TIPS FOR BETTING GREEN

Between now and Earth Day (April 22), expect the word “green” to turn up ad nauseum. As in: How to live green; How to shop green; How to eat green; How to sleep green; How to drive green; How to die green. Last year, there was a great story on how to make love green that included details on where to buy green underwear. Just live with it. Or celebrate pollution.

BusinessWeek (BW) proves itself an authority on New Energy investing by beginning its advice with a disclaimer - be patient and let these New Energy companies grow: “In some cases, what makes a company a really compelling bet is the fact that it hasn't yet turned a profit—and is priced accordingly.”

The short version in 6 points:

(1) BW says the best solar companies are moving to thin film. (And NewEnergyNews would add that solar power plant investments are starting to soar.)

(2) BW says to think of wind as a Blue Chip stock and consider FPL Group’s move to go on building wind but selling natural gas until energy prices stabilize higher. (NewEnergyNews sees wind continuing to grow if the U.S. Congress comes through.)

(3) BW likes "Demand Response" electricity monitoring systems and sees them growing.

(4) BW says geothermal will jump when carbon has a cost.

(5) For BW, the best New Energy investment of all is in companies retrofitting buildings for efficiency. (NewEnergyNews: it does look like the best bet long-term but it’s not yet clear who to bet on.)

(6) BW points out oil and gas industry service companies will make money doing pipeline work for carbon-capture-and-sequestration (CCS) systems.

When will we be rich? Many New Energy investments, BW stipulates, won’t really take off until the U.S. enacts legislation putting a price on emissions. Debate on the first climate change bill begins this spring but is not expected in earnest until after the presidential election. The real nitpicking will probably begin in 2009.

Something – probably cap-and-trade but maybe, just maybe, a tax, nah, not politically possible, figure cap-and-trade – is almost certain to be in place no later than 2012 in order to sync with the beginning of the 3rd phase of the Kyoto process for the EU and the rest of the world, according to BW.

2 other important factors driving companies’ growth: (1) The urgent global need for new power generation. (2) Wherever there is a Renewable Electricity Standard (RES), there will be demand for New Energy.

Names and details are below.

So much demand, so little New Energy - nothing but room to boom. (click to enlarge)

Green Investing: Clever Plays in Clean Tech; The prospect of new limits on carbon emissions is driving demand for clean technology in the energy sector. But investors need to take the long view.
David Bogoslaw, April 14, 2008 (BusinessWeek)

WHO
Investors

BusinessWeek says bet on thin film. Solar power plants may be just as big. (click to enlarge)

WHAT
BusinessWeek offers insights into the best “green” investments.

WHEN
- Phase 3 of the Kyoto process begins in 2013.
- Thin film is expected (by BusinessWeek) to be the next new thing in solar. (NewEnergyNews must add here that solar thermal power plants look like they're going to be pretty big, too.)
- BusinessWeek sees wind reaching maturity this year and a next big round of smaller more efficient wind coming in 2 to 5 years. (Sorry, NewEnergyNews must interrupt again: That doesn’t seem right.)
- Demand response electricity monitoring systems will grow continuously after 2009.
- Geothermal will come in with the price on emissions.
- Building retrofitting will be a boom industry for 3 decades.
- CCS technology is a “sooner or later” concept if anybody ever proves it can work at cost effective prices.

click to enlarge

WHERE
BusinessWeek says the best companies right now are only traded in Europe – Vestas Wind Systems (VWSYF), SolarWorld (SRWRF), and Q-Cells (QCLSF) – but there are good stocks also available on U.S. exchanges (see below).

Demand Response systems are likely to boom. (click to enlarge)

WHY
- Solar companies ready to do thin film: SolarWorld (SRWRF) and SunTech Power
Holdings (STP)
- Big wind players still growing: Siemens (SI), Vestas (VWSYF), Spain's Gamesa (GCTAF); Wind player with new strategy: FPL Group (FPL)
- Important providers of demand response electricity monitoring systems for networks: EnerNOC (ENOC) and Comverge (COMV)
- Recommended Geothermal: Ormat Technologies (ORA) and Calpine (CPN)
- Retrofitting powers have not yet emerged.
- CCS powers will be oil and gas industry pipeline companies, especially those with experience doing oilfield Enhanced Oil Recovery (EOR).

How many houses and buildings need retrofitting for efficiencies? (click to enlarge)

QUOTES
- Kevin Book, senior energy policy analyst, Friedman Billings Ramsey: "If the U.S. is not up to global standards [at the beginning of Kyoto Phase 3 in 2013], it could be disruptive from a trade and economic perspective…Any economy that wants to play in that game is going to want at least one year of lead time."
- Jack Uldrich, nanotech consulting firm head/ Motley Fool writer: "The manufacturing economics tell me the future is in thin-film, as well as flexible polymers, and not silicon…Both [SolarWorld and SunTech] are positioning themselves to take advantage of that…"
- Angie Storozynski, utilities analyst, Macquarie Research, on the FPL strategy: "The longer they wait to fix their prices, as utilities get closer to deadlines for renewable portfolio standards, they will be willing to pay up for wind…"
- Jack Uldrich, nanotech consulting firm head/ Motley Fool writer: "The cleanest, most affordable type of energy efficiency is never using energy in the first place, and that's exactly what these companies help utilities to achieve, and consumers…As sensors get more effective and drop in price as a result of advances in the semiconductor business, they will find more opportunities and be able to go into more people's homes with these smart networks…There's a lot of efficiency still to be squeezed out of the system and both those companies are close to figuring out how to do it."