Solar, Wind ETF Growth Could Suffer from Creaky Power Grid

A new industry report claims sun and wind energy may interrupt the power grid, creating a new set of obstacles for inventors, investors and ETFs within the industry.

By adding electricity generated by the sun and the wind to the nation’s power grid, the reliability of the current system and the frequency of blackouts are at stake.

The North American Electric Reliability Corporation says in a report scheduled for release today that unless appropriate measures are taken to improve transmission of electricity, rules reducing carbon dioxide emissions by utilities could impair the reliability of the power grid, reports Matthew L. Wald for The New York Times.

Basically, the actions of implementing wind and solar energy would place stress on a transmission system not designed for large power transfers over long distances. Imposed carbon emission rules are going to increase demand on natural gas and make power generation susceptible to interruptions.

Greenhouse gas issues and electric utility reliability are battling and so far there has been no resolution.

Could our aging electrical grid hamper the growth of alternative energy ETFs in the long run? One possible solution to the problem would be more use of “demand-side resources,” deals with customers to cut consumption in periods of high energy use.

Will Barack Obama help the issue? One of his big pushes will be for improvements to the country’s infrastructure.

Claymore/MAC Global Solar Energy (TAN) is down 58.8% since its April 15 inception.

PowerShares Global Wind Energy (PWND) is down 54.6% since its July 8 inception.

Comments

[john s. gordon:]

utility companies build xmission facilities (using their own or borrowed funds) for use with power generated in their own plants.

forcing utility companies to transmit power generated by others over long distances places an economic burden on the company.

something has to give here. hopefully reasonable & wise govt regulation can resolve this conflict.
> jack

2008 Nov 11 08:53 AM

[Clearlead:]

No, utilities build transmission sufficient to maintain reliability, regardless of whether the utility owns the generation in its service territory, which is a matter of what region you are looking at in the nation. Fact is that transmission companies will do "economic" expansions of the grid if generators are willing to pay the cost. transmission companies will build back bone when it makes economic sense...take a look at AEP and it's 765 Kv projects.

The author has a point with respect to demand response and efficiency measures in lieu of major capex expansions of transmission, this is the view point of the current FERC commissioner Wellinghoff. Hardly as sexy as wind, but demand response and efficiency is going to have a place in our new energy future.

2008 Nov 11 09:47 AM