IBM and Your Changing Energy World

NEW YORK (TheStreet) -- If I had a technology that could cut the cost of solar energy production to as little as 10 cents per kilowatt-hour (KwH), I'd be dropping everything to get it to market.

But I'm not IBM (IBM).

IBM announced last week it will spend a $2.4 million grant from Switzerland studying a solar energy technology called High Concentration PhotoVoltaic Thermal (HCPVT). 

HCPVT combines the concentrated solar energy system used in the newly opened Ivanpah plant in California, where mirrors direct sunlight to a central point and produce heat, with conventional photovoltaics, the technology that turns sunlight directly into electricity on a rooftop near you.

HCPVT uses a parabolic dish of mirror facets and a sun tracking system to concentrate power on a collection of liquid-cooled photovoltaic chips. The system collects electricity through the chips and heat through the chip-cooling system. IBM's press release says it can produce energy for less than 10 cents per KwH.

That's the same price as coal. The efficiency is nearly twice that of a recently-announced solar cell produced by the Fraunhofer Institute

How excited is IBM by this? Not much. A spokesman wrote that IBM hopes to partner with other companies to make the chips, partner with construction firms to develop the systems, but that "compared with the key IBM growth areas of Cloud, Big Data, Analytics, Security and Mobile, this technology is not at the same scale."

I don't think the company is being disingenuous or that it is wrong about the potential of this new system in relation to other corporate efforts. I think the rest of us are missing the point.

Renewable technology is marching forward at warp speed.

Solar panels erected in 2010 may become obsolete long before their useful life is over. Wind technology is moving from simple, large windmill structures to more complex systems that are far more efficient. Biofuel start-ups are having a tough time keeping up

Natural gas prices may remain at their present $4/mcf levels for 20 years, according to a recent IHS study, as an abundance of gas in North America powers the economy forward.

Demand, meanwhile, is not growing as fast as it once did. U.S. electricity demand is rising less than 1% per year, according to the Energy Information Agency, thanks to the cheapest form of renewable energy -- efficiency. Insulation, light emitting diodes (LEDs), more efficient electric motors in appliances and industry are all playing their part.

In other words, we are approaching an era of energy abundance, with supplies overtaking demand on several fronts, all at once. Anyone who is building a portfolio based on an assumption of high, rising energy prices, in my view, is making a mistake.

In this new energy world, the costs for all energy production are going to matter. The highest-cost supplies are going to be priced out of the market.

I don't think many portfolios are prepared for this. If natural gas remains at $4 per mcf, why should oil remain over $100 per barrel indefinitely? If renewable energy costs are continuing to decline, doesn't that mean oil companies have to look at the costs of development, not just at their proven reserves but the price of extraction?

What's happening in the energy market is not a secret to IBM. It's not a secret to the Department of Energy. Don't let it be a secret to you.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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