In our previous blog post, Exploring Renewable Energy Asset Opportunities, we took an in-depth look at two of the United States' leading renewable energy sources: solar and wind. Our surface-owning clients are excited to be on the cutting edge of these new technologies which have the potential to add new revenue streams.
This month, we explore three additional asset classes: hydropower, biomass, and geothermal. These renewable energy classes offer additional revenue potential for our clients who own real estate, farmland, ranches, estates, and timberland.
Hydropower Energy
Hydropower, one of the oldest forms of energy dating back thousands of years, harnesses the energy of flowing water to generate electricity. Hydroelectric dams, for example, can rapidly shift from zero to maximum power output, making them ideal for serving as a backup during major disruptions. Despite accounting for only about 6% of total electrical generation in the U.S., hydropower remains an important renewable due to its cost-effectiveness and rapid response time.
Hydropower Royalty Owners
Dam owners, landowners near rivers, and tribal communities with water rights may receive royalty payments from hydropower projects. In Europe, Canada, and parts of the northern United States, new smaller hydroelectric power turbines are coming online to provide power for commercial and residential properties with proximity to rivers and streams. They have the potential to spread to other areas as well and can provide electricity and passive income for landowners.
Biomass Energy
Biomass energy, derived from organic materials like wood, agricultural residues, and algae, represents approximately 5% of the U.S.'s annual energy demand. It is effective in heating homes and powering transportation systems. Biomass energy can be harnessed through direct combustion, burning wood or other biomass materials to produce heat or electricity, and biofuels, such as ethanol (from corn or sugarcane) and biodiesel (from food-grade oils), which power internal combustion engines.
Biomass Royalty Owners
Forest owners, farmers, and biofuel producers may receive royalty payments from biomass energy projects. Farmers with excess crops or produce that cannot be sold in supermarkets can turn that residue into needed electricity. And, with the assistance of an expert negotiator, generate additional revenue from what would otherwise be a waste of resources.
Geothermal Energy
Geothermal energy leverages the Earth’s internal heat, a nearly infinite energy source. By drilling wells into deep underground reservoirs, geothermal power plants can use the steam to power turbines and generate electricity. While geothermal currently contributes approximately 0.4% of the U.S. energy demand, it holds significant promise.
Geothermal Royalty Owners
Owners of both minerals and land may find new revenue opportunities from lease agreements with geothermal power plants. Geothermal is already generating heat and cooling capabilities at the residential level worldwide. It will not be long before technological advances make it possible to generate electricity at many orders of magnitude greater than even the most efficient forms of power generation available today. And, unlike wind or solar, which are weather-dependent, geothermal can use the heat of the Earth’s core 24 hours a day.
The U.S.'s growing energy demand will likely continue to spur the discovery and advancement of renewable energy. As more renewable energy classes come online, our land and mineral management teams at SS&C will continue researching and understanding how to manage these energy sources to serve our clients better. We are excited by technologies’ potential to make the planet and our clients’ balance sheets stronger and more sustainable.
SS&C Innovest provides customized outsourcing solutions and Managed Services. Scores of organizations and individuals across the country, from individuals, family offices, and community banks to national organizations, empower SS&C Innovest to manage these services on behalf of their clients or directly. To learn more about how SS&C Innovest can support your needs, call (800) 727-0605 or email info@sscinc.com.
