Investing in Clean Energy

Written By Nick Hodge

Posted March 6, 2009

We’ve seen it before.

A newsletter publishes an editorial completely discounting the clean energy industry. Now it’s perfectly fine to disagree… whether it’s philosophically, fundamentally, politically, etc. 

But if you’re gonna rip renewables, we only ask that you do your homework.

Here’s what I mean. . .

One letter—the furthest thing from an energy expert—ran an article the other day entitled, "Why Clean Energy Doesn’t Make Any Sense."

As you can imagine, their rationale was more than laughable, and their logic more than flawed.

They used the PowerShares Wilderhill Clean Energy Portfolio (NYSE: PBW) to represent the clean energy industry, calling it, "one of the worst-performing assets in the world right now."

Here’s the chart they used to give ethos to their massive lie:

clean energy etf 1

Indeed, things do look bad for this troubled clean energy ETF. But simply putting up a chart of a worst-in-breed stock is hardly enough to discount the entire industry.

I call that lazy, ignorant and misguided. Here’s what they left out…

Cleantech Does Make Sense

Here’s that same chart, only this time PBW is compared with stalwart representatives from other industries like Alcoa (NYSE: AA), General Motors (NYSE: GM), GE (NYSE: GE), Bank of America (NYSE: BAC), and Citi (NYSE: C):

clean energy etf with other stalwarts

PBW, and particularly clean energy, doesn’t look so bad now, does it? The cleantech ETF has outperformed blue chips in the banking, automotive, metals, and technology industries over the past two years.

The only thing that doesn’t make any sense is a newsletter using a chart of PBW to condemn the clean energy market when many other sectors are, and have been, in a much worse position.

Take a look at that same chart once more. Only this time, I’ll add First Solar (NASDAQ: FSLR), a solar energy leader:

clean energy etf and first solar

First Solar, and many other cleantech stocks, have outperformed several of the renowned Dow members.

So here’s a little lesson on the cleantech reality, for investors and newsletter writers that don’t know any better: 

Three Reasons Cleantech Will Make You Money

Reason #1: Favorable Legislation

Other newsletters seem to think that "coal and crude oil are the cheapest thing we’ve got." To think that is to be completely blind to the current legislative environment.

The President has laid out the goal of doubling our use of renewable energy in the next three years. And he’s committed to laying 3,000 miles of new power lines to do it. All those activities create profitable market opportunities.

The recently-passed stimulus has a $47 billion cleantech portion that creates tax-based incentives that will lure additional capital back to these markets and renew robust demand.

Congressional leaders have also indicated they intend to pass new energy legislation before the Memorial Day break. That legislation is slated to contain two provisions that will change the energy market as we know it.

The first, cap-and-trade, will make it much more expensive to generate electricity with coal—and make renewables cost-competitive in most markets. The budget currently before Congress allocates $15 billion in revenue per year from such a scheme. Part of that revenue would go to taxpayers to offset the rising cost of energy and part would go to funding new renewable energy projects.

I don’t know where you’d get the idea that coal is the "cheapest thing we’ve got." Wind and solar are now competitive in many areas. And Obama has been quoted saying, "if somebody wants to build a coal plant, they can – it’s just that it will bankrupt them, because they are going to be charged a huge sum for all that greenhouse gas that’s being emitted." Doesn’t sound too cheap to me.

The second coming energy provision, a national renewable portfolio standard (RPS), would require utilities to generate a certain percentage of their electricity—probably 20% by 2021—from renewable resources. That would create guaranteed minimum demand for wind, solar, and geothermal at much higher level than presently seen—driving up stock prices and your bottom line in the process.

Reason #2: The Non-U.S. Market

Several companies (most of which my Alternative Energy Speculator readers are well-positioned in) have indicated that credit markets are starting to thaw in Europe. The German state development bank (Germany has the largest solar market in the world) KfW has indicated that financing is once again flowing for high quality projects, and new deals will be complete in time for installation by year’s end.

Strong solar growth is also slated for Mediterranean countries, which boast some of the highest retail electricity rates in the world. The Italian solar market alone is slated to grow over 3,100% between now and 2015, from 190 MW to 6.2 GW.

As a whole, the global solar market is expected to grow 374% in the same time, from 15.22 GW to 72.17 GW.

And the global wind market is no different. Europe and Asia account for 76.4% of total installations to date, with 54.8% and 21.6%, respectively. Globally, the wind industry will grow 143% by 2015, from 121 GW to 294.2 GW.

The companies providing those solar panels and wind turbines are slated for equally impressive growth—much to the contrary of other observers. And you can harness that growth for your portfolio.

Reason #3: The Alternative Energy Speculator

Of course you can’t make money in clean energy if you’re constantly misled by other newsletters that don’t know enough about it to make profitable recommendations. (As such, they just dismiss it entirely.)

Sure, times are tough. But there’s still money to be made when you’re being guided by someone who knows the nuances of a specific industry—especially one that’s in for such staggering future growth.

Already this year, readers of the Alternative Energy Speculator have closed out five winning plays for total winnings of 121.85%, simply by following my advice on how to play the clean energy market.

That’s an average gain of over 24% per closed position. . . all while the market tanked to its lowest levels in more than a decade. And we’re ready to cash out on a handful of other plays at any moment.

Indeed, clean energy does make sense—both as an energy source and an investment vehicle—as long as you understand the complex associated industries and are willing to follow expert advice, not the ramblings of energy neophytes.

If you’re ready to stop reading rhetoric in lieu of actually making money, the time is now to join the Alternative Energy Speculator.

You’ll not only get my latest report on how to profit from the billions afforded cleantech in the stimulus, but you’ll also be privy to numerous other reports outlining how to profit from specific industries like solar and wind.

Plus, you’ll get access to my interactive portfolio, which has detailed investment reports on each company, along with "buy in" prices and price targets.

And I’ll send you instant alerts whenever it’s time to buy or sell a stock or there is important industry news.

In addition, you’ll also get a copy of the new book, Investing in Renewable Energy: Making Money on Green Chip stocks, which I co-authored with energy experts Jeff Siegel and Chris Nelder.

Wouldn’t you like clean energy advice from someone that "wrote the book on it" rather than from other newsletters that make shots in the dark—as we’ve just seen—in an attempt to get it right?

Join me today. That 121% so far this year is only an appetizer, there are many more winners to come.

Call it like you see it,

nick hodge


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