Renewable Energy Myths: Learn the facts before investing in green power stocks

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Alternative Energy Investing Myths

For decades, Big Oil and Big Auto have created a smokescreen of misinformation about the validity of alternative energy markets.

And who could blame them?

The best way to beat potential competition is to smother the market with confusion.

But today, with peak oil a reality and global warming dictating energy policy, the truth about alternative energy is breaking through the clouds.

And savvy investors are using this opportunity to load up now, while the opportunities are still abundant.

But many of the myths created by alternative energy opponents can still be found all over the Internet. Most of these can be traced back to unreliable and unethical sources.

And in order to make a wise investment, you have to be able to separate the myths from the facts.

Think about it.

How much do you think alternative energy investors would've made in solar over the past few years had they believed some of the lies they've been told about solar? Things like it'll never be competitive or that the technology can only provide a miniscule amount of electricity?

Fortunately for these investors, the myths have already been separated from the facts.

And that's what we've done for you here.

Because the opportunities for alternative energy investors are just heating up. And there's absolutely no reason you should miss out on them because of faulty information and questionable data.


Solar Power Investing

Myth: Solar energy can only serve a tiny fraction of US or world electricity needs.

Fact: Solar photovoltaic (PV) technology can meet electricity demand on any scale. The solar energy resource in a 100-mile-square area of Nevada could supply the U.S. with all its electricity using modestly efficient commercial PV modules.

Myth: Solar energy cannot significantly offset global warming.

Fact: If the industry continues to grow by 25% per year, which is the prediction, PV in the United States will offset 10 million metric tons of CO2 per year by 2027. That's equivalent to the annual increase emitted by US electricity generation from fossil fuels.

Myth: A solar device requires more energy to manufacture than it will produce in its lifetime.

Fact: A PV system will produce much more energy than it consumes over its lifetime. In the worst case, the energy payback for PV is less than four years. A PV module's lifetime is typically more than 20 years.

Myth: Solar is too expensive to catch on.

Fact: Every solar panel purchased makes the next one cheaper. As opposed to nonrenewable sources, which become scarcer and more expensive with every ton that is burned. When all is said and done, each cumulative production doubling drops the price by about 20%.

Geothermal Energy Investing

Myth: Geothermal energy is still new and experimental.

Fact: Geothermal energy is been used to generate electricity since 1904. Today, the US has nearly 2,800 MW of geothermal electricity connected to the grid that generates a yearly average of 15 billion kilowatt hours of power. That's comparable to burning about 25 million barrels of oil or 6 million short tons of coal per year.

Myth: Geothermal power plants emit smoke.

Fact: The visible plumes seen rising from geothermal power plants are actually water vapor emissions, not smoke. No combustion of fuels occurs to produce electricity at a geothermal facility.

Myth: Extraction and injection of geothermal brines contaminates drinking water.

Fact: No contamination of groundwater has ever occurred as a result of geothermal activity.

Wind Power Tutorial

Myth: Wind turbines are loud and create noise pollution.

Fact: An operating modern wind farm at a distance of 750 to 1,000 feet is no noisier than a kitchen refrigerator.

Myth: Wind turbines harm property values.

Fact: There is no evidence that the presence of a commercial wind farm within sight of a property decreases that property's value. Better yet, a nationwide study conducted in 2003 surveyed property near multiple wind farms and found that not only do wind farms not harm property values, but in some cases they actually increase them.

Myth: Wind turbines kill birds and bats.

Fact: Regardless of how extensively wind is developed in the future, bird deaths from wind energy are unlikely ever to be more than a small fraction of bird deaths caused by other sources, such as cats and buildings.

Myth: Wind farms fragment wildlife habitats.

Fact: Wind farms are typically built in areas close to transmission lines, where habitat has already been modified and fragmented.

Myth: Wind turbines operate only a small fraction of the time.

Fact: Wind turbines generate electricity between 65% and 80% of the time, though the amount of output is variable. The fact is, no power plant generates at 100% nameplate capacity 100% of the time. The only thing that comes close is geothermal, which is about 98%.

Myth: Wind energy only provides a small amount of electricity.

Fact: The US Department of Energy estimates America's wind energy potential to be larger than total US electricity consumption today.

Hybrid Vehicles

Myth: Hybrid batteries will lose their charge and leave you with a $3,000 repair bill.

Fact: Hybrid batteries last for the life of the vehicle. In fact, Toyota, the maker of the Prius, has said that it has never had a charge-related warranty claim.

Myth: Hybrids are slow.

Fact: Most hybrids are actually faster than comparable cars without hybrid electric motors. In fact, the Honda Accord hybrid is the fastest family sedan on the market.

Myth: You'll never recoup the high price premium.

Fact: With the tax credits, the payback is between two to three years. Without a tax credit, you're looking at five to six years. Of course, this is also based on $2.20 a gallon.

Also keep in mind that as production increases, economies of scale are expected to reduce the costs. Toyota actually plans to offer hybrid versions of all its most popular models, which will cut the incremental cost of hybrids in half.
Ethanol

Myth: Ethanol production uses corn that would otherwise be used for human consumption.

Fact: Corn used for ethanol production is typically the corn that's used to feed livestock. And the production of ethanol provides for the production of distillers grains (DDG), which are used to feed livestock.

Moreover, these leftover grains contain a certain amount of fat. And with today's technology, that fat content can be raised or lowered depending upon the end use. For example, dairy cows and beef cattle require different amounts of fat in their diet to optimize production. The new technology allows ethanol producers to regulate the amount of corn oil present in their DDGs while simultaneously concentrating the amount of protein.

This means that not only are beef and dairy farmers able to acquire feed as an ethanol co-product, the feed they get can be tailored to their specific industry.

Myth: Ethanol harms car and truck engines.

Fact: Every major auto manufacturer approves the use of ethanol blends up to 10 percent under warranty. 10 percent is the most common mix found at today's gas stations. Cars built since the 1970s are fully compatible with a 10 percent mix (E-10).

Myth: It takes more energy to make ethanol than the fuel itself produces.

Fact: According to Michael Wang from the Energy Department-funded Argonne National Laboratory for Transportation Research, the energy used for each unit of ethanol produced has been reduced by about half since 1980. Today, 1 million BTUs of ethanol uses 0.74 million BTUs of fossil fuels (not including the solar energy used to grow corn). By contrast, he found that the delivery of 1 million BTUs of gasoline requires 1.23 million BTUs of fossil fuels.

Wang also noted in his study that energy balance value alone is not meaningful in evaluating the benefit of ethanol or any other energy product. For proper evaluation, a product's energy balance must be compared with that of the product it replaces. And compared to gasoline, any type of fuel ethanol substantially helps reduce fossil energy and petroleum use.

Myth: There's not enough land to grow crops for ethanol.

Fact: Former secretary of state George Schultz and ex-CIA director R. James Woolsey estimate that 30 million acres can replace half our gasoline demand. By taking land now used to grow export crops and instead planting energy crops, it's feasible to eliminate our need to import oil for gasoline.

Moreover, with advances in agricultural technology we can now harvest more corn using much less land.

This myth is also based primarily on corn, and doesn't take into account conventional celloulosic feedstocks such as switchgrass, corn stover and even old newspapers. These feedstocks can significantly decrease the amount of land needed to grow energy crops.

Myth: Switching to ethanol is expensive.

Fact: A new car can be made flex-fuel-capable for about $35. And the cost of adapting a retail gas pump for E85 is as little as $10,000.

Myth: Ethanol is unfairly subsidized.

Fact: Yes, ethanol producers and blenders share a 51-cent-a-gallon federal credit that costs taxpayers about $2 billion a year. Meanwhile, the US also directly subsidizes Big Oil. The General Accounting Office reports that the industry has netted $82 billion from just one line item alone, something called "excess of percentage over cost depletion," and there are many other such clauses. And this doesn't even get into the price tag of protecting shipping lanes to move the oil from point A to point B. The taxpayer picks that up as well.