Energy Stocks Could Power Your Portfolio

We have fond memories of growing up in the suburbs of Melbourne.

Those days brought a real sense of freedom. We could spend our days hooning around on our bicycle — and if the light had fresh batteries, we could keep hooning until after dark.

That wasn’t always possible, since the light chewed through batteries at a rate of knots.

That’s why when we acquired a simple dynamo for the front wheel of our bike, the thing fascinated us.

Flick the device onto the tyre, and voilà — free light. Beautiful.

Sure, we had to pedal a little harder to drive the bike lights.

But we’ve often wondered why we don’t use more of this free sort of energy.

Back then, we remember thinking — if a dynamo can give us free power, what’s stopping us from scaling up the same simple idea to power a car? Or a factory?

Carmakers have brought part of that dream to fruition. Today’s focus on fuel economy means vehicles waste less movement energy than ever before.

But one company is taking this idea to a whole new level. Personal transport is just the beginning…

Two weeks ago, a young CEO addressed the All-Energy Australia conference at Melbourne’s Convention and Exhibition Centre.

He spoke boldly of changing the way the world powers its cities.

Idealistic men in their twenties are a dime a dozen. But Laurence Kemball-Cook is different.

Laurence has spent the past five years developing and proving up tech that seeks to harness the same energy that powered our bike light — but this time, it’s on a grand scale.

Imagine if every step you took generated electricity.

Laurence’s company, Pavegen — short for ‘pavement generator’ — develops power-harvesting tiles. These tiles capture the kinetic energy of your footsteps.

Through a carefully crafted set of cogs and widgets, the tiles turn that kinetic energy into electricity. The tiles can then feed that energy to the grid to power streetlights, shopping centres and more.

Pavegen has demonstrated its potential by laying its tiles under the astroturf of a new soccer field in Rio de Janeiro. You can see the field below.


Source: Fast Company
Click to enlarge

We’re told Brazilian soccer players run more than 10 kilometres per game. Having witnessed a few games in Rio late last decade, we’re inclined to believe that stat.

Notice how the photo above is brightly lit in the dark of night? The floodlights are running on people power. No footstep goes to waste.

Laurence explains,

‘On a fully charged battery, the technology can power lights and the surrounding favela for up to 10 hours. I believe this will make a massive difference to a place that so often goes without electricity — they can now become a core part of their own energy generation.’

When you think about the number of footsteps that people take every second in a place like Tokyo, you can get a sense of how exciting Pavegen’s prospects could become. The potential for Pavegen to power smart cities is sky-high.

We love this kind of idea.

It’s simple enough for us to kick ourselves for not thinking it up first — and it’s tremendously scalable.

Simple, scalable ideas have powered some of the most explosive small-cap growth stories the markets have ever seen.

We’re always on the lookout for stocks like that for Australian Small-Cap Investigator.

What’s more, we’re always hunting for companies shaking up the energy business.

The idea that renewable energy will grow in importance has become a mainstream view.

There’s just one problem.

You don’t always get the energy exactly when you need it. And even if you do, the energy intensity is wildly variable.

That’s a major roadblock on the path to commercial success.

Hope springs eternal among CEOs of emerging companies. Whether it’s Pavegen, the geothermal energy company I showed you last week, Geodynamics Ltd [ASX:GDY], or any of the thousands of hopeful energy minnows out there…the founders can all see their products changing the world and making shareholders filthy rich.

Some may succeed. Many will not.

The way we see things, renewable energy will become increasingly relevant over the next few years.

But anyone who thinks renewables will knock fossil fuels off the perch in our lifetime is kidding himself or herself.

Money doesn’t make the world go round. Energy does. Specifically, the energy we get from oil, gas and coal.

The recent downdraft in the crude oil price has led many investors to ignore the sector.

They think there are no big gains on the table in oil stocks.

These punters must be out of their minds. That’s how wrong they are.

The likes of Pavegen and Geodynamics may become profitable one day. But as an investor, you have to live in reality.

That means small-cap oil and gas stocks — although risky — offer some of the richest potential rewards on the market today. Go here to find out how to play them.

Cheers,

Tim Dohrmann+
Editor, Money Morning

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