Editor's note: This is the first in a series about new-energy alternatives. This week RealMoney columnists Jim Seymour and Christopher Edmonds will explore the options and let you know which areas investors might find promising.

On the Wings of Power

Early Positions in Fuel-Cell Makers May Be Cheap, but Risky

The Wind -- and Water -- Beneath Power's Wings

Fuel Cells' Technology, Economics Shape Coming Market

Rushing to Get Off the Grid -- and Make Some Money

One of the biggest stories in investing over the next decade -- and in restructuring the U.S. economy, and in technology, and in personal finances -- is going to be the rush to "get off the grid" in this country. That is, to end, or at least powerfully reduce, individual businesses' and homeowners' reliance on their connection to the local electric company's power grid. And thus, to the associated regional grid, and to the big Eastern and Western metagrids.

This will be driven by economics and technology. Some argue that the present situation in California is an accident of time and place, that California brought on its problems through misguided efforts at deregulation combined with overeager not-in-my-back-yard environmentalism and an ugly political version of Russian roulette. But in fact, many of the programs that have become visible in California last year and this year exist all over the country.

No area has any substantial excess of power. No area has done much to reduce consumption, or even to flatten its growth materially. No area has been truly far-seeing in terms of building new generating capacity for the decade ahead. Worse, we are only now seeing just how overburdened and stressed the distribution grid is -- not just our ability to generate power, but to send it where it's needed.

We are truly in this pot together.

Meanwhile, demand grows, on both the residential and commercial sides. And demand for reliability -- something like 99.9% uptime, if not the probably unrealizable Holy Grail of five-nines' (99.999%) uptime -- grows as well. Businesses need stable, nonfluctuating power; consumers want and expect it.

At the same time, technology is getting ready to deliver workable answers for both groups. After three decades of research, of vast amounts of capital, of hype, promises and endless failures to deliver on those promises, the nascent fuel-cell industry is getting close to delivering on-site power generation in capacities, and at capital and operating costs, which finally make sense.

But just how close? How cheap? And how safe?

Beyond the Grid: Unitized Power

The California crisis is shining a bright spotlight on alternatives to conventional power from the local grid, produced by conventional means -- coal, gas, nuclear. Fuel cells are the brightest hope among the alternatives, for they not only promise electricity generated through other fuels, but the unitization of generation: production of electricity onsite, at millions of locations, where it is needed, with a rarely used connection to the local grid only for periods of local maintenance and repair.

That notion has the power to turn our traditional model of electric power sales in the U.S. upside down. Rather than connecting many residences and businesses to central generation facilities through complex, expensive, fabulously wasteful and unreliable distribution networks, fuel cells will allow us to nearly abandon the central-grid model, producing electricity at many points, where it is used.

In the end, that's a far bigger change, and a huge improvement, over the notion of quickly building more and larger generation stations, and pumping more juice over an already overloaded grid. Fuel cells will be important, without doubt, in the future of U.S. power.

But when?

No one I know who is well-informed on fuel cells doubts that in the relatively near-term future, fuel cells will deliver viable alternatives to staying on the grid. There's nothing truly new here: Fuel cells provided onboard power for NASA's Gemini and Apollo missions in the 1960s. But there is so much uncertainty, and there has been so much hype and vainglorious bragging in the past, especially the past couple of years, about the paths to commercialization of fuel-cell power production, that most responsible people have avoided making concrete predictions.

Similarly, although I get a steady stream of inquiries from RealMoney.com and TheStreet.com readers about fuel-cell stocks -- some genuine, some bulletin board-inspired campaigns to dragoon me onboard as a fuel-cell true believer -- I have avoided the area, because I don't want to lead lambs to slaughter. Billions have been lost in misguided fuel-cell investments -- high-profile/high-promotion player Plug Power (PLUG:Nasdaq - news - boards) has plunged from a year-ago price of $150 to today's $15 and change -- and it has, in my view, simply been too early to consider pouring money into these betting-on-the-come names.

Rich Markets

Providing electricity to U.S. homes and businesses is a $225 billion-dollar-a-year market. Hidden within that polyglot marketplace is a market probably already worth $40 billion to $50 billion a year for what we might call premium-quality power -- clean, stable, uninterrupted, spike-and-surge and brownout-free power -- for technology industries.

Nab just a tenth of that overall market for fuel cells and you have a huge new technology-driven market, with customers lining up at the door. But fuel cells will do a lot better than that: They promise, in the first wave, to absorb a huge chunk of that premium-power market, where the reliability of your own onsite "clean" power generation is worth paying a commensurately premium price.

So it's not too early to start thinking about fuel-cell investments, and more importantly, it's not too early to start studying the technological and economic issues surrounding the commercialization and wider use of fuel cells. So this week, I'm going to focus on the realities, problems and promise of fuel cells.

You simply cannot jump to discussing fuel-cell adoption rates, and investment opportunities, without first understanding both the technology and the economics surrounding this potentially seismic shift, because they will control both the rate of adoption and the money to be made here.

On Wednesday, I'll look at the competing technologies, their readiness for market, and the economic issues that will speed or retard their movement to wider markets.

On Thursday, I'll look at the investability of fuel cells today through the major players, including Plug Power, Ballard (BLDP:Nasdaq - news - boards), United Technologies' (UTX:NYSE - news - boards) International Fuel Cells division, and more. I'm willing to bet many RealMoney.com and TheStreet.com readers will be using fuel-cell-generated power a decade hence, and that many will have made a lot of money from fuel-cell investments by then as well. What about a year from now? Two years from now?