue of the NFL. I’ll touch on individual opportunities in a moment. But first, let’s look at the current state of wind energy...

The Largest Source of New Power Generation

There are more than 50,000 wind turbines in 40 states and Puerto Rico.

Like solar, wind energy systems benefit from renewable energy credits. And that benefit isn’t going away anytime soon. Last December, Congress extended the 30% renewable energy credit through 2020.

Another positive for consumers is that both energy sources are a hedge against future utility rate increases. Once turbines and solar panels are up and running, the electricity is free after the hardware is paid for.

Wind farms also have the advantage of requiring no water to operate. Fossil fuel and nuclear plants all use large volumes of water for cooling and steam generation.

To top it all off, wind energy costs have dropped by 66% since 2009.

So it’s easy to see why wind farm builders have pumped $128 billion into new projects over the past decade. And I believe things will rapidly scale up from here...

Wind was the largest source of new power generation last year. All together, these projects added nearly 8.6 gigawatts of capacity.

Wind now makes up nearly 5% of all U.S. electrical power.

What’s in store for 2016? At the moment, projects under construction should add an additional 9.4 GW of capacity. There’s also an additional 4.9 GW in the planning stages. I suspect that number will move even higher now that the renewable tax credit is good through 2020.

That would actually put us ahead of growth estimates...

America’s Wind Vision

Back in 2013, the U.S. Department of Energy forecasted wind would make up 10% of U.S. electric demand by 2020, 20% by 2030 and 35% by 2050. But the way things are going, it will more than likely beat those dates.

The benefits of deploying wind energy are significant. First, utilities will save a cumulative $149 billion by choosing wind. One study also forecasts a 14% reduction in greenhouse gas emissions. That’s equivalent to 12.3 billion tons of CO2.

Utility water use would be 23% less and water withdrawals 15% less.

And - not that it’s a huge issue right now - adding this much wind into America’s energy mix will make utilities 20% less sensitive to fossil fuel costs.

Local municipalities benefit too. By 2050, wind will generate more than $3 billion in annual property taxes. And landowners will collect $1 billion in land lease payments.

Of course, we still have a long way to go before we catch up with Europe, the world leader in offshore wind. It has more than 3,000 wind turbines in 80 offshore sites. But we are making strides...

The nonprofit Lake Erie Energy Development Corporation (LEEDCo) is developing a project fittingly called “Icebreaker.” When completed, it will have six 3 MW turbines in Lake Erie, seven miles off the coast of Cleveland, Ohio.

Here’s a diagram of the proposed site:

(Source: LEEDCo)

 LEEDCo’s project is still in the planning stages. One of the biggest issues it faces is Great Lakes ice. The organization is currently working with a Finnish engineering company to develop turbine pylons that can withstand ice loading.

As of this writing, LEEDCo has not chosen a supplier for the turbines. However, General Electric (NYSE: GE) is the No. 1 supplier of U.S. wind turbines.

GE is also one of the largest turbine suppliers in the world. Starting in 2002 with just one model, the company now offers 13 different types of turbines with various blade lengths.

In fact, with 30,000 wind turbines installed, GE is actually responsible for more than 25% of the world’s renewable power.

That said, as I wrote here in November, Vestas Wind (OTC: VWDRY) and Siemens AG (OTC: SIEGY) are the true world leaders in offshore wind turbines. There’s also the First Trust ISE Global Wind Energy ETF (NYSE: FAN) for folks who’d rather spread their risk across 40-plus players in the industry.

The bottom line is this: Wind power is going to flourish over the next decade and beyond. You should make sure your portfolio has some exposure.

Good investing,

Dave

Have thoughts on this article? Leave a comment below.

P.S. I believe this is a watershed moment for renewables. Certain companies are going to make HUGE leaps forward in 2016 - and I’ve got my eye on several likely suspects. I’m planning to reveal my favorites to a small crowd at this year’s Investment U Conference in Carlsbad, California. Not able to make it? No worries!

That’s precisely why The Oxford Club developed Investment U LIVEStream. With it, you can access every single recommendation - from more than 20 speakers - all in the comfort of your own home. Even better, if you secure your access now, you can get $100 off. But you must act before midnight tonight. Click here for details.

New Focus for a 124-Year-Old Megacorp

You may have seen the recent series of commercials about a techie college grad who accepts a job at General Electric (NYSE: GE), befuddling all of his friends and family who assumed he’d move out to Silicon Valley.

The ad spots are humorous, but through them, GE is making a serious statement. The 124-year-old company is moving away from its image as a mere appliance manufacturer and embracing its innovative side.

In 2014, the company began to divest Synchrony Financial, its retail finance business. Next, it announced it would be shedding nearly all of its financial services business, GE Capital. The goal? To transform a disorganized group of businesses in one industrial powerhouse.

GE is seeking to take all of its multidisciplinary engineering talents and focus them on its power, renewable energy and energy management segments. And that shift is turning lots of heads - particularly those of investors.

Here’s what Dave had to say when he recommended the stock to his Oxford Resource Explorer subscribers:

“As I've said, we are on the verge of a big disruption in energy. GE is not just aware of the disruption... it's going to drive it. And it's going to do so by returning to its core businesses - the ones that started it all.

“Yes, GE still makes lightbulbs. But [lightbulbs have] come a long way since Edison created them... just as GE has since Edison founded the company.

“The company is involved in the largest transformation in its history. The good news for investors is it's just beginning.”

- Alexander Moschina with Alexander Green

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