I forget where I first came across this idea - probably in some article on industrial design - but the basic principle is that the end of an era is marked by Giants.

The Egyptian pyramids and the Roman Empire are historic examples, but the concept is most applicable to today.

Consider the steam locomotive. From tiny tea kettles pulling mining carts to the Union Pacific Big Boy, steam engines increased in size, weight and power until the practical limit was reached.

The solution was found in diesel engines, which started life in the 1000 HP range, and following the same principle, grew in size and power until today you have 4000 HP units in multiple sets pulling 100+ car trains. Train length and available trackage then sets a new limit, and you either have to build new capacity or find a different approach.

The same phenomena can be seen in shipping, where we have huge container ships and giant oil tankers in place of the older, much smaller general cargo ships. As size grows, the number of ports and canals that can handle these vessels shrinks, until once again you reach the limit of growth.

Put a Ford Model-T next to a present day SUV, or a DC-6 alongside a 747. Same thing.

Power generation has followed the same path, from small coal fired plants, to massive dams and giant nuclear complexes driving sprawling distribution grids. Clearly we're reaching the end of the cycle - Giants now dominate this space and a new approach is required.

We have a model for this already in the Internet, distributed redundancy being the key concept. Instead of one large power plant servicing an entire region, we need multiple smaller, more widely distributed plants that can limit and offset the kind of disaster we've seen in Fukushima.

The age of giants is almost over for this industry, but the path to a better approach is clear from the study of industrial history. We have the technology to do this - all that's lacking is the will. I personally think we'll find it, and that's the area where my investment activity will be focused in the years ahead. Wind, solar, geothermal AND nuclear. All of these will come into play as the theme for the next bull market.

ebear