Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

NRG Energy Inc (NRG), Duke Energy Corp (DUK), Tesla Motors Inc (TSLA): The Future of Electric Energy

NRG Energy IncThe electrical grid is notoriously slow to change. Since the days when Thomas Edison debated the merits of A/C versus D/C power transmission, the biggest debates in electrical generation have been about whether to use natural gas or coal for power. But that’s all changing as the cost of traditional energy sources rises, and that of alternative energy falls, and it becomes viable to generate power on-site.

The big question is: What does the future of electric energy look like?

Coal takes a tumble
It’s no secret that the coal industry has struggled since President Obama took office: 15,000 MW of coal supply has been taken off the market due to uncompetitive costs and the sheer age of the plants. Some of the industry’s struggles have been due to increased regulations put in place under the Obama administration, but another big driver is the low cost of natural gas, which has become the country’s most used fuel for generating electricity.

Henry Hub Natural Gas Spot Price Chart

Henry Hub Natural Gas Spot Price data by YCharts

As recently as a few years ago the coal industry provided most of the country’s power, but that’s been turned on its head recently. Natural gas is now in favor due to lower costs and lower emissions, something that will keep it on top until another energy source with even lower costs and fewer emissions emerges.

Renaissance in nuclear falls flat
This was supposed to be a time for a nuclear renaissance in the U.S. The economic stimulus plan passed during the recession included money to guarantee nuclear plants, and a number of companies made big plans to build new capacity. But the excitement has cooled considerably and, one by one, companies have abandoned nuclear plants altogether.

NRG Energy Inc (NYSE:NRG) was one of the first to give up on its grand nuclear plans in 2011, while Duke Energy Corp (NYSE:DUK) recently announced it would retire its Crystal River nuclear plant and stop pursuing the $25 billion Levy County nuclear project as well. The Southern Company (NYSE:SO)‘s Plant Vogtle in Georgia is also coming under fire for being uncompetitive compared to natural gas generating, and even renewable energy, sources.

New nuclear plants have been cancelled domestically; internationally, the trends don’t look good either. Germany has said it will close all of its nuclear plants, and since the Fukushima Daiichi disaster in Japan, that country is looking at solar as an alternative source of energy.

There’s still hope for nuclear growth in China but the momentum that nuclear backers thought they had gained in developed countries is evaporating. High costs for nuclear power and new low-cost alternatives will keep the industry down for the foreseeable future.

Solar emerges as a viable energy source
A decade ago solar energy was a pipe dream that only made sense in countries like Germany where the energy source was highly subsidized. Today, the solar is cost competitive with the grid in many parts of the world without subsidy, its costs continue to fall, and installations in markets like the U.S. are exploding.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.