Real Power to the People

Reddit

It’s show time today for The Money for Life Letter. We’re on the Gold Coast interviewing the man utility companies fear most for an upcoming monthly issue. That means this Daily Reckoning was written yesterday. If a financial crisis broke out last night, you won’t read about it here.

But what does our friend Len McKelvey have to do with investing? Well, did you know Australia has the most expensive electricity in the world? If you separate renewable energy powerhouses Germany and Denmark from the European Union we come in third place. Congratulations Australia.

What’s more interesting is that your utility bill is about to surge. Australia’s grid is old and needs a heck of a lot of spending to get up to date. More than $100 billion will be needed to provide for Australia’s power needs over the next 20 years, according to a report from the Australian Energy Market Operator. That cost is going to be passed on to you (unless you follow the advice in The Money for Life Letter).

But here’s the bit that Daily Reckoning investors need to know about. Europe’s Energy Commissioner Antonio Tajani reckons the European Union is in for an ‘industrial massacre‘ because of its high power prices. Companies are balking at their power bills and heading overseas.

If Europe is struggling with its power prices, can you imagine where Australia is going to land when our bills continue to rise from already outrageous levels? That’s where Len comes in. He shows companies how to reduce their spending on power and water using brand new technology. But it’s his experience from a few years ago that we’ll be asking about. You see, Len went off the grid completely.

Over in Japan, people have cottoned on too. The Wall Street Journal reports how ‘tens of thousands of Japanese homeowners are generating their own power with hydrogen fuel cells and solar panels, part of a post-tsunami revolt against electric utilities.‘ It’s the libertarians’ version of an economic revolution – real power to the people.

Len reckons all of this is part of a broader trend of decentralisation in power. Companies are sick of dodgy expensive power mucking up their machines. With the grid needing an expensive revamp, it’s a good idea to stop relying on your utility company altogether. One kitchen maker in Sydney is building a power plant that will run on its own waste material. The problem is, if some people go off grid, that leaves those who can’t afford power plants, hydrogen power cells and solar power shouldering the cost of the failing grid.

The good news is that electricity will one day become just like any other good and service in the economy. No more government infrastructure meddling. Somebody is going to make a lot of money producing miniature power plants. But in the meantime, we’re on the edge of a power crisis.

A few years ago, we met a scientist who works on hydrogen fuel cells on a flight to our hometown in Germany. His students had just won a race driving a hydrogen powered moped around South Africa. Let’s hope he comes up with more useful applications for your home soon.


Regards,

Nick Hubble+
for The Daily Reckoning Australia

Join The Daily Reckoning on Google+

From the Archives…

Emerging Markets Walk The Tapertalk
6-09-2013 – Nick Hubble

House Prices Halve Without a Recession
5-09-2013 – Nick Hubble

A Manufacturing Industry Revolution
4-09-2013 – Nick Hubble

How the RBA is Using Low Interest Rates to Destroy Your Wealth
3-09-2013 – Nick Hubble

Is the Stock Market Predicting War?
2-09-2013 – Nick Hubble

Nick Hubble
Nick Hubble is a feature editor of The Daily Reckoning and editor of The Money for Life Letter. Having gained degrees in Finance, Economics and Law from the prestigious Bond University, Nick completed an internship at probably the most famous investment bank in the world, where he discovered what the financial world was really like. He then brought his youthful enthusiasm and energy to Port Phillip Publishing, where, instead of telling everyone about The Daily Reckoning, he started writing for it. To follow Nick's financial world view more closely you can you can subscribe to The Daily Reckoning for free here. If you’re already a Daily Reckoning subscriber, then we recommend you also join him on Google+. It's where he shares investment research, commentary and ideas that he can't always fit into his regular Daily Reckoning emails.
Reddit

Leave a Reply

2 Comments on "Real Power to the People"

Notify of
avatar
Sort by:   newest | oldest | most voted
garry
Guest

Apart from the rest of the worlds energy prices, the Australian part seems like a lot of ill researched waffle to me.

The fact is, we have lost control of our energy assets to foreign interests. Indeed, many in the form of foreign governments with corporate sounding names

Perhaps a read of a single example of their shenanigans might help. And to boot, its a call from an industry expert

http://www.adelaidenow.com.au/news/opinion/bruce-dinham-former-etsa-boss-says-were-all-being-ripped-off-on-electricity-prices/story-fni6unxq-1226676683356

slewie the pi-rat
Guest
once upon a time, there weren’t any utility bills. love and war by candlelight and cannonade. or, the more ‘uncivilized and savage’ approaches [if you believe the winners’ press releases] to the common weal. no fudging on the horse-power, either. once, while very ‘young’, i earnestly inquired of one of my grandmothers, in a somewhat public setting: did YOU ever ride in a covered wagon? hankies to the front! and, people do try to get at this ‘civilization’ thingy. not everyone takes it for granted. see Freud, for example. or Weird Al’s “Amish Paradise”? here’s Twain’s version, a historical piece… Read more »
wpDiscuz
Letters will be edited for clarity, punctuation, spelling and length. Abusive or off-topic comments will not be posted. We will not post all comments.
If you would prefer to email the editor, you can do so by sending an email to letters@dailyreckoning.com.au