Real Power to the People

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 Markets and Money 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 Markets and Money 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.



Nick Hubble+
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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

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.

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