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Trump’s Energy Plan: How to Profit from the Trump Trade

by Marin Katusa, Katusa Research:

Donald Trump wants to make America great again.

His energy plan is full of clever slogans and big claims. It’s clear “The Donald” wants to get his message out to the masses.

Trump says his plan will create jobs and lead to American energy independence. It’s a familiar tune. Many politicians before him have sung it. So how does The Donald’s energy plan break down?

First off, he wants to breathe life back into the coal industry. Long-time readers are familiar with the call I made in 2011 to stay away from coal. I’ve stuck with it for years.

Avoiding coal investments has been the right move. The U.S. coal index is down more than 90% since 2011. Many coal companies have gone bankrupt. Coal mining is an industry in a steady decline for many reasons. There are many better bets to make with your capital. The Donald knows this also.

While promoting coal will win him votes in coal states like West Virginia, the simple fact is that coal is now one of the most expensive power plant fuels in the United States. Promoting coal is flat out “bad business.”

Here is something that Trump totally ignored in his energy plan (Hillary, you can thank me later—as I am sure your strategists will benefit from this also)… The cost of electricity from coal fired plants has doubled since 2009.

The other clean energy alternatives, which are favoured by the masses, actually make much more senseeconomically and environmentally.

The energy industry measures fuel costs with a metric called LCOE. It stands for “Levelized Cost Of Electricity.”

LCOE is a measure of how much it costs to produce one megawatt hour of electricity with a given fuel source. It’s a comprehensive, “all in costs” figure.

You get it by tallying up all the costs related to building and operating a power-generating asset like a coal-fired power plant or a wind farm… and dividing that number by the expected output of the asset over its lifespan.

LCOE is a vital measure these days because it allows for direct comparisons across different types of power plant fuel, like coal, natural gas, and solar energy.

The lower a fuel’s LCOE, the cheaper and more attractive it is for consumers like you and me. As you can see from the chart below, solar power and wind power are much cheaper than coal power.

Trump Energy Plan LCOE

Even states like Texas are seeing a green revolution completely change the price of electricity. That is how you make America great again Donald, by reducing electricity costs. Not increasing them for a few votes from the canaries in the coal mine.

Rather than restrict free trade, use technology (including lower electricity costs) and undercut the emerging market nations who have cheaper labour. But I digress. Back to Trump’s energy plan.

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3 comments to Trump’s Energy Plan: How to Profit from the Trump Trade

  • mark

    Sorry folks… this assessment of cost/ value is in-accurate. After working with fossil and alt energy production, the analysis is flawed. My first issue is subsidy, it utterly screws over all life cycle cost. The other factor was “climate change think tanks and NGO’s”. Basically, as useless as the ethanol mandate… Thanks Gore.

    The first failure in all this analysis is distribution infrastructure and demand response. Plow through the DOE energy data book, through a couple of publishing’s and you will know exactly what I mean. BTU’s is BTU’s.

    Yup, from an investors point from `09 to now it was a bad move, and there is a clear bias against coal by the author. Pickens actually had a great start with his plan.

    If you want to know how to invest and you trust a politician to give you a solution my argument may be mute. If you actually want to find a solution and fix shit, you need to look at localized generation / distribution, CO-generation, and reduction in regulatory constraints.( Case in point a 3 megawatt hydro plant that was not recommissioned with private money due to a state employee who didn’t understand a covenant and deed restriction process )

    Smaller local utilities that existed 30 or so years ago just worked better. Less hold fire for light demand, and faster response for high demand. Less distribution loss. More Efficient = Lower overall cost.


    • glitter 1

      Bravo,you are correct.

      I worked 40 years for an electric utility,31 in nuclear generation.
      Deregulation is a disaster.It doesn’t add reliability,it reduces it.It doesn’t save the rate payer any money either.All it does is raise the salaries/bonuses/stock options of the Utility Officers.

      • mark

        Thanks. I would just like to see things get fixed for the future.

        Cant remember if it was `03 or `06 when the cascading failure that started with First Energy equipment in Wisconsin was stopped by the guys at the PMJ, before the whole eastern seaboard went dark, but my conversations with both parties engineers was enlightening to say the least.

        Maybe a good 3 day outage would get people interested in the process/systems we are aware of but even after storm outages, once the lights come on they forget what it takes. I know first hand your remarks on deregulation are true.

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