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Investing in Wind Energy

Written By Nick Hodge

Posted May 5, 2008

"Green doesn’t always mean more expensive."

That’s what Chief Executive Mark Levin has to say about the matter.

He runs a company called Home Office Solutions Group (HOSG), which sells furniture to small businesses.

The company has reported its green sales are ‘going strong’, despite an overall decline in average purchases being attributed to what some would call a ‘rough patch’ in the economy.

In fact, one of HOSG’s most popular items is the Think chair, manufactured by Steelcase Inc. (NYSE: SCS).

The chair is made with as much as 37% recycled materials and can be sold at retail for $569. Steelcase’s Leap chair—which is very similar, just not green—sells for $250 more.

So you see, green doesn’t always cost more.

But recycled materials aren’t the only thing making the Think chair green.

Steelcase also has committed to buy all the renewable energy credits generated by a Texas wind farm in an effort to reduce its carbon footprint.

The wind farm from which Steelcase will purchase its electricity was built by a Deere & Co. (NYSE: DE) subsidiary.

All of a sudden we have this green menage from a group of companies that aren’t generally thought of as pioneers in the field. And there are plenty of others consdering investing in wind energy as well.

The Growing Use of Wind Energy

That’s because companies from multiple sectors are seeing an accumulation of reasons to go green.

For starters, some companies are going green to take advantage of tax credits spawned by legislation on The Hill. Some of those tax credits expire at the end of the year, and companies are hastily implementing projects to ensure they get their breaks.

Even if such projects require a little more up front capital, the long-term benefits are being realized through higher efficiency and lower energy usage.

Plus, more stringent energy legislation is on the way. So some companies—even those formerly opposed to such rules—are taking action to stay ahead of the energy policies they know are in the pipeline.

I’m talking, of course, about laws requiring less emission of greenhouse gases or the increased use of renewables, or both.

Most recently, we saw Ohio enact legislation requiring 12.5% of its electricity to be generated renewably by 2025.

Including Ohio, 29 states have now enacted some sort of renewable portfolio standard (RPS). That’s 58% for those keeping count.

Right now, wind energy is the renewable resource of choice for generating utility-scale power.

In 2007, wind generated revenues soared above $30 billion for the first time. That number is expected to grow 177% in the next ten years to $83.4 billion.

Just last year the U.S added 5,244 MW of new wind capacity—a 45% expansion. Total installed wind capacity now stands at 16,819 MW, with another 3,626 under construction.

Wind Energy Investing: The Foreign Winds are Blowing

What most don’t know is that the domestic wind energy market is currently being dominated by overseas players.

With the exception of General Electric, foreign competitors—mostly from Europe—have taken a strong position as wind market leaders.

Because of their early aggression in tackling environmental issues, it’s no secret that European firms have led the way in many renewable technologies. Their cavalierness has led Germany to be the cradle of the solar revolution, the Scots to take the lead on wave power and a Portuguese/Spanish/Danish tandem to lead on wind.

Last year, Energias de Portugal—the national utility—bought Horizon Wind Energy from Goldman Sachs for $2.15 billion—the highest price ever paid for a wind-only company.

For its part, Spanish company Acciona acquired rights to about 1,300 MW of wind farms in the Midwest.

But the U.S wind market isn’t the only one that’s booming. Europe still has billions to claim as well.

In its most recent report, the European Wind Energy Association (EWEA) said that wind became the leader in terms of new installed energy capacity.

Through 2020, wind is expected to account for 34% of new generating capacity. It’ll account for 46% from 2020-2030.

And the goal of attaining 12-14% of Europe’s power from wind by 2020 is well within reach.

By 2020, it’s expected that 180 gigawatts (GW) of electricity will be supplied by the wind—enough for about 107 million European households.

For that to happen, wind-based capacity needs to increase 9.5 GW per year through 2020. That shouldn’t be too hard, considering the EU installed 8.5 gigawatts worth of wind capacity last year.

In addition to the companies mentioned above, Green Chip International has its investment portfolio primed to take advantage of all growth in the wind industry—no matter where it happens.

The portfolio includes a global clean energy ETF and three foreign-based companies with significant wind exposure, amons several others. All are set to capitalize on the coming growth in the global wind business.

But the one I’m most excited about is going to release its first quarter earnings this Thursday.

Company revenues are expected to rise nearly 20% and net profit is forecast to rise 135% over the same quarter numbers from 2007.

When these numbers come out, I assure you investors will go crazy. Some analysts are predicting a target price some 23% higher than it is now.

This is surely a company you want to be invested in before the first quarter numbers are released. As I write this, the price is already starting to tick northward.

But only Green Chip International members are going to be privied to the information needed to profit from the company that’s as close to a sure bet as it gets. So become a Green Chip International member today!

Call it like you see it,

nick hodge


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