Technology is Disrupting the Energy Industry and it’s Creating Opportunities for Individual Investors
The rapid growth of technology has fostered alternative solutions in industries on a scale that has never been seen before and the power industry is no exception.
As governments are having difficulty being able to afford infrastructure projects, the opportunity for the traditional institutional investors has never been higher. However the growth of technology and non-traditional power projects such as distributed generation has created the opportunity for individual investors to get into the infrastructure and power markets.
In a recent article published on the World Economic Forum, author Vivek Wadhwa discusses how advances in technology are forcing industries to change how they traditionally conduct business.1 Individual consumers are moving towards grid parity; alternative energy sources that can generate electricity at a levelized cost (LCoE) that is less than or equal to the price of purchasing power from the electricity grid. This means that the traditional utility companies will start to see competition pop up all over, an incredible opportunity for investing in infrastructure and power.
In addition to grid parity, we are also seeing an increase in distributed generation: Distributed generation (or DG) generally refers to small-scale (typically 1 kW – 50 MW) electric power generators that produce electricity at a site close to customers or that are tied to an electric distribution system.
An article published this week on RenewableEnergyWorld.com features an interview with former U.S. Federal Energy Regulatory Commission (FERC) Chief Jon Wellinghoff about grid security and distributed generation.
“Commissioner Wellinghoff believes the true answer to grid security is to fundamentally realign the system from one that relies on a few nodes (probably less than a dozen), which are all critical for the grid to operate, to a national system of ‘distributed grids’; hundreds of smaller ones, which of course could be attacked individually through conventional or nuclear or cyber means, but none of which could topple the entire system if it went down.”2
This is encouraging news for investors because there is a need for capital to fund the construction and maintenance of this growing system of individual distributed grids.
1Wadhwa, Vivek. “5 industries on the brink of disruption.” The World Economic Forum. 23/12/2014. https://agenda.weforum.org/2014/12/5-industries-on-the-brink-ofdisruption/?utm_content=bufferb1ff3&utm_medium=social&utm_source=twitter.com&utm_campaign=b uffer.
2 Register, Chip. “Former FERC Chief Jon Wellinghoff Speaks Out on Grid Security and Distributed Generation.” RenewableEnergyWorld.com. Jim Callihan, 09/02/2015. http://www.renewableenergyworld.com/rea/news/article/2015/02/former-ferc-chief-jon-wellinghoffspeaks-out-on-grid-security-and-distributed-generation.