Renewable Energy is Here to Stay
Created by EQUITIES Magazine
In October, I told you that when the new president moved into the White House, our entire energy infrastructure would begin a major transition from one based almost entirely on fossil fuels to one that would finally include a significant contribution from renewable energy.
Well, my friends—that transition has begun.
Thanks to a crumbling electric infrastructure, the threat of peak oil, and global climate change (whether you believe it’s real or not), the move to integrate more renewable energy has not been the hard sell so many had expected.
Sure, there are still objections—mostly by those who stand to lose a lot of money from this transition. But no matter how you slice it, renewable energy is no longer the domain of just environmentalists. And for investors who choose to embrace the future of energy regardless of political or social views, there’s a lot of money to be made.
It’s no secret that the Obama administration has been very aggressive in its efforts to give the renewable energy industry a major shot of steroids. Billions of dollars are being distributed in an effort to spark renewable energy development. A national renewable portfolio standard has gone from rumors on Capitol Hill to actual debate on the floor, with both sides of the aisle working to launch this thing instead of killing it.
It should also be noted that more than half the states in the nation already have their own renewable portfolio standards. So either way, we’re well on our way to nationwide mandates on renewable energy generation and energy efficiency requirements for states that lack robust renewable energy resources. And of course, climate-change legislation will also prove to be a major benefit for renewables.
All in all, the stars are aligning for one of the greatest energy transformations the world has ever seen. And as a result, renewable energy investors are going to make a fortune.
Focused on the Future
When the market began to implode in 2008 and early into 2009, a lot of analysts began questioning the potential of renewables. Although during that time, nothing was spared. Renewables, like everything else, got hammered. So while those talk-show blowhards and bitter analysts who didn’t catch the first wave of renewable energy profits bashed everything from solar and wind to geothermal and smart grid, we maintained our bullish position and loaded up.
While the recession has done an excellent job at weeding out the less-than-impressive renewable energy companies, it also ushered in heavily discounted shares of quality renewable energy and smart-grid stocks. Here are a few of my favorites, as I know many Green Chip stock investors cleaned up on these:
- First Solar Inc. (NASDAQ: FSLR) – Hit a low of $85.28 in November 2008
- U.S. Geothermal Inc. (AMEX: HTM) – Hit a low of $0.39 in December 2008
- Ormat Technologies Inc. (NYSE: ORA) – Hit a low of $22.84 in November 2008
- Yingli Green Energy Holding Co. Ltd. (NYSE: YGE) – Hit a low of $3.32 in March 2009
- EnerNOC Inc. (NASDAQ: ENOC) – Hit a low of $4.80 in November 2008
Except for Ormat, which currently trades around $40 a share, all these doubled or tripled within less than a year of hitting their lows.
Now, to be honest, I’m still not buying this summer rebound. Given the overwhelming obstacles we continue to face—unemployment, commercial real estate, debt, plummeting tax revenues, prime mortgage defaults, etc.—I have little confidence that “everything is okay.”
But with or without a rebound, one thing you can count on is that “business as usual” in the world of energy is no longer an option.
The basic fundamentals of supply and demand no longer favor oil over the long term. Climate-change legislation (and to a lesser extent, coal reserves, which are not enough for 250 years but rather about 100 years, according to a 2007 National Research Council report) will certainly impede coal-fired power-plant development. And unless upfront capital, decommissioning, and waste-storage costs come down for nuclear, I don’t believe it’ll be the solution to our energy woes despite its carbon advantage.
Bottom line: We can no longer safely rely on only nonrenewable resources to supply all our power generation. And any investor who counts out renewable energy at this point is going to miss out on a lot of money.
Going forward, I believe our best long-term bets are on the solid renewable energy, energy efficiency/conservation and smart-grid companies. These include but are not limited to SunPower Corp. (NASDAQ: SPWRA), First Solar, Yingli Green Energy, Solarfun Power Holdings Co. Ltd. (NASDAQ: SOLF), Ormat Technologies, U.S. Geothermal, Vestas Wind Systems (Copenhagen: VWS), EnerNOC, and Comverge Inc. (NASDAQ:COMV).
By Jeff Siegel
Jeff Siegel is the co-founder and managing editor of Green Chip Stocks, an investment advisory service that focuses exclusively on renewable energy and organic and natural food markets.
