It’s not just a question of renewable energy and nuclear – you need to factor energy efficiency in there too, as well as improving the grid.

And as the transformation occurs there will be plenty of opportunities to profit. SunPower (SPWR), the largest U.S. solar-panel maker, recently reported 2Q net profit of $28.6 million, or 34 cents per share, compared with a loss of $5.3 million, or 7 cents per share, in the year-ago period. Definitely one to watch…

Looking forward, the U.S. and the West simply have to buckle down and decide that it’s time to transform the energy systems of the world. We have to move away from burning scarce, expensive and often dirty carbon to using something else.

But burning carbon (coal, oil and natural gas) is what provides 87% of the U.S.’s total energy supply. Nuclear, by the way, is another 10% of total energy. Renewable energy sources are less than 3% of total U.S. energy supplies (and about two-thirds of that is from forest companies burning wood chips to run the mills).

So any transformation from carbon to that elusive “something else” will take a long time and require immense restructuring of the current energy systems that are out there.

As the transformation occurs, there will be great opportunities. But there will be a lot of political and economic pain, as well.

To achieve stable and affordable energy supplies (and, certainly, to lower energy imports), we will need an entire range of options. It will take a portfolio of technologies. These include:

– Conservation and efficiency improvements, everywhere! This is more of a “cultural” than technical issue. I mean, we already know how to insulate houses, but we just don’t do it. And many cars already get 45 miles per gallon, but Americans haven’t been buying them in the past 20 years or so. People just have to believe that conserving energy is one of their highest priorities (as if gasoline at $4.25 per gallon is not doing that already).

– Extremely more efficient power generation and transmission. If we burn carbon, we have to get more energy-efficiency out of it. And the U.S. transmission grid is woefully inadequate. Really, transmission is a disaster waiting to happen. So in some respects, transmission is also an investment opportunity waiting to happen.

– Massive use of “high-value” energy efficiency, from load reduction to combined heat and power systems. For example, you won’t recognize your household electric meter in the future. It’ll be as annoying as your BlackBerry.

– Dramatically increase the diversity of the fuel mix. One example is flexible fuel mixes, moving from gasoline to methanol-ethanol-butanol. Then do what Toyota (NYSE:TM) is already pioneering and put solar panels on the roof of the car to augment the electric system. Your car of the future (if you have one — another story entirely) will have more chips in it than the space shuttle.

A lot of this is already happening, due to price and supply pressures, reliability issues, the rapid maturity of new technologies, new ideas for systems integration and government policies at all levels.

Unfortunately, our energy transformation is not happening fast enough or in a widespread enough manner. But the good news is that the foundation is there. As a nation, we need to “step on the gas,” if you’ll excuse me using such a primitive analogy.

Source: The Great U.S. Energy Transformation