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U.S. Investment in Renewable Energy

Jeff Siegel

Written By Jeff Siegel

Posted August 22, 2008

Over the past few months, the renewable energy industry has struggled to maintain investor confidence as Congress continued to drop the ball on the renewable energy production and investment tax credits.

They’re set to expire at the end of the year. And if that happens, renewable energy stocks are sure to fall.

Now before you draft your hostile e-mails about how renewables should be able to compete without subsidies, I call your attention to the billions in subsidies the oil industry receives every single year.

I can assure you, NO form of energy generation exists without some form of subsidies.

And if you don’t believe it, take a look at this 2007 article written by my colleague, Chris Nelder. It spells out the whole dirty secret that no one in Washington wants to admit about fossil fuel subsidies.

U.S. Renewable Energy Tax Credits…by way of Stupidity!

Last Saturday, Nancy Pelosi signaled her willingness to consider opening more coastal areas to oil exploration. If this happens, it could certainly enable a bipartisan effort to get those tax credits extended through a long-awaited compromise.

Now don’t get me wrong. Opening up offshore drilling is a bad joke with an even worse punch line.

If we started drilling today, we’d have a very small flow of new oil coming online in about a decade. This would be well after the global peak of production, and provide little relief to the average Joe trying to get a tank full of gas.

Of course, some have suggested that had we just done this ten years ago, we’d have all that lovely oil flowing right now. And that’s true.

Though, in another few years, we’d be right back where we started — sitting here with our thumbs in our mouths, trying to figure out how to fill up our SUVs with rhetoric and fairy dust.

Meanwhile, the dolts in Washington continue to blatantly lie in an effort to placate the voters just a little longer.

Take a look at what House Minority Leader John Boehner said in response to Pelosi’s announcement about the Democrats’ willingness to consider offshore oil exploration:

"Our message to Speaker Pelosi is very simple: We are ready to vote on more energy production and lower gas prices right now, and we should not wait one more day to begin giving the American people the relief they expect and deserve. If you meant what you said last night, we welcome you and your Democratic colleagues to join us in our historic call to action on American energy."

Historic call to action? Really?

Well, I guess history is filled with "historic calls to action" that ultimately led to disaster. So they won’t be the first.

Either way, this latest news does lend a bit more confidence to the possibility that the production and investment tax credits will be extended. At this point, it’s really a matter of whether or not these bureaucratic parasites decide to actually get some work done when they come back, or spend their time campaigning… slinging mud on our dime.

It’ll probably be a little of both.

Though, as we saw over the past couple of weeks, with or without those tax credits, renewable energy momentum is not slowing down.

Renewable Energy Investment, without Hesitation

Last Thursday, Pacific Gas & Electric (PGE) announced that it had signed contracts to buy 800 megawatts from two solar power plants that will be built near the Central California coast. Combined, these plants will produce enough power for about 240,000 homes.

The companies that landed these deals?

SunPower Corporation (NASDAQ:SPWR) and Optisolar.

This project is the largest single photovoltaic commitment from an electric utility in the world, according to the Solar Electric Power Association.

The SunPower project will begin power delivery in 2010, and the Optisolar project, which is twice as big in terms of megawatts, is expected to begin power delivery in 2011.

Not surprisingly, SunPower soared on the news, picking up as much as 22% by the next day.

Google’s Impact on Renewable Energy

This past Tuesday, Google Inc. (NASDAQ:GOOG) announced that it was investing $10.25 million in Enhanced Geothermal Systems (EGS). The funding is going to…

· Seattle-based AltaRock Energy Inc. to develop technologies that will enable cost reductions and improved performance in EGS projects.

· Redwood City-based Potter Drilling, Inc. to develop new approaches to lower the cost and expand the range of deep hard rock drilling, which is critical to large-scale deployment of EGS.

· Southern Methodist University Geothermal Lab to update geothermal mapping in North America.

No publicly-traded companies involved here. Though if you’re looking for a geothermal play, your safest bet would be with Ormat Technologies (NYSE:ORA). Or, if you’re looking for more bang for your buck, check out U.S. Geothermal (AMEX:HTM). It’s an up and comer that’s actually generating megawatts and money right now.

Also on Tuesday, New York Mayor Michael Bloomberg outlined his proposal for more renewable energy in New York City. The Mayor wants to build offshore wind farms, small-scale wind installations and tidal power systems to supply no less than 10 percent of the city’s electricity needs.

According to aides, the mayor has recently met with T. Boone Pickens to discuss how wind power could be used in New York City. And certainly you’ve seen what T. Boone’s done for the wind industry in just the past month. Not to mention the money investors are making off of his transitional energy stocks.

On Wednesday, Suntech Power (NYSE:STP) announced that its sales and profit climbed significantly in the second quarter.

Sales rose more than 50 percent from a year ago, and profit rose to $64.9 million for the quarter, compared to $41.7 million a year prior. The company also raised its 2008 revenue forecast to a range of $2.05 billion to $2.15 billion from a range of $1.9 billion to $2.1 billion.

The stock ended the day with a 12.4% gain.

Still, STP wasn’t the biggest solar winner that day.

No, the biggest winner was Solarfun Power Holdings (NASDAQ:SOLF).

Incidentally, this is a stock that Alternative Energy Speculator editor Nick Hodge recommended about five months ago when it was trading around $9.40. By Thursday, the stock hit $21.26 a share

That’s a gain of more than a 126% – in just five months!

If you’d like to see Nick’s latest pick, which is actually a company that’s making money hand over fist thanks to T. Boone Pickens and his Pickens Plan, click here now.

To a new way of life, my friends. And a new generation of wealth…

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