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Can you name America’s oil king?
It’s Texas, of course.
Roughnecks pull 4X more “black gold” out of the ground there than in New Mexico, in second place.
Texas is also America’s “green” energy capital. It produces more solar and wind power than any other state.
Thing is, there’s a BIG problem with these renewable forms of energy…
And it just put up to 26 million people at risk earlier this week.
Today, I’ll share the #1 problem with renewables… and the once-in-a-generation opportunity it’s handing to investors like us.
Men with drills are standing on my neighbor’s roof as I write this…
The couple living next to me is getting solar panels installed.
They’re the fifth house on my road to get them in the past few months. The guys doing the drilling told me they’re so busy, they’ve had to turn down jobs!
Solar energy is now one of the fastest-growing technologies in history. The amount of “sun power” installed around the world is going parabolic:
In the last six months alone, $225 billion was spent rolling out solar energy. My math suggests the only tech deployed at a faster clip was railroads in the 1800s.
This tells me we’re in the early innings of a once-in-a-century disruptive shift. The world is trying to wean itself off “dirty” oil and gas and switch to “clean” renewables.
Environmentalists think they’re forging a green utopia. That once the world runs on solar power, we’ll all sit around singing kumbaya.
But they’re ignoring one BIG problem with renewables.
And that problem is rearing its ugly head in Texas…
Texas is famous for its oil tycoons…
Like everyone’s favorite cowboy-hat-wearing, horse-riding oil baron, J.R. Ewing from the TV show Dallas.
Fun story: Ireland (I’m Irish) has a thing for Texas TV shows.
For years, Dallas was the most-watched show in Ireland. People used to take extended lunch breaks just so they wouldn’t miss it! Walker, Texas Ranger was my favorite show as a kid.
When I think of Texas, I imagine huge, hammer-shaped oil rigs pumping thick, black tar out of the ground like I used to see on TV.
But these days, you’re more likely to see 100-ft. wind turbines and solar farms that stretch for miles.
In fact, Texas generates more electricity from wind and solar than any other state by a long shot:
With all this clean energy production, you’d think Texas’s grid would be as strong as an ox…
Yet, it’s actually at high risk for rolling blackouts.
On Wednesday, grid operators in Texas issued an emergency alert…
Roughly 26 million people were at risk of losing power.
Blackouts are one of those things that don’t seem like a big deal until they happen to you.
Having suffered one recently, I can tell you it’ll ruin your day. My refrigerator went off. I couldn’t cook. And I had no internet… which peeved me more than the kids.
This is the second time in as many weeks that Texas has narrowly avoided rolling blackouts.
Texas’s grid operator, ERCOT, said the issue was due to “low wind and declining solar power generation.”
Here’s the BIG problem I’ve been hinting at: Renewables aren’t reliable.
The wind doesn’t always blow, and the sun doesn’t always shine. Even in America’s sunny southwest, solar only produces energy less than eight hours a day.
But people expect their refrigerator, cooker, and internet to work 24/7/365.
Especially in a state like Texas, which needs air conditioning day and night to combat the scorching summer heat.
It’s clear which way the world is moving…
When you flick on a light switch, you expect it to turn on. But renewables don’t give us this complete reliability.
They need to be paired with “always on” baseload power—like nuclear energy. Otherwise, you should prepare for blackouts.
Despite this major flaw, bureaucrats around the world are pumping trillions of dollars into green energy while declaring holy jihad against oil and gas.
And everyone from the UN… to the US government… to Amazon (AMZN) will spend more money on “green” initiatives than they’ve ever spent on anything over the coming decades.
To be clear, I’m pro-renewables. But I’m against worshiping any technology and blindly glossing over its drawbacks.
Sooner or later, governments will have to confront renewables’ “reliability” problem.
And when they do, they’ll pump billions of dollars into energy storage.
Batteries solve our renewable energy problem.
They allow us to store energy produced by wind and solar when there are no gusts of wind and it’s cloudy outside.
I believe Contemporary Amperex Technology (CATL) will be one of the biggest winners from this trend. It’s the world’s largest battery producer.
In fact, I’m convinced that by 2030, CATL will be one of the top 10 largest companies in the world.
Unfortunately, CATL only trades on Chinese markets… and it’s off-limits to most US investors.
Panasonic Holdings (PCRFY) is a good alternative to CATL. It makes batteries for Tesla’s (TSLA) electric vehicles.
Tesla sold a record number of EVs last quarter, and it recently told Panasonic it would buy as many batteries "as (Panasonic) can make."
It doesn’t matter whether you think renewables are total baloney or Earth’s savior.
What matters is the largest organizations in the world—with (very) deep pockets—are spending trillions of dollars on renewables.
And that creates big opportunities for investors like us, who understand the technology needed to make renewable energy sustainable.