Dear Energy Daily reader:

I often get e-mails from investors who want to know which renewable energy sectors are still in early stages of development. And I'm not talking about photovoltaic technology or ethanol processing. I'm talking about stuff that's so far from fruition - you'd be hard-pressed to find even one publicly-traded company in the mix. Or at least one that's worth anything.

Of course, it wasn't long ago when the only off-grid solar installations I saw were being manufactured in a rented warehouse space in California.

Today, there's an off-grid manufacturer that's earned itself a solid spot on my Green Chip Portfolio.

My point is this - if you want first crack at the new stuff, you have to at least make an effort to educate yourself before the jokers on Wall Street send their interns out on research expeditions.

So when I'm asked which early-stage renewable energy sectors are worth a once-over, though there are definitely more than one...my first 'wink and a nudge' goes to marine energy.

While marine energy might not be front-page news, there are a number of active test sites producing impressive results right now.

And this is where it all starts folks.

Tidal Highlands

The marine energy testing facility that's received the most attention recently is the European Marine Energy Center.

Back in 2003, the Forum for Renewable Energy Development in Scotland established the Marine Energy Group (MEG) to assess the potential for developing wave and tidal energy in Scotland, and to produce an action plan for developing that potential. A year later, industry experts found that the potential exists to install over one GW of wave and tidal capacity in Scottish waters.

The MEG now believes that by 2020, Scotland could see 1,300 Megawatts of marine energy capacity installed, increasing at a rate of 100 MW per year.

But the far-reaching benefits of this marine energy momentum go beyond just renewable energy.

You see, Scotland is now leading the world in research, development and certification of marine energy devices. And as the technology becomes more efficient and cheaper to produce, the Scottish-based marine energy companies conducting the research today will be the ones supplying the major international markets tomorrow.

At the end of 2003, the European Energy Center was established to stimulate and accelerate the development of marine power devices through the operation of a testing center in Orkney. But it wasn't long after that when the center became home to some of the most technologically-advanced marine energy systems in the world.

So the question is - who's developing this stuff. Because clearly, these are the companies that will lead the pack in the coming years.

Unfortunately for investors, there isn't a conga line of publicly-traded marine energy companies waving golden carrots outside Wall Street. But mark my words, it won't be much longer.

Now that energy companies are scrambling to find the next 'big thing' in renewables, it won't take much convincing once the Orkney testing facility starts pumping out the same kinds of numbers that two years ago starting bringing investors to the solar markets in droves.

You can read more about marine energy technology in my free archives section at www.greenchipstocks.com.


- Jeff Siegel

"Energy stocks... The only way a human is going to make any money."

-- Matt Simmons, Peak Oil's first and most vocal proponent,
and founder of the country's last pure play energy investment banking firm.

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