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The Far-Reaching Effects Of The Evolution Of Energy Sources
David Thomas, Contributor
http://www.forbes.com/sites/greatspeculations/2016/10/14/the-far-reaching-effects-of-the-future-of-energy/#3dc930175df4
Last month in Algiers, the 14 members of the Organization of the Petroleum Exporting Countries (OPEC) voted to lower oil production by almost one million barrels per day. The agreement boosted crude oil prices back to around $50 per barrel. OPEC had not voted to cut in eight years and the oversupply drove oil prices from $100 to $30 per barrel. Amazingly only a 3% gap between supply and demand can cause this much volatility. Is there something else on the horizon adding to this picture?
Are we going back to nuclear energy? Nuclear reactors were designed with slide rules back in the 1950s. They are basically just steam engines with a different fuel, but they get only 0.7% of the energy from the uranium. One 16 oz. can of depleted uranium has the equivalent energy remaining of 120,000 gallons of gasoline. There are 700,000 metric tons of nuclear waste which can power the world for 1,000 years. Terra Power is a company that burns nuclear waste attempting to accomplish this goal and Bill Gates is the chairman of this company.

There are other forms of energy on the horizon that may make the high capital cost of nuclear energy inefficient. Wind energy accounts for 6% of energy production today but is not on an exponential growth curve. Solar energy production currently provides less than 1% of energy needs and has been on an exponential curve for 30 years. Only now are we starting to see the impact.

Solar energy has come down from a prohibitively expensive $77 per kilowatt hour, and now a Bloomberg article declaires that Chile has set the new record for solar power rates at 2.9¢ per kilowatt hour. That’s half the cost of coal. U.S. rates are not far behind. There is a doubling every two years of the amount of solar energy being created per dollar cost as scientists now apply nanotechnology to solar panels.

Electricity is becoming incredibly cheap and clean. How cheap? It is becoming cheaper than grid electricity, with zero government subsidy. Solar energy at 5¢ per kilowatt/hour is the equivalent of oil at $10 per barrel. The price for solar dropping so much that coal companies that currently produce most of the electricity, may be obsolete by 2025.

To do a location-based comparison, we also need a solar insolation map. We’ve decided to focus on the U.S from the wholesalesolar.com website.
Using 20-year, 5% financing, the EIA’s 1c/kWh projection for fixed O&M (no subsidies), and the US solar insolation map above, we get these numbers:

$1.20/W =

7.3¢ per kWh in Zone 5 (4.2 solar hours, 17.5% capacity — Northeast/Midwest)
5.8¢ per kWh in Zone 2 (5.5 solar hours, 23% capacity — Southwest)

$1.50/W =

8.3¢ per kWh in Zone 5
7¢ per kWh in Zone 2

$2.00/W =

11.4¢ per kWh in Zone 5
9.9¢ per kWh in Zone 2

If solar energy is starting to win, does this mean we should dump big oil stocks? Exxon Mobil no longer refers to itself as an oil company, but as an energy company. This is a distinct change of mindset, and an important change. Exxon knows about the changes in alternative energy sources and is investing billions in this area to stay ahead of this curve and be a viable energy company in the future.

Cheap solar electric energy will change many industries, including transportation. The complete auto industry will start to be disrupted. Electric cars will become main stream by 2020 if not sooner which will further lower the demand for oil. A car with an internal combustion engine has 2,000 moving parts, whereas the electric Tesla Model S has 18. The Tesla Model S is now the best selling luxury car in the U.S. and Europe, eclipsing Mercedes, BMW, and Porsche.