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Unveiling Smart Grid Companies

This Is Not a Science Fair Project

Written by Nick Hodge
Posted April 24, 2009

At energy and climate bill hearings this week, Rep. Jay Inslee was quoted as saying, "the bad news is that Thomas Edison would actually recognize our current grid system."

Time Magazine this week called our grid "a dinosaur, a leaky, money-wasting, carbon-dioxide-spewing system that remains shockingly vulnerable to accidents and terrorist attacks."

What this means is that improving the grid is the low-hanging fruit when it comes to cleaning up our energy act. Even before switching energy sources, we can reduce emissions and improve efficiency and transmission by giving a century-old system a 21st century update.

It's called the smart grid. And in addition to alleviating all costly energy bottlenecks, blackouts, and the inability to communicate in real time, the smart grid will also make smart investors lots of easy profits.

(For background info on the smart grid, click here and here.)

Blue Chips Seek Billions of Smart Dollars

The Obama Administration and the Department of Energy recently announced $4 billion in smart grid stimulus funding. The announcement was made by VP Joe Biden at an ABB Ltd (NYSE: ABB) transformer plant in Missouri.

That should be a clear indication of where to begin looking for smart grid profits. I had Alternative Energy Speculator readers in ABB back in October. It's made a quiet 50% run in the past six months:

ABB (NYSE: ABB)

That 50% gain came as smart grid stimulus measures were being discussed by a new President and Congress. The stock gains when the billions of dollars start flowing will be much bigger — doubles and triples are certainly in the cards.

I mean, you'd have to be living in a bunker not to recognize the opportunity here.

Even the bluest of blue chips are going after this sector.

Haven't you seen the GE (NYSE: GE) commercials with The Scarecrow crowing about how wonderful the smart grid will be? Or the IBM (NYSE: IBM) ads that have ordinary people talking about how smart everything should be? Or the Exxon (NYSE: XOM) series in which engineers talk about changing the energy picture with advanced technologies?

Believe me, Exxon isn't going all Al Gore on us. . . they simply see the other green here.

GE executives have said they expect the smart grid electricity monitoring business to grow to represent between $3 billion and $4 billion in annual revenue over the next three to four years.

Before the company's annual shareholder meeting, Vice Chairman John Krenicki said of the smart grid, "It's going to be a lot like wind. It's going to take off quickly."

Quickly, indeed. . .

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Projects & Profits Have Already Begun

Large smart grid projects have been in the works for about a year now. I reported on Xcel's (NYSE: XEL) $100 million plan to make Boulder the first smart grid city last June.

More recently, several companies and the City of Miami stepped up to launch a $200 million smart grid project that will connect every home and business in Miami-Dade County by 2011.

Heading up the project is Florida Power & Light (NYSE: FPL), along with GE and Cisco. Smart grid start-up Silver Spring Networks will provide software support.

If successful, FPL plans to invest another $500 million to expand the program to all of its 4.5 million customers.

According to GE CEO Jeffrey Immelt, "This is not a science-fair project. This is commercial technology that shows the smart grid is real."

The profits are real, too.

Here's a chart of three specialized companies that come to mind when the term smart grid is mentioned:

Smart Grid Companies 1

Folks, this is all before the stimulus billions have been doled out. And readers of Alternative Energy Speculator took profits from two of them.

But this is just the beginning.

According to Jeffrey Immelt, "This [industry] is going to be the biggest investment for the first half of this century."

As that plays out, the 100%+ gains like those above will be less than nominal. You'll want to establish your position before the sector really takes off.

Call it like you see it,

nick hodge

Nick

P.S. I mentioned that readers of Alternative Energy Speculator have already closed numerous winning smart grid plays. Those are only a few of the gifts the stimulus brought savvy investors. Billions more are being doled out to all sectors of cleantech. . . and we're profiting from that, too. Click here to see all the investment opportunities afforded us from Uncle Sam's $787 billion hand-out.

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