Investing in Energy Efficiency and Solar
Take the Money and Run!
It's all about the money.
I don't care how you slice it — when it comes to investing, personal politics are irrelevant.
This has long been how I've approached wealth creation, and it works quite well. Even as I denounced the continued reliance on outdated and economically inferior energy and transportation systems (i.e. the internal combustion engine and tar sands production), I make no apologies for profiting from new opportunities in fossil fuels.
My gains in shale over the past few years alone are reason enough to stick to this strategy.
Of course, when I'm given the opportunity to profit from new developments in cleaner energy, well, that just puts another smile on my face.
And last week, I was grinning like the Cheshire cat. You should be, too.
While I'm no cheerleader for the Obama administration, I'd be lying if I said some of his policies haven't made me rich. From his early initiatives in renewable energy to the tragedy that is Obamacare, if you're ever looking for an easy way to make some cash, just follow the trail of lucre from K Street to the White House.
What can I say? It's easy pickings!
Now last Friday, President Obama announced a new series of commitments and executive actions he plans to use to advance solar deployment and energy efficiency measures. The PR alone reads like a crib sheet for energy investors.
You see, one section in the follow-up press release instantly caught my attention. Essentially, it looks like a loose mission statement for a company that's already been landing fat government contracts for energy efficiency and renewable energy initiatives.
I'll tell you the name of the company in just a moment. But first, let me share with you the section to which I'm referring.
Follow the Money
Here it is:
Drive $2 Billion in Energy Efficiency Investments for Federal Buildings: Today, President Obama is announcing an additional $2 billion goal in federal energy efficiency upgrades to Federal buildings over the next 3 years... The $2 billion investment announced today extends and expands the President’s commitment to energy upgrades of Federal buildings using long-term energy savings to pay for up-front costs, at no net cost to taxpayers. Federal agencies have already committed to a pipeline of nearly $2.7 billion in projects.
Folks, last year I told you that the Obama administration was setting the stage for this kind of thing. Heck, it was in October of 2013 when I commented on the new Energy Secretary's first speech, which included the following statement:
Efficiency is going to be a big focus going forward. I just don't see the solutions to our biggest energy and environmental challenges without a very big demand-side response. That's why it's important to move this way up in our priorities.
Then, in December of 2013, the President ordered the federal government to get 20% of its energy from renewables by 2020. To put that in perspective, the federal government owns and occupies about 500,000 buildings.
There's no doubt this initiative has long been in the making. And last week, we got further confirmation after we learned that another $2 billion has been earmarked for this. I suspect some of this is going to trickle down to Hannon Armstrong Sustainable Capital (NYSE: HASI)
Lucrative Deals Coming
I first told you about Hannon Armstrong last year in my 2014 Alternative Energy Stock Predictions piece. In it, I wrote...
Hannon Armstrong is basically a specialty finance outfit that offers debt and equity financing for modern energy and sustainable infrastructure projects. The company has actually been around for more than 30 years, and since 2000 has provided or arranged nearly $4 billion of financing.
HASI focuses primarily on infrastructure projects that have high credit quality obligors, fully contracted revenue streams, and of course, inherent economic value. Some of these obligors include U.S., federal, state and local governments, high credit quality institutions and utilities.
The company is actually the leading provider of financing for energy efficiency projects for the government.
Hannon Armstrong released Q1 earnings on Monday. Results were pretty much in line with estimates, although the company's pipeline of projects in the second half was impressive enough to placate investors looking for bigger numbers. The stock continued to charge along nicely.
While HASI is not immune to broader market moves, I remain convinced that increased spending on the federal level will result in some very lucrative deals for this financing firm.
To a new way of life and a new generation of wealth...
@JeffSiegel on Twitter
Jeff is the managing editor of Energy and Capital and contributing analyst for the Energy Investor, an independent investment research service focusing primarily on stocks in the oil & gas, modern energy and infrastructure markets. He has been a featured guest on Fox, CNBC, and Bloomberg Asia, and is the author of the best-selling book, Investing in Renewable Energy: Making Money on Green Chip Stocks. For more on Jeff, go to his editor''s page.