Fund managers Tim Guinness, Edward Guinness and Matthew Page discuss the Guinness Atkinson Alternative Energy Fund in a question and answer forum covering topics from the alternative energy market to management style and methodology for selecting stocks and managing the portfolio.
...Q. Edward , at the moment most forms of alternative energy are not economically viable without government incentives. How long will it be until alternative energy can stand on its own feet and what is going to get us there?
A. Some forms of alternative energy are economical now. Electricity production from hydro and geothermal sources has been tapped for many years and the technology is fairly mature. Wind power does benefit from subsidies but in specific locations with strong and predictable winds can be economic now. Subsidies for wind projects may not be necessary in 3 - 5 years time. The solar industry is dependent on subsidies and will require subsidies for longer but some industry analysts predict electricity from solar will be at parity with the grid in 5 - 7 years time in remoter locations with good isolation. The subsidies in place allow the industry to grow and technologies to be developed and mature and drive costs down. In predicting parity of course the price level for oil and gas has to be factored in. The higher conventional energy prices rise the sooner parity can be achieved.
Q. Matthew, what percentage of world energy production is from alternative energy and can alternative energy overtake more conventional energy sources?
A. If you exclude hydro, alternative energy makes up around 2.5% of world electricity production capacity of which wind is about 1% and solar 0.1% and various forms of biomass and geothermal make up most of the balance. In the medium term (~25 years) we could see wind and solar each making up 15% and 5% respectively of world electricity production increases of 15X and 50X respectively. Eventually we believe cheap fossil fuels will run out and alternative energy sources should be cheaper sources of electricity and should therefore become the more conventional source of energy....MORE