With all the oil-related headlines we're exposed to each day, you might
assume that "black gold," along with other fossil fuels like coal
and natural gas, matter to humanity's future. You'd be wrong. Like Keynesian
economics and fiat currencies, fossil fuels are near the end of their run.
From here on out, solar is the story.
The following chart shows the decline in the cost of solar power and the
resulting surge in solar installations through 2015. The relationship is
clear: as prices plunge demand surges -- in both cases exponentially.
Pretty impressive, right? But nothing compared to what happened in 2016:
And here's one more chart showing how China -- that insanely polluted coal
burning urban dystopia -- is leading the way on solar:
This is shocking to people who A) are dependent on fossil fuels through
work or investing or B) don't understand the way exponential growth can
change a market in an eye blink. So let's hear from the father of exponential
analysis, Google's director of engineering Ray Kurzweil:
Ray
Kurzweil: Here's Why Solar Will Dominate Energy Within 12 Years
(Fortune) - Ray Kurzweil has made a bold prediction about the future of
solar energy, saying in remarks at a recent medical technology conference
that it could become the dominant force in energy production in a little over
a decade. That may be tough to swallow, given that solar currently only
supplies around 2% of global energy -- but Kurzweil's predictions have been
overwhelmingly correct over the last two decades, so he's worth listening to.
Kurzweil's basic point, as reported by Solar Power World, was that while
solar is still tiny, it has begun to reliably double its market share every
two years -- today's 2% share is up from just 0.5% in 2012.
Many analysts extend growth linearly from that sort of pattern, concluding
that we'll see 0.5% annual growth in solar for the foreseeable future,
reaching just 12% solar share in 20 years. But linear analysis ignores what
Kurzweil calls the Law of Accelerating Returns -- that as new technologies get
smaller and cheaper, their growth becomes exponential.
So instead of looking at year over year growth in percentage terms,
Kurzweil says we should look at the rate of growth--the fact that solar
market share is doubling every two years. If the current 2% share doubles
every two years, solar should have a 100% share of the market in 12 years.
Okay, technically, that would suggest solar would have a 128% share of the
market in 12 years. Some might love that -- but it highlights the fact that
Kurzweil's prediction is only partially grounded in the real world. Even 100%
share is extremely unlikely -- fossil fuel giants are definitely not going
down without a fight.
But even those giants ignore Kurzweil at their own peril. He predicted the
mobile Internet, cloud computing, and wearable tech nearly 20 years ago --
all on the basis of the same principle of accelerating returns that's behind
his solar call.
Why is something like this appearing on a gloom-and-doom blog? Because one
of the basic tenets of sound-money investing is that during periods in which
society is destroying its fiat currencies, real assets will tend to
outperform financial assets. So swap your government bonds (and certainly
your bank stocks!) for farmland, well-chosen rental houses, gold, silver, and
energy assets.
For the past century that last category was dominated by oil wells, coal
mines and the stocks of the companies that owned them. But if the above
trends continue - and it's a near certainty that they will, given the torrent
of advances in solar panels and batteries pouring out of labs around the
world - then "energy assets" of the future will likely be solar and
wind farms, advanced battery makers and the like. So the thesis remains the
same while technology causes the names to change.
