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

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On the cost side, the average cost to install a solar system in the U.S. has fallen 37% from Q1 2011 to Q1 2013 to $3.37 per watt. That has helped drive 670% growth in installations over the past two years, hitting 1.8 GW last year, a figure that will likely more than double this year. What we’ll see in the future of electricity is that more and more of these installations will end up on the rooftops of homes and commercial buildings around the country, pushing power generation from power plants closer to the source of demand.

One company leading the charge is SolarCity, who has made a goal of 1 million rooftop solar installations in the next five years. By offering a zero-dollar-down product that saves consumers money, the value proposition is an easy sell and SolarCity, along with others, is taking advantage.

Electric cars, batteries, and the future of the grid
The next giant leap forward for electric energy regards batteries and electric vehicles, which need similar advancements in technology. So far, Tesla Motors Inc (NASDAQ:TSLA) has been the only company proven worthy of building electric vehicles that people will buy — and a big reason for that is its battery. The next leap forward for EVs, which will bring more manufacturers into the fold, will come when battery technology allows storage of 300-plus miles of power in a smaller, more economical package. Tesla Motors Inc (NASDAQ:TSLA) is working with Panasonic on this next-generation battery; lab results suggest that it may be about four years away.

The role that EVs would play in the grid can be viewed as a storage system for solar power. Plans for a smart grid include using either a separate battery or the EV itself as a storage system to smooth the ebb and flow of solar power and store it for night use. This is still years away, but that’s the vision of the electricity grid that Tesla Motors Inc (NASDAQ:TSLA), SolarCity, and many others are working toward.

The future of electric energy
The power sources of the future likely look nothing like the power sources of the past. Coal and nuclear power are being replaced by natural gas and solar, and as the cost of renewable energy falls it will play an ever larger role in the grid. As solar grows we’ll also see power generation move to a more distributed model instead of the current one in which large power plants provide all of the power. Changes are in store for the industry and all companies will have to adapt.

The article The Future of Electric Energy originally appeared on Fool.com and is written by Travis Hoium.

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends Southern Company and Tesla Motors. The Motley Fool owns shares of Tesla Motors.

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