Nick Hodge - Angel Publishing

Green Energy Investing

This article originally appeared in the Green Chip Review on July 17^th, 2008 as an in-depth report on today's green energy investments. With the current state of the energy market, and the looming boom in green energy, we felt readers of Wealth Daily could also profit from the information presented in this article. Enjoy

So the markets are in the pits. Citizens are lining up for hours—predawn hours—to withdraw money from their failing banks. And the Dow is at it's lowest point since July. . . of 2006.

At this point, many portfolios are in a holding pattern. The so-called credit crunch, and the resultant housing collapse and severe stocks market downturn, has led to the shrinking of savings and the defaulting of millions of mortgages.

And yet, there's no point in selling—houses or stocks. Why sell a long-term investment for less than you paid for it, especially if its likely that the price will rise again in the next few years?

The same holds true for green investments. Some that you've picked up so far may showing red returns at the present time. But as longs as you're willing to hold out, they'll rise again once market conditions begin to improve and policies are put forward that actually deal with our energy and environmental solutions instead of just implementing laws du jour aimed only at swaying public opinion or cushioning constituents' bottom lines.

In the meantime, it's still possible to make money on the bull side of things, but it's going to take more than a promising press release. To make money in this market, you have to know the ins and outs of the green energy market and how it's developing.

What's more, if you can get past the guttural reaction to simply watch from the sidelines, there are some good buys to be had in this down market. Ones that are off their recent highs, but will return to those levels or higher as the market rebounds.

With that in mind let's take a look at the current state of the renewable, both from an output and monetary standpoint, in an effort to identify which areas are ripe to buy in troubled waters.

Investing in Green Energy: Growing, Growing

First and foremost, green energy investing has been, and will continue to be, a runaway train scenario. Check out the total annual green investment data for the past few years:

2004, $33.4 billion
2005, $58.7 billion, 76% growth
2006, $92.6 billion, 58% growth
2007, $148.4 billion, 60% growth

In that time, total public market transactions have also skyrocketed. The following data includes IPOs, secondary offerings, and convertible bond issues:

2004, $800 million
2005, $5.6 billion
2006, $12.6 billion
2007, $27 billion

Take a look at just one more set of data. These are total green venture capital and private equity numbers from early stage through over the counter listing:

2004, $2.4 billion
2005, $6.4 billion
2006, $9.3 billion
2007, $13.5 billion

These numbers are impressive, showing not only the strong growth of the renewables industry, but also indicating—via the 2007 venture capital data—that the industry is far from saturated and that billions are still being wagered on its future success.

But the effects of the credit crisis began to rear their ugly heads early in 2008, resulting in few new IPOs and stock prices down an average of 17.9%. This tightening of the markets spawned increased merger and acquisition activity, as it generally tends to do.

Yet for all the recession talk and bear banter, overall investment in green technology during the first half of 2008 has actually been above the levels seen during the first half of 2007.

And, according to Global Trends in Sustainable Energy Investment 2008:

Although asset finance is down somewhat, venture capital and private equity invesment, public market capital raising and stock prices are all healthy, indicating that the finance community still sees strong fundamentals underlying the sector and is increasingly looking to take part in its future growth.

Investment between now and 2030 is expected to reach $450 billion a year by 2012, rising to more than $600 billion a year from 2020. The sector's performance during 2007 sets it on track to achieve these levels, with the current credit crunch testing the market's resolve, but not dislodging it.

In many ways, our current sentiment as retail investors is out of line with the rest of our financial brethren. The problem is not a lack of investment—indeed, investment flows have continued to grow—but rather the broadening of the sector and the diversification of green investment options, which now run the full gamut, from primary energy production in the form of electricity and transportation fuels to demand-side management solutions for the end user, including smart grid technologies.

So yes, it's becoming more difficult to find a good green investment because of all the options. But it's certainly not impossible.

And it's Green Chip's role, along with our other publications, to help you do that.

Where's the Green Investing Money Going Now?

Despite the limelight shone on the solar industry, the wind industry has and continues to attract the most investment—$50.2 billion in 2007.

Although, solar's limelight isn't entirely undeserved, $28.6 billion of new investment flowed into that sector in 2007. Investment in solar has grown at a 254% clip since 2004.

Not surprisingly, most of that money traded hands in Europe, with the U.S. in second place. But China, India and Brazil are attracting a growing amount of capital as their share of asset investment has doubled since 2004.

A large portion of green investment ($84.5 billion) in 2007 went toward building new sustainable energy assets. This is a result not only of factory and capacity expansions, but also of massive installations of solar systems are wind farms.

When put together, wind, solar and biofuels accounted for about 85% of new investment in 2007. Here's the chart of total green investment in 2007:

But the chart for just public market green investment looks strikingly different:

Public markets are dominated by wind and solar alone, to th tune of 81%. This is obviously where our money should be as well.

A good place to start is probably with Iberdrola Renovables (MCE: IBR), whose $7.2 billion IPO last December accounted for over half the money raised in 2007 via initial public offerings.

That's an installation play, and a good one. For a turbine play, try the company with which Iberdrola recently inked the biggest wind transaction ever, Gamesa (MCE: GAM).

On the solar side of things, production is still very much key. You should be looking for mid-size companies with extensive growth and expansion plans that have a steady supply of raw materials.

Solarfun (NASDAQ: SOLF) is one such company. Members of the Alternative Energy Speculator have already seen gains in excess of 60% on that stock. And there's probably more upside to be had.

Installers of both traditional solar and concentrating solar will also begin to receive increased attention.

We'll continue to cover broad topics like this again in my next issue of the Green Chip Review. Instead of focusing on which sectors are getting the public and asset money, we'll focus on the up-and-comers claiming victory in green venture capital and private equity.

In the meantime, don't miss another day's worth of profits by sitting on the sidelines.

The team of analysts at the Alternative Energy Speculator has uncovered an undervalued company operting in the green energy space. Their technology could be a game-changer, and deliver massive profits to those who get in early.

Call it like you see it,

Nick

The Pickens Energy Plan

Chalk another one up to clean technology.

Legendary Texas oilman, billionaire and America's 117^th richest person, T. Boon Pickens, has unveiled a $58 million public relations blitz focused on persuading Americans to reduce their dependence on foreign oil by turning increasingly to natural gas and wind.

Called The Pickens Plan, the project calls for an estimated $1 trillion government investment to displace electricity currently produced with natural gas with clean wind power.

Then, the resultant excess natural gas capacity would be used to power cars and trucks.

T. Boone, the plan's creator, says it would alleviate hundreds of billions of dollars currently spent on oil while creating thousands of U.S. jobs.

According to Pickens, ""I've drilled more dry holes and also found more oil than just about anyone in the industry. With all my experience, I've never been as worried about our energy security as I am now."

But don't get it twisted. Pickens isn't hugging trees just yet. It's all about the bottom line, and T. Boone is heavily vested in both the wind and natural gas industries.

In fact, he's spending $12 billion on what could prove to be the world's biggest wind farm—in Texas, of all places.

Another of his ventures, Clean Energy Fuels (NASDAQ: CLNE), builds and operates natural gas fueling stations for vehicles.

Said Pickens: "Don't get the idea that I've turned green, my business is making money, and I think this is going to make a lot of money."

Making Money with The Pickens Energy Plan

According to The Pickens Plan website:

America is in a hole and it's getting deeper every day. We import 70% of our oil at a cost of $700 billion a year - four times the annual cost of the Iraq war.

I've been an oil man all my life, but this is one emergency we can't drill our way out of. But if we create a new renewable energy network, we can break our addiction to foreign oil.

Breaking that addiction is shaping up to be a multi-billion dollar business, and the "Oracle of Oil" is placing his bet right now.

It's probably wise to follow his lead. In addition to Energy & Capital, Pickens was one of the few insiders calling for $100 oil when that price seemed unfathomable. And the realization of his most recent call for $150 oil seems imminent.

Even if all the points of the plan don't come completely to fruition, the wind and natural gas industries are still poised for a boon.

Just in July, T. Boone's natural gas provider Clean Energy Fuels has:

been awarded a five-year contract from the City of Akron to operate and maintain the fueling station for the city's 45 full-sized compressed natural gas buses
received two liquefied natural gas supply contract renewals from the City of Phoenix that will add $6.7 million to the company's bottom line
secured nearly half its supply of natural gas through June 2011 by entering into an extended definitive agreement with its supplier, Williams Four Corners

Clean Energy Fuels is probably a good place to be. More and more fleets, both governmental and corporate, are switching to natural gas vehicles everyday, for both economic and ecologic reasons.

As this trend plays out, all those fleets are going to need natural gas fueling stations. And Clean Energy is the foremost player in that game.

Another lucrative way to play the emergence of natural gas vehicles would be to invest in the company making natural gas engines. This report has all those details.

The Windier Side of Energy

Pickens isn't just betting on natural gas. He also has ambitious plans to build the world's largest wind farm on the Texas panhandle—for a modest $12 billion.

Back in April. T. Boone made the first down payment on 500 wind turbines at a cost of $2 million dollars each. GE (NYSE: GE) was the lucky beneficiary of that transaction.

But that initial $1 billion (for the 500 turbines) hardly puts a dent in the now $12 billion price tag—the project was originally estimated to cost a mere $6 billion.

By 2012, about 2,700 turbines are slated to be erected on 200,000 acres of the Texas panhandle. That's four times bigger than the word's current largest wind farm.

When finished, 4,000 turbines will crank out enough electricity to power over one million homes.

But a billionaire-oilman-turned-wind-investor isn't the only indication of the momentum the wind sector possesses.

In 2007, wind received the most investment dollars of any clean technology with $50.2 billion, or 43% of all new green investment. It was also the leader in 2006 when it was responsible for 38% of new investment.

The wind industry also dominated asset finance in 2007, receiving about $38.9 billion or 46% of all new-build asset investment, which basically means steel in the ground in the form of either wind farms, solar power plants or biofuel production facilities.

To date, 94 gigawatts (GW) of wind capacity have been installed worldwide, with 20 GW coming online in 2007, led by the U.S., China and Spain.

Wind also received the most public investment in 2007, raising $11.3 billion. It should be noted, however, that $7.2 billion of that investment came just from the IPO of the world's leading wind installer and wind farm manager, Iberdrola Renovables (MCE: IBR).

The wind industry has also been a favorable environment for exits of venture- and private equity-funded companies, as well as for mergers and acquisitions. This has been evidenced by Energias de Portugal's $2.93 billion purchase of Horizon Wind and Scottish & Southern Electric's $3.2 billion purchase of Airtricity.

More recently, investor interest in wind power has heated up due to a report from the U.S. Department of Energy claiming wind can provide 20% of all U.S. Electricity needs by 2030.

For that to happen, more than half a trillion dollars needs to be invested in new turbine manufacturing capacity and capital projects. Just in the first quarter of 2008, the U.S. Installed 1,400 MW of new wind capacity with a price tag of $3 billion. Expect that trend to continue and expand.

The way to profit from this part of Pickens Plan is to stake your claim now in a variety of turbine manufacturers, both foreign and domestic, and also in wind farm developers and owners.

These could be juggernaut wind companies like Vestas Wind Systems (COP: VWS) and Gamesa (MCE: GAM), or in large development firms like Fluor (NYSE: FLR).

Of course, there's also a handful of smaller companies that stand to make a fortune as the wind industry continues to mature.

While it's nearly impossible to say which of those smaller companies are going to succeed as this story unfolds, we'll be providing daily and weekly commentary and recommendations on the matter in all of our publications:

Get ready for a literal windfall of profits.

Call it like you see it,

Nick

Green Energy Investments

So the markets are in the pits. Earlier this week, patrons were lining up for hours—predawn hours—to withdraw money from their failing banks. And the Dow recently hit it's lowest point since July. . . of 2006.

At this point, many portfolios are in a holding pattern. The so-called credit crunch, and the resultant housing collapse and severe stock market downturn, has led to the shrinking of savings and the defaulting of millions of mortgages.

And yet, there's no point in selling—houses or stocks. Why sell a long-term investment for less than you paid for it, especially if it's likely that the price will rise again in the next few years?

The same holds true for green energy investments. Some stocks that you've picked up so far may be showing red returns at the present time. But as long as you're willing to hold out, they'll rise again once market conditions begin to improve and policies are put forward that actually deal with our energy and environmental problems instead of just implementing laws du jour aimed only at swaying public opinion or cushioning constituents' bottom lines.

With that in mind let's take a look at the current state of the renewable industry from a purely monetary standpoint, in an effort to identify which areas are ripe to buy in troubled waters.

Green Energy Investments: Growing, Growing

First and foremost, green energy investing has been, and will continue to be, a runaway train scenario. Check out the total annual green investment data for the past few years:

2004, $33.4 billion
2005, $58.7 billion, 76% growth
2006, $92.6 billion, 58% growth
2007, $148.4 billion, 60% growth

In that time, total public market transactions have also skyrocketed. The following data includes IPOs, secondary offerings, and convertible bond issues:

2004, $800 million
2005, $5.6 billion
2006, $12.6 billion
2007, $27 billion

Take a look at just one more set of data. These are total green venture capital and private equity numbers from early stage through over the counter listings:

2004, $2.4 billion
2005, $6.4 billion
2006, $9.3 billion
2007, $13.5 billion

But the effects of the credit crisis began to rear their ugly heads early in 2008, resulting in few new IPOs and downward pressure on most stocks. This tightening of the markets spawned increased merger and acquisition activity, as it generally tends to do.

Yet for all the recession talk and bear banter, overall investment in green technology during the first half of 2008 has actually been above the levels seen during the first half of 2007.

And, according to Global Trends in Sustainable Energy Investment 2008:

Although asset finance is down somewhat, venture capital and private equity invesment, public market capital raising and stock prices are all healthy, indicating that the finance community still sees strong fundamentals underlying the sector and is increasingly looking to take part in its future growth.

Investment between now and 2030 is expected to reach $450 billion a year by 2012, rising to more than $600 billion a year from 2020. The sector's performance during 2007 sets it on track to achieve these levels, with the current credit crunch testing the market's resolve, but not dislodging it.

So yes, it's becoming more difficult to find a good green investment because of all the options. But it's certainly not impossible.

And it's Green Chip's role, along with our other publications, to help you do that.

Where's the Green Investment Money Going Now?

Despite the limelight shone on the solar industry, the wind industry has and continues to attract the most investment—$50.2 billion in 2007.

Although, solar's limelight isn't entirely undeserved, $28.6 billion of new investment flowed into that sector in 2007. Investment in solar has grown at a 254% clip since 2004.

When put together, wind, solar and biofuels accounted for about 85% of new investment in 2007. Here's the chart of total green investment in 2007:

But the chart for just public market green investment looks strikingly different:

Public markets are dominated by wind and solar alone, to the tune of 81%. This is obviously where our money should be as well.

A good place to start is probably with Iberdrola Renovables (MCE: IBR), whose $7.2 billion IPO last December accounted for over half the money raised in 2007 via initial public offerings.

That's an installation play, and a good one. For a turbine play, try the company with which Iberdrola recently inked the biggest wind transaction ever, Gamesa (MCE: GAM). Of course a wind ETF like First Trust Global Wind Energy (NYSE: FAN) or Powershare's Global Wind Energy (NASDAQ: PWND) could also do the trick.

On the solar side of things, production is still very much key. You should be looking for mid-size companies with extensive growth and expansion plans that have a steady supply of raw materials.

Solarfun (NASDAQ: SOLF) is one such company. Members of the Alternative Energy Speculator have already seen gains in excess of 60% on that stock. And there's probably more upside to be had.

Installers of both traditional solar and concentrating solar will also begin to receive increased attention.

We'll continue to cover broad topics like this again in my next issue of the Green Chip Review. Instead of focusing on which sectors are getting the public and asset money, we'll focus on the up-and-comers claiming victory in green venture capital and private equity.

In the meantime, don't miss another day's worth of profits by sitting on the sidelines.

Green Chip International is quickly growing a portfolio filled with green juggernauts located outside North American borders in parts of the world receiving not only more investment, but better policy as well.

And Alternative Energy Speculator is picking up the growth opportunities here in the U.S. and Canada. That portfolio is currently boasting six double-digit winners with 3 over 60%

Call it like you see it,

Nick

Bush, Really?

I keep a special bookmarks folder entitled, 'Bush, Really?', for my own personal amusement.

They're mostly news clippings of comical things our leader does, from asking a blind journalist why he's wearing sunglasses to times he's shielded people in his administration from testifying or being held accountable for their actions and, of course, the time he vetoed an expansion of children's healthcare that was to be funded by an increase in the cigarette tax.

They're just little souvenirs I picked up along the way of what I'm convinced will be one of the most remembered presidencies in history.

While I certainly don't catch them all (who could?) and I generally try to limit my politics in writing, I feel compelled to share the most recent 'Bush, really?'.

The story didn't really make waves here in the U.S.—I often find some of the best 'Bush, Really' items come from foreign news services, even ones concerning domestic policy—but I'm sure the rest of the world had a laugh at his (and our) expense.

At the close of a private meeting at the recent G8 Summit in Japan, Bush, in all his diplomatic splendor, ended the meeting with the words: "Goodbye from the world's biggest polluter."

Pause. Shake your head.

Here's what happened immediately after, quoted directly from the UK's Telegraph: "He then punched the air while grinning widely, as the rest of those present including Gordon Brown and Nicolas Sarkozy looked on in shock."

Pause again. Shake once more.

Here's a picture that captures the essence of the moment brilliantly:

Now some will simply chuckle and dismiss the incident saying, "That's just Bush being Bush." And others will cry out, trying to use the quote as a catalyst for protest, rallying to incite action.

Personally, I think the man has one huge set of cajones to utter a careless comment like that, which illustrates his blatant disregard for the important issue at hand, in the presence of seven other world leaders and the press.

His Successor Will Bring Profits

Not to worry, the opportunities for Bush to embarrass himself and his country are growing smaller with every tick of the clock—we're down to about six months now.

And no matter who takes office next, the policy landscape for renewables inherently has to get better. Both McCain and Obama support limiting carbon emissions. And putting a price on carbon emissions means added value for renewables across the board.

Of course, one prospective president's candidates positions on the issues would benefit the industry more than the other's.

But either one has to be better than the man who:

allowed oil consumption to rise 3% since he famously said "America is addicted to oil"
opposed provisions to significantly raise fuel economy standards in the energy bill and threatened to veto the bill if they were not changed.
threatened to veto the energy bill because it included a renewable electricity standard that would have increased the use of renewable electricity up to 15 percent by 2020.
threatened to veto the tax incentives package that included incentives for plug-in hybrids and renewable fuels. Congress dropped these provisions because of his veto threat.
consistently opposed binding mandatory reductions of greenhouse gases proposed by the European Union and other allies during the G-8 and Bali climate talks.
blocked California's adoption of a 30% reduction in greenhouse gases from motor vehicles.
consistently ignored the views of scientists about global warming. The House Committee on Oversight and Government Reform reviewed government documents that "portray a systematic White House effort to minimize the significance of climate change."
saw oil's price rise over 300% during his tenure
obviously thinks offshore drilling will solve our woes (when it clearly will not)
didn't even know gas was approaching $4 when questioned about it by a reporter

No doubt about it, the renewable industry will benefit from a change in administration, and so will those who wisely choose to invest in it.

Just hope Bush doesn't try to do anything really crazy before he leaves. I mean, even his 'Bush, Really?' moments are showing signs of a deteriorating condition.

His latest one, the "Goodbye from the world's biggest polluter" comment, wasn't even correct. China overtook the top spot in 2006 by 8%.

He could've at least been accurate and said, "Goodbye from the world's biggest polluter per capita."

Call it like you see it,

Nick

Investing in Solar Installers

It's fair to say that, so far, solar installers have been the red-headed stepchild of the renewable energy investment world.

Their counterparts, module manufacturers and silicon suppliers, have been in a noticeably different boat. And rightly so.

You know the stories by now: First Solar, SunPower, and MEMC Electronic Materials. The list goes on.

And while some are still busy touting those stocks, their explosive potential has long passed. Don't get me wrong, there is still money to be made there—good, safe, clean, green money. Their classification is simply being shifted from 'growth stock' to 'value stock.'

Those are exactly the kind of stocks now covered by Green Chip Stocks—more stable, established green companies, capable of delivering good value over time. The smaller, more speculative plays now reside with the Alternative Energy Speculator.

When it comes to growth stocks in the solar space, I think investing in solar installers is the perfect place to look, given current market and legislative conditions.

Solar Installers and the Investment Tax Credit

As many of you are aware, Congress has failed to extend the investment tax credit (ITC) for solar energy (not to be confused with the production tax credit (PTC) that mostly affects the wind industry and is also at risk of expiring) that expires at the end of this year, despite numerous pieces of legislation aimed at doing so.

These are the two federal ITCs at risk:

Residential Solar Tax Credit: A 30% tax credit, created in the Energy Policy Act of 2005, for the purchase of residential solar water heating, photovoltaic equipment, and fuel cell property. Expires after December 31, 2008.
Business Solar Tax Credit and Fuel Cell Tax Credit: A 30% business credit, established in the Energy Policy Act of 2005, for the purchase of fuel cell power plants, solar energy property, and fiber-optic property used to illuminate the inside of a structure. After December 31, 2008, the credit reverts to a permanent 10-percent level.

Failure to extend these policies thus far—and worries that they won't be extended by year's end—has led to staunch downward pressure on many solar-related companies and all installers. That's because, without firm tax support, most solar installations simply aren't yet economically feasible for the consumer—even though eleven states are requiring a certain percentage of their power come from solar resources.

And when it comes to commercial and utility scale solar installations, equity providers are in the same boat; they're hesitant to provide capital for new projects because of the long lead times for construction and equipment.

Would you pony up money for a new solar project now that may or may not be finished by the end of the year, given that you're risking getting a guaranteed 30% back? Me neither.

Of course, blatant federal inaction is being overshadowed in many cases by overwhelming support from the collective states. Here's a rough list of programs going on around the country:

26 states with tax credits and deductions for renewable energy (federal policy expires Dec. 31)
29 states with property tax incentives for renewable energy (no federal policy)
21 states with state sales tax exemptions for renewable energy (no federal policy)
38 states with rebate programs for renewable energy (no federal policy)
31 states with loan programs for renewable energy (no federal policy)
24 states with grant programs for renewable energy (no federal policy)
42 states (plus D.C.) with net metering laws (no federal policy)

By the way, three cheers are in order for Arkansas, the only state that has none of the above policies, putting them on the same playing field as the federal government. But I digress.

Even with states picking up some of the legislative slack—California and New Jersey are particularly favorable areas—a lack of funding from the federal side has been enough to temporarily stall the industry.

But it's not all bad. And as green investors, we can leverage the panic to make some nice profits.

Investing in Solar Installers

Take, for example, this line from a recent Sacramento Business Journal article that was published on MSNBC: "When the tax credits expire Dec. 31, small solar power installation companies could be hit the hardest because they depend on new business in their local markets. But even large companies are scrambling to finish as many projects as they can this year."

Those things would be true if the extension was not passed. But I'm willing to bet Congress isn't willing to let that happen—not with the growing popularity of clean energy and the strength of their lobby.

Plus, most Congressmen and Senators—regardless of aisle side—know the extension needs to be passed, but they disagree on how to fund it. Taking money away from Big Oil and Hedge Funds goes against what has become a GOP stump issue, and would offend millions of dollars worth of constituents.

What's more, Congress notoriously waits until the last minute to pass energy- and tax-related policies. Such was the case with a wind power tax credit that was extended on December 18^th last year—it was due to expire two weeks later.

And if Congress fails to act, domestic solar companies will be forced to do business elsewhere, like Canada or Europe, where the policy landscape is much more favorable. Driving business out of the country is also a big political no-no.

So here's the deal: The battered state of a few publicly traded solar installers presents us with an excellent buying opportunity.

The shortlist of worthy solar installers begins with Akeena Solar (NASDAQ: AKNS), which, after ascending to over $16 in January, has been on a six month skid. Now below $5, this one is a bargain buy, especially since they just launched their much awaited and revolutionary Andalay Flat Roof Solar Power Systems and are making inroads toward the booming Mediterranean market.

Also worthy of noting is Real Goods Solar (NASDAQ: RSOL), the solar installer spin-off from sustainable lifestyle juggernaut Gaiam (NASDAQ: GAIA). Those guys simply couldn't pick a worse time to IPO, in early May, during some seriously tumultuous times for the market and a period of instability for policy.

Real Goods came to market strong, in the high $8 range, but has never traded higher than that, and has since slipped down to under $6.50. While I don't fully understand why this company is valued higher than Akeena, it is also a reasonable stock to get into before the tax credit gets extended.

But the third solar installer on my list is one I'm very interested in. In fact, I'm more than interested; I've already written the company up and will be recommending it to readers of the Alternative Energy Speculator this week—possibly tomorrow.

Not only is this company operating in the most profitable regions of the U.S., they're also expanding operations to include the Mediterranean market. This company also has proprietary energy management software that has exciting smart grid implications. That software also provides a monthly revenue stream in addition to solar installations.

Best part is, the stock is currently trading under a dollar, so there's minimal downside. Buying in now will offer you the greatest upside before the ITC gets extended and after.

But you have to be a member of the Alternative Energy Speculator to get in on this one. If you do, the subscription fee can more than pay for itself.

Call it like you see it,

Nick

Investing in Algae Biofuel

When the price of oil rises just one dollar, the Pentagon's fuel expenses climb an astounding $130 million.

So the $50 rise in oil prices over the past six months has taken over a half billion dollar toll on the U.S. government. And that's on your dime.

Obviously the massive machinery needed to transport troops and equipment by air, land and sea is the reason for the military's high fuel use. But just how much does the Defense Department—the government's largest consumer of petroleum products—spend on fuel?

According to Lt. Col. Brian Maka, "we anticipate over the next three months that the increase in fuel costs for the department [will be] $1.2 billion." With a fuel bill like that, you can bet the Pentagon is going to use its huge R&D resources to look for alternative fuels, including algae biofuels.

In fact, back in February, the National Renewable Energy Laboratory (NREL) and the Air Force Office of Scientific Research (AFOSR) held a joint summit with outside experts to to discuss a variety of issues related to algae biofuel production for jet fuel.

I know more than a few of you are interested in investing in algae biofuel, so let's take some time to explore the basic economies, capacities and companies associated with algae biofuel production.

Problems with Current Fuels and Biofuels

In order to determine the benefits of algal oil, we first have to identify some of the problems that it could solve. Many of these issues are well-known, but they're certainly worthy of repitition.

The most obvious is a shortage of petroleum reserves and supplies increasingly being attributed to peak oil. And then there's the rapidly rising price of petroleum, which has gone up 90% in the past year—and is constantly breaking new highs.

What's more, the U.S. has a serious energy security problem. We consume 20.7 million barrels per day (bpd), while importing 12.4 million bpd—leaving us 60% dependent on petroleum imports.

And while crop-based biofuels initially offered a glimpse of relief, their contribution to rising fuel prices (even though drought, lower yields and higher demand are the main causes) has led first generation biofuels to essentially be labeled the fourth member of the Axis of Evil.

But what most don't realize is that rising food prices also hurt crop-based biofuels producers, who obviously have to pay higher prices for their feedstocks like corn and soy oil. Soy oil prices, one of biodiesel refiners' favorite feedstocks, have risen more than 35% in the past six months.

So more and more, the industry is realizing that crop-based biodiesel is not the most promising avenue, what with unstable prices and their limited capacity. NREL, for example, deemed that the entire U.S. soybean crop could only provide about 2.5 billion gallons per year (bgy) of biodiesel. And worldwide production of biodiesel from all oilseed crops can only yield 13 bgy.

That's less than a drop in the bucket when you consider U.S. diesel demand alone is 60 bgy. So at the end of the day it's a food vs. fuel issue, not on a cost basis—food prices are going to rise anyway—but on an availability basis.

Benefits of Algae Biofuels

Significant production of algae biofuels could solve a great deal of those problems.

That's because algae, or microalgae, has a much higher productivity potential than crop-based biofuels.

Here's a chart showing various feedstocks and their potential oil yield per acre. (note: g/m2/day is the harvest rate of the algae and % TAG is the percentage of triglycerides

These high yields can be attributed to algae's high growth rate, which is often monitored in hours instead of days, and has inputs of only land, sunlight, water, carbon dioxide (potential for carbon credits) and nutrients.

And while deriving fuel oil from algae has been cost prohibitive in the past, oil on its way to $150 per barrel or higher certainly makes it an attractive alternative.

Plus, the algae growth cycle can actually be used as a carbon sequestration mechanism because carbon dioxide is the primary input required by algae to grow. In fact, if the U.S. were to derive all its diesel from algae (60 bgy), the growth of that algae could displace 56% of U.S. power plant emissions.

Growing algae is also very water efficient. Producing enough to make 60 bgy of biodiesel could require as little as 16 trillion gallons of water. To put that in perspective, we use 4,000 trillion gallons of water per year to grow corn in the U.S.

The best part is, algae can grow in brackish, saline and wastewater, further reducing the amount of freshwater needed to grow it. And the nutrients in wastewater actually feed the algae, making it possible to cultivate at any one of the 5,100 wastewater treatment facilities nationwide.

And the benefits go on.

No one country (or host of hostile countries) has a monopoly on algae production or the algae production equipment.
Algae can grow in temperatures ranging from below freezing to 158 degrees Fahrenheit
It is not in direct competition with food crops
There are a multitude of algae biofuel value-added byproducts like syngas, high-protein animal feeds, agricultural fertilizers, biopolymers (plastic), glycerin and even ethanol and jet fuel.

Investing in Algae Biofuel Companies

There have been limited investment opportunities so far in the algae biofuel arena despite all its promise and potential. So far, it's been sort of a throw it at the wall and see what sticks kind of strategy.

This is so because of the fair amount of companies pursuing the technology, each keeping their methods and processes under lock and key.

Here's a list of some companies dabbling in algae growth, harvesting and algae biofuel production:

GreenShift Corporation (GERS.OB)
Nanoforce Inc. (NNFC.PK)
Valcent Products Inc. (OTCBB: VCTPF)
Green Star Products (Pink Sheets: GSPI)
OriginOil, Inc. (OTCBB: OOIL)
PetroSun Inc. (Pink Sheets: PSUD)

But don't let the presence of all these tiny companies fool you. This is a legitimate technology also being pursued by the big boys, like Royal Dutch Shell (LSE: RDSA).

If I had to place a bet right now, I'd lean toward OriginOil or Valcent, but that's based purely on proven work and technology development to date.

This is still a nascent industry that's receiving gobs of money in the venture capital realm. When the dust settles, it could be a tiny start-up company (like the one springing up from major research institutions around the country) that find a winning solution.

One thing is for sure, this is exactly the kind of opportunity we love at the Alternative Energy Speculator: new technology with an enormous upside.

As this scenario unfolds, you can be sure those readers will get first crack at any companies capable of bringing algae based fuel to market in a scalable fashion.

So sign up today to make sure you don't miss it, and you'll be taking other alternative energy related profits in the process.

Call it like you see it,

Nick

Investing in Electric Vehicles

If you think $4 at the pump is bad, just wait. It's not getting better anytime soon.

By now, we've heard all the reasons for escalating prices: rising demand in India and China, a falling dollar, speculative trading and many others.

But the one that receives the least attention—and the one that is most patently obvious—is a clear-cut and well-documented minimal margin of supply over demand—about 1%-2%. And don't expect that margin to grow anytime soon. Even with the discovery of a few minor new fields, the increased capacity (after the years it would take to develop) would hardly be enough to put a dent in now skyrocket demand.

Yet proposed solutions have been coming from high and low as to how we can secure our energy independence, or at least ease the pain of rising energy prices.

So far, we've heard:

a gas tax holiday
ANWR
increasing CAFE standards
suing OPEC
ceasing the filling of the Strategic Petroleum Reserve
opening off-shore drilling and
many laughable others

So let's see. . .

The gas tax holiday was merely an election season novelty and has no real substantive base.

ANWR, according to the Energy Information Administration, "would only slightly reduce America's dependence on imports and would lower oil prices by less than 50 cents a barrel." Plus, if Congress opened up ANWR today, oil wouldn't start flowing until 2013 and peak production would occur by 2025.

CAFE standards are (and have been) a joke. Even after a the overall standards were raised 27% in late 2007—for the first time in more than 30 years—they still are less-than-impressive, calling for a fleetwide fuel economy of 35 mpg by 2020.

BS alert: average fleetwide fuel economy in 1987 was 26.2 mpg, and has fallen since. So Detroit has to raise its average fuel economy less than 10 mpg in 33 years. That comes out to an increase of .30 mpg per year, and it's pathetic.

Suing OPEC is too preposterous to even address.

Halting deliveries to the Strategic Petroleum Reserve is one of the few measures that have actually been passed to combat high fuel prices. And while some economists argue that ceasing to fill the reserve could knock a few buck of the price of a barrel, the 60,000 bpd, which is only 0.3% of U.S. daily consumption, is hardly enough to help struggling supply gain ground on surging demand.

It's a good gesture though. And we'll see how it pans out when the reserve stops getting filled in early July.

And so we're left with opening U.S. shores to oil drilling, which, again, would take years to come to market and the long-term benefits still aren't clear. Short-term benefits to drilling off our shores are nearly non-existent.

Plus, this issue won't get a decisive conclusion until there is a change in administration—still seven long months away. And even if ANWR and offshore drilling are opened, the one million bpd they could possibly produce—and that's the most egregiously high estimate—would do little to quench America's 21 million bpd thirst.

Also, don't forget that oil is a global market. Any oil produced here would still be sold at the going rate, and that, by nearly all estimates, is never going below $85 again.

Investing in Electric Vehicles: The DIY Strategy for Energy Price Hedging

After that quick run-through of proposed fuel price solutions, it may appear as if there is no government help in sight. The market is in full control, at least for now.

While Congress dilly-dallies and the presidential candidates posture for poll position, it's up to consumers to fend for themselves.

Now, with the market's bottom hopefully behind us, it's possible to make some smart investments to help offset the cost. And if you do it right, you can invest in companies making the next generation of automobiles and energy efficiency devices. So you're literally investing in the future while hedging against present energy prices.

Take, for example, Altair Nanotechnologies (NASDAQ: ALTI), which designs, develops and produces nano lithium titanate battery cells, batteries and battery packs. They also offer testing services for batteries and battery applications.

The company made inroads to the electric vehicle industry when they became the battery provider of choice to Phoenix Motorcars—one of the first companies to bring an all-electric car to market.

Despite falling with the broader market for the first half of the year, Altair seems to be on the upward move again. It bounced off its 52-week low earlier this week, and I doubt it will stay below $2.00 for long. Take a look:

UQM Technologies (AMEX: UQM) is another electric vehicle company that's been doing business with Phoenix Motorcars. But instead of providing batteries, UQM specializes in propulsion systems, generators, converters and other power electronics.

Also down for a good part of the first half of the year, UQM has enjoyed recent upside. And as fuel and oil prices continue to rise, electric vehicles and hybrids are going to look increasingly impressive. So will the share prices of the companies involved in the sector. Take a look at UQM's recent bounce:

Folks, the electric vehicle and battery markets are in the very nascent stages. Many of the current orders—beyond the obvious success of the Prius—are coming from utility and government fleets.

But the market has so much more potential than that. Every one of the nearly 100 million Americans that drive less than 30 miles per day is a target.

We've already seen sales of traditional internal combustion engines plummet as ridership of public transportation and sales of electric vehicles surge.

This is only the beginning. When it comes time for those 100 million Americans to buy a new car, you can bet an electric option will be on the table. And that's just here in the States—there's an entire international market that ripe for the picking.

Of course, the addition of millions of electric vehicles to our nation's highway will also require billions of dollars be invested in infrastructure, including smart grid technologies and the like. But that's an entirely different article.

For now, try to ease that pain in the pump by taking profits from companies trying to do the same.

Call it like you see it,

Nick

PS. My colleague, Jeff Siegel, is one of the foremost experts on investing in electric vehicles. His service, Green Chip Stocks, has already taken profits from related companies. But like I said, this thing is just getting started. If you'd like a piece of the huge profits that await this industry, consider joining his service today.

Solar Energy Companies

Oil isn't the only overpriced commodity.

Silicon, the raw ingredient for solar panels, is also in short supply and being sold for near-record prices. So precious is the metal that in some recent cases it has been sold for as much as $500 per kilogram at the spot price.

Those who've negotiated long-term contracts may enjoy a slightly lower price.

For some time now, silicon procurement and prices have been a driving factor behind the success of solar panel producers that use silicon-based technology.

If a company has a steady supply, secured by contracts, it's generally been less volatile than its peers struggling to secure feedstock on the spot market.

Some solar energy companies that have been buying silicon at spot prices have seen those increased costs reflected in the form of decreased margins. And not only do decreased margins look bad on quarterly reports, in many cases they're also cutting into net profit. Not a good situation.

In the face of high raw material costs, the companies that use the least amount of silicon, or the ones that use none at all, have been the companies to be in.

Naturally, solar companies that specialize in silicon production and refining have also found good success.

Let's take a look at a few of those success stories.

Solar Energy Companies and The Silicon Supply Supernova

You may already know what's coming, but the most clearcut example of a company prospering from silicon is MEMC Electronic Materials (NYSE: WFR). I mean, their ticker says it all: WFR, short for wafer—the silicon building block of a solar panel.

If you bought that stock two years ago, you'd now be up 80%. But had you bailed late last year, as the markets were just beginning to tank, you could've made 174%, as the stock topped out near $96 around Christmas time. Take a look:

You can see how WFR made its run parallel to the silicon supply crunch that began in 2005. This is essentially the same way oil exploration and service companies have risen along with associated oil supply concerns.

The second example of how silicon-related companies have skyrocketed comes from a relative newcomer.

Before mid-April, you'd have been hard-pressed to find someone who had even heard of ReneSola Ltd. (NYSE: SOL). The company IPOed in January and traded down until some promising news started surfacing during the fourth week of spring.

On April 15^th, the company announced two six-year wafer supply agreements for 105 MW each with Ningbo Solar Electric Power and Eoplly New Energy Technology, both solar cell manufacturers.

On April 17^th, the company increased its output and revenue guidance to 320 MW and $550 million, respectively. That day, another six-year, 105 MW agreement rolled in from Shenzhen Topray Solar, another cell manufacturer.

What's more, the company was busy expanding upstream in the silicon value chain as they ventured into polysilicon manufacturing. As we've seen time and time again, The Street loves vertically integrated solar energy companies.

Renesola leaped 113% in about one month's time, from mid-April to mid-May. It rests now at about $17, but I've seen 12-month estimates on this one as high as $40. Check it out:

But that could be nothing compared to. . .

The Next Round of Silicon-Induced Profits

Here's why.

For all of WFR's success, they are not the leading producer of silicon feedstock. Here are their recent output numbers and future estimates:

2006: 4,100 metric tons
2007: 4,875 metric tons
2008: 6,675 metric tons
2009: 8,000 metric tons
2010: 8,000 metric tons

That's enough to make it the world's fourth or fifth largest producer, depending on who you ask. I'd call it fifth, if you take into consideration the estimates through 2010.

And while WFR could see increased upside as the silicon crunch continues to play out, I'd be putting my money on the fourth largest producer, which has a chance to double in the next 12 months.

In case you're wondering, the largest producer, Hemlock, is privately held. The second-largest, Wacker Chemie (XETRA: WCH) has been volatile lately. And the third-largest, Tokuyama (TYO: 4043), is too diversified to invest in based solely on silicon merits.

But the fourth-largest producer is a gem in the making. Its silicon wafer division is sold out for 2008 and 2009, which translates into pretty firm revenue guidance. It also has an order book value of $6 billion.

What's more, this company's output numbers blow WFR's out of the water. They're anticipating production of 7,000 metric tons in 2008, ramping to 12,500 metric tons in 2009.

Plus, the company is also vertically integrated—it makes wafers and modules as well. Pending a decision to build a plant in Singapore, the company could reach a 2.3 gigawatt output of wafers in 2001, which is very impressive.

I'll be recommending this solar energy stock to members of Green Chip International early next week. But you have to be a member to get in on it.

In addition, I'll be recommending a German solar integrator along with it. Integrator, in the solar energy world, basically means installer.

And as such, the company is not tied to any one technology or feedstock. Specializing in both rooftop and utility scale installations, this company is more than well-positioned profit from a still robust German market (people are trying to get as many panels installed as they can before the subsidy reduction in 2009) and from a set-to-explode Mediterranean market.

In several locations surrounding the Mediterranean, solar has already reached grid parity—the point when solar-derived electricity is cost competitive with local peak utility rates. So installations in that area are about to skyrocket.

You can get in on both of these opportunities. Simply take a few minutes to read a little more about the service and become a member. Then, once I recommend the stocks, you'll get the detailed information right to your inbox.

These are easy profits, folks. Don't miss out.

Call it like you see it,

Nick

P.S. Green Chip International recommends renewable energy companies based outside the U.S. While some of them trade on domestic exchanges, others only trade in their native countries. Keep this in mind before you become a member.

Smart Grid

We knew it was coming.

There is simply not enough electricity in New York to satisfy all of its over-heated citizens.

Yesterday was the second straight day New York set a record not only for high temperatures, but for electricity usage as well.

As the mercury rose, workers from Consolidated Edison, the local utility, scrambled to fix sporadic failures across many parts of the metropolis. Customers in the Bronx, Brooklyn and Queens were without power for parts of the day on Tuesday, affecting not only homes, but public transportation systems as well.

Temperatures peaked at 96 degrees Fahrenheit, but peak electricity use was much higher, topping 12,987 MW—a record for June and the fourth highest usage in Con Edison's history.

The rise in electricity demand is being attributed to many of Edison's 3.2 million customers who turned on their air conditioners for the first time to battle the intense heat.

Parts of Brooklyn, for example, saw a 45% jump in peak demand from this week to last. With that much demand being placed on the grid, many of the city's commercial users were forced to cut their usage per a program developed by the New York Power Authority.

Here are some examples of the steps being taken to quell demand:

some elevators and escalators were turned off
diesel back-up generators were used to power large buildings during peak hours
air vents in the Holland and Lincoln Tunnels ran at slower speeds
some air conditioners were turned up early in the day to precool buildings

Said the Port Authority's COO, Ernesto Butcher: "It's almost routine now when the weather is such that there is pressure on the grid. Everyone has the playbook and gets the message first thing in the morning."

But for all their efforts, the power authority only expects to reduce consumption by 61 MW, a mere 0.47% of total peak demand.

Of course, that wasn't nearly enough to alleviate the massive load being put on the grid, and many customers still lost power.

It's not always going to be like that though. Advancements in the smart grid sector are bringing our aging electricity infrastructure up to date and are quickly developing into billion dollar markets.

The Coming of the Smart Grid

Before we can understand the smart grid, we first need to gain a clear picture of how the grid currently operates.

First and foremost, we have to understand that the grid cannot supply more more power than is being supplied to it. So if the grid has a 12,500 MW capacity, being supplied by its various generation sources, than it certainly cannot fulfill the 12,987 MW being demanded during peak hours.

Another issue is that utilities still use big centralized power plants for densely populated areas, making it necessary to route the electricity through numerous substations, transformers and transmission lines.

And it's not only that. Once the electricity reaches the substation—many steps before its final destination—the utility, in the majority of cases, can no longer track or monitor it.

That means when the power goes out on a city block, the utility has no idea. They have to wait for enough calls to come in, and then they try to pinpoint on a map exactly where the problem was likely to have occurred.

They literally have to make an educated guess on where to send the crew to fix the problem. But this is rapidly changing thanks to many advances in smart grid technologies and power electronics.

It's difficult to define exactly, but a smart grid is basically overlaying the power system with an information system that allows the utility and consumers to constantly monitor and adjust electricity use.

The smart grid is a major step, as it allows adjusting load instead of the supply to solve high demand issues. So instead of building new power plants to increase capacity, it will be possible to actually reduce demand.

Smart Grid Technologies

Smart grid technologies consist of many devices. On the demand response (DR) side, companies like Comverge (NASDAQ: COM), EnerNoc (NASDAQ: ENOC) and Echelon (NASDAQ: ELON) are making devices and systems that let consumer monitor and adjust their electricity use in real time.

These are devices like smart thermostats and smart meters that allow commercial and residential customers to reduce their consumption and send the saved power back to the grid. In the case of Comverge and EnerNoc, the companies sign contracts with utilities and are paid based on how much they reduce demand.

EnerNoc, for example, has about 2,189 customer sites and has approximately 1,112 MW of demand response capacity under management—that's about 9% of New York City's peak demand on Tuesday, and certainly much better than the current conservation practices.

Companies are also working hard on the supply side to implement a smart grid. Firms like Fat Spaniel, GridPoint and PowerSecure International (NASDAQ: POWR) are providing products that are changing the way utilities deliver and monitor power.

Fat Spaniel, for example, offers services that:

Remotely monitor, diagnose, manage and control systems, without costly "truck rolls"
Receive alerts that serve as early warnings to equipment and system issues
Perform remote diagnostics, updates and resets to optimize performance

GridPoint and PowerSecure, for their parts, offer some of the same services as Fat Spaniel, but also offer power back-ups and storage that can incrementally introduce power to the grid during times of peak demand.

If you want to get in on this thing from the utility side—and take some dividends in the process—Xcel Energy (NYSE: XEL) is one of the first utilities in the nation to undertake implementing a smart grid for an entire city. They'll soon begin spending an estimated $100 million to fit 100,000 homes with smart grid technologies in Boulder, Colorado.

Of course, it's still early in the evolution of the smart grid. And there will undoubtedly be more opportunities as these new types of electricity management systems continue to emerge.

The Alternative Energy Speculator is already positioned with one smart grid-related play, and I'll be adding a few more in coming weeks. Sign up today to ensure you don't miss the next winning recommendation.

Call it like you see it,

Nick

Green Venture Capital

Many of the cleantech companies we've come to know and love started their exciting journeys with green venture capital.

Indeed, the common path for several successful green initial public offerings (IPOs) has been via venture-backed activity. Some recent examples of companies in that category include, in order of IPO date:

Hoku Scientific (NASDAQ: HOKU)
Q-Cells (Xetra: QCE)
SunPower (NASDAQ: SPWR)
First Solar (NASDAQ: FSLR)
Comverge (NASDAQ: COMV)
EnerNoc (NASDAQ: ENOC)
Orion Energy Systems (NASDAQ: OESX)
Ocean Power Technologies (NASDAQ: OPTT)

This onslaught of venture-backed IPOs is undoubtedly connected to a rise in interest from venture capitalists about green technologies.

In 2005, for example, only 74 green venture capital deals were executed with about $600 million changing hands.

By 2006, the number of deals grew to 124 and the value of those deals climbed to almost $2.5 billion.

Experts really started paying attention to green venture capital in 2007, when the number of deals grew to 222 at a value of approximately $3 billions.

But the most impressive year for green venture capital (GVC) is shaping up to be 2008. In the first quarter alone, 73 GVC deals were pushed through with a price tag of $962 million.

At that pace, GVC is on target to close 292 deals costing $3.85 billion by the end of the year. Of course, it remains to be seen whether that will happen or not.

It is important, however, not to get lost meddling in the numbers from individual years and quarters. Instead, I've provided those numbers to illustrate the emerging macro trend.

That trend, if you haven't guessed, is that venture capitalists are tripping over themselves to fund startups and companies with promising technologies operating in the clean space.

And while we're not green venture capitalists, following these early rounds of funding can give us an edge as these companies make the trek toward listing on a major exchange.

Following the Green Venture Capital

Back in 2001, GVC made up only 1% of total venture capital spending. That number grew to 10% (or more depending on the source) by 2007, leading some insiders to call cleantech the "third leg" of venture capital behind only biotechnology and software.

But just knowing how many deals are being executed and at what value doesn't really tell us where to put our money as retail investors. For that, we have to know exactly where the green venture capital dollars are going.

We have that information as well.

In 2005, only six green sectors received venture funding. Here are those sectors with the approximate amount received:

Biofuels, $210 million
Solar, $120 million
Water, $110 million
Fuel Cells, $100 million
Batteries, $50 million
Smart Grid, $50 million

2006 brought venture capital to many of those same sectors, though the dollar amounts began to significantly expand. We also began to see money going toward electric vehicles, wind, and geothermal.

2007, it seems, is when GVC began taking notice of other cleantech sectors. In addition to the previously mentioned green divisions, millions started being funneled to ocean energy, lighting and efficiency, and the still elusive "clean coal".

So far in 2008, green venture spending has continued in the original sectors, but to a much more limited extent, while increased dollars have flowed to "newer" sectors, like smart grid technologies, demand response, energy efficiency, batteries and fuel cells.

Reacting to Green Venture Capital

The green sectors of the market that have been hot in over the past year or so are industries that received venture funding years before that.

SunPower (NASDAQ: SPWR) is one of the most prominent examples. When that company was in its early days, it employed only six people and was desperately seeking funding.

Luckily, SunPower's story came across the desk of Amy Smith, now Co-Head of Alternative Energy Banking at Lehman Brothers. Funding came SunPower's way, Lehman underwrote the IPO, and the rest is history.

The early days of cheap solar stocks climbing to legendary status may be behind us. When good companies come to market these days, they're generally valued higher than in years past, if only because of the success of their peers.

To profit in the solar sector these days takes more skill and analysis. It's more about output numbers, the reduction of costs and the creation of economies of scale than it is about just having a novel concept and a name that includes solar.

There are, however, sectors in which it is still possible to get ahead of the retail investment curve. Those, of course, are the sectors being invested in by green venture capital right now and as recently as a few years ago.

The goal is to find those sectors, which we did earlier in this article, and place your bets early. The sectors to watch, in my opinion, are batteries/electric vehicles, water, emissions control, and any technologies that help store renewably-produced power or aid in its introduction to the grid.

At the Alternative Energy Speculator, I look for such early stage companies to get my readers in as early as possible. One of those opportunities, in the emissions control space, is chronicled in this report.

As always, keep with Green Chip to get all the latest on investment trends and analysis of green markets.

Call it like you see it,

Nick

P.S. My colleague and editor of Wealth Daily, Steve Christ, has devised a novel way for 'lazy' investors to profit. It centers around creating a portfolio that works for you by investing in unconventional stocks, bonds and trusts that pay dividends or have other benefits. This report will show you everything you need to know about starting a journey toward wealth building.

The Energy Water Nexus

Most energy solutions fail without water.

But all water solutions fail without energy.

Such was the theme at many breakout sessions during last week's Clean Technology 2008 conference in Boston, MA.

Those sessions dealt with what many industry professionals are now calling the energy-water nexus. A concept that, like the name suggests, deals with the vast issues of water consumed by energy, vice-versa, and everything in between.

The issues are complex, to say the least. And some would call it a zero sum game.

But just identifying some of the key problems can get the ball rolling on potential solutions and, in turn, massive opportunities for profit.

Here are the nuts and bolts of it all.

The Energy Water Nexus

At its core, the energy-water problem stems from the fact that we have a limited supply of each. We have a certain amount of both energy and water, and can't make or destroy either. So we have to find novel and efficient ways to use each of these precious resources.

Here's the 411 on the water situation, which may be a recap for some of you.

As any third-grader knows, the earth is covered 75% with water and 25% with land. That sometimes makes it hard for many to even consider the fact that the world is facing widespread water shortages.

But drilling down on the contents of that 75% water make-up makes it a little easier to understand.

You see, 97.5% of the water we have here on earth is saltwater, leaving only 2.5% as usable freshwater.

Of that tiny 2.5%, 79% is perpetually frozen in the form of polar ice caps and glaciers, making it inaccessible, even at high costs.

Another 20% is groundwater, some in the form of aquifers, which we've been tapping successfully for some time via wells and mains and such.

And the remaining 1% is surface water, or the lakes, rivers and streams that dot landscapes around the globe.

It also doesn't help that we've constantly polluted the tiny fraction of surface water we have for years with the dumping of chemicals, fertilizers, sewage and other pollutants.

So that's the water side of things in a nutshell. We aren't getting any more of it.

The energy connection is a bit more clandestine, especially since we don't see that side of things on a daily basis. Here are just a few of those relationships, though they can certainly be applied to numerous industries and energy-related activities.

It takes, for example, 4 barrels of water to produce just one barrel of oil. This could be water used for well-injection, cooling or a variety of other applications
The Canadian tar sands use more water than the entire population of Alberta (where they're located) on an annual basis
In the U.S., the transportation and purification of water consumers 4% of all electricity
In California, water consumes 19% of the state's electricity and 31% of its natural gas
50%-80% of desalination costs are for energy

Of course, examples like that could fill an entire page, especially if you track water use all the way back to manufacturing processes that make parts for the energy industry. But you get the picture.

The Problem with Water

So we know that water consumes energy and energy consumes water.

We also know the problems, both current and future, with energy security and supply, as they've been chronicled in these pages for years.

What may not be as obvious are the countless problems surrounding the water industry, which, if you like to live, are equally important.

So here are some of those issues.

Water systems are failing. Most water pipes in this country were laid in years following World War II, from 1945-1965, and are now past their useful life—a fact many know, but are unwilling to deal with.

It is these inferior post-War pipes—pre-War pipe were actually better quality—that are responsible for 50% of all leaks in the U.S. A huge number when you consider, though you may not believe it at first, that 20%-40% of all drinking water is lost through leaky pipes.

The aging water infrastructure is also evidence by the 300,000+ water main breaks that occur each year.

And there's more. . .

Water tables and aquifers are falling. Here are just three examples of current water table levels of three major metropolises, compared to their historical average:

Chicago/Milwaukee down 900 feet
Tuscon/Phoenix down 500 feet
Houston down 400 feet

You've also undoubtedly heard of the severe and ongoing droughts in the arid southwest and southeast—for which watering your yard only once a week is an inadequate solution, to say the least.

We're also facing drastic rises in consumption, which the U.S. has led for years. And this is where the zero sum game comes into play.

You see, China, India and Eastern Europe are host to about 2.6 billion people, or 40% of the world's population. The ongoing creation of an ever-growing middle class in those areas brings with it a massive increase in water demand.

Right now, Americans use about 158 gallons per day to take showers, flush toilets, brush their teeth and wash their clothes and dishes. This doesn't take into account the water used to make our goods and grow our food.

In developing nations, water use stands at about 13 gallons per day. But you can bet they'd like an American's share of water, and they're trying to get it.

And these numbers don't include the nearly 1.1 billion people that lack access to fresh drinking water. They too are seeking their share of the world's water.

But if we can't make water, American water use has to go down for others' to go up, right? Hence, zero sum.

Naturally, that's the $64,000. . .ahem. . . $22.6 trillion question.

Profiting from the Water Solutions

Obviously, American's aren't going to curtail their water use independently. Having a green lawn in July is much too important for that.

Nonetheless, something is going to have to be done to overhaul the way we use water. Like in energy (which some have forgotten), the first and cheapest way to do that is through efficiency.

We're seeing this through low-flow toilets and shower heads that use much less water than their predecessors. But for all their benefits, there's really no investor money in toilets.

As investors, we need to be focused on water infrastructure, which was recently given a grade of D- by the American Society of Civil Engineers. By fixing those leaky pipes that cost us 20%-40% ofour drinking water every year, it becomes less critical—though still important—to make large water-use reductions at the individual level.

To that effect, Booz Allen Hamilton, a private government consulting firm, estimates that $22.6 trillion needs to be invested in water and related infrastructure to quell a large portion of the problems.

Add to that the fact that water is undervalued by 300%-500% (just compare a gallon of Deere Park to a gallon of gas) and you're looking at an investor's dream.

Now water is a widespread business, encompassing thousands of companies in hundreds of sectors. So you'll need to weed through them until you find the profitable opportunities.

Of course, that's what I do for members of the Alternative Energy Speculator every week.

Members of that service received their first water-related stock recommendation about one month ago, and have already seen gains in excess of 10%.

And we'll have plenty more double- and triple-digit water winners to come. One stock in the Green Chip Water Index has gained 260% in 14 months.

If you want to get in on these types of water plays to compliment the already hefty profits being taken in the alternative energy markets, you should definitely check out the Alternative Energy Speculator.

In the mean time, take a look at Itron Inc. (NASDAQ: ITRI) and Veolia Envriontment (NYSE: VE)—two all-but-guaranteed winners as this water issue continues to play out.

Call it like you see it,

Nick

Clean Technologies

The Hawaiian Ribeye was absolutely delicious.

After registering for the Clean Technology 2008 conference in Boston early yesterday afternoon, I headed to a nearby restaurant to have dinner with some friends who happened to be in the area.

But despite the high-end service and even better food at what can only be described as a contemporary bistro called Houston's, it was something directly outside the restaurant that really impressed me.

Just out the front door was Faneuil Hall, a shopping center built in 1824 to support the growing city's rapid commercial development.

Perhaps foreshadowing the Big Dig, part of Boston Harbor was filled with dirt to provide land for construction of the hall. Expansion and innovation would continue in Beantown for nearly the next two centuries.

Certainly not part of the area's original construction, the grounds around Faneuil Hall are now graced with solar-powered trashcans—one of the few clean technologies I must say I'd never heard of.

Clean Technologies and The Greening of Waste

The solar powered trashcan outside Faneuil Hall is affectionately dubbed Big Belly, and is made by a company called Seahorse Power.

Big Belly is the brainchild of Jim Poss, who noticed Boston's problem of overflowing city trashcans back in 1999 during a walk around Boston Common.

Originally a developer for electric car company Selectria, Mr. Poss designed a prototype fitted with a compactor powered by a solar panel.

His first trashcan led to the formation of Massachusetts-based Seahorse Power, which began selling the cans in 2005.

There are now about 500 units in cities from Los Angeles to Chicago to New York. And why not?

Big Belly holds up to five times the amount of a typical trashcan, which reduces collection frequency, fuel consumption and the amount of space needed to store waste in landfills.

The novel can is just one way the $45 billion waste disposal industry is going green. We've also recently witnessed the conversion of trash truck fleets to clean fuel vehicles and the creation of energy from waste in the form of biomass, biogas and even cellulosic ethanol.

Incidentally, greening the waste process is also a honey hole for reaping carbon credits. And as we approach a cap-and-trade carbon emissions trading system in the U.S., companies that can make disposing of waste more clean and efficient stand to make a killing, along with the savvy investors who know about the emerging trend.

One such company is Casella Waste Systems (NASDAQ: CWST), which, beyond transforming how the waste stream works, is also guiding and investing in Seahorse Power.

The Adoption of Clean Technologies

Of course, garbage isn't the only way to capitalize on the scorching hot cleantech revolution. And as Washington State Congressman Jay Inslee disclosed in this morning's keynote address, the industry is only going to get hotter in 2009 as Congress moves to pass several bills to foster the adoption of clean technologies.

I've condensed the Congressman's speech into six reasons you need to be invested in this sector before 2009. Each is a measure he thinks will be passed in the 2009 legislative session.

6 Reasons to Invest in Clean Technologies

1. A national renewable portfolio standard (RPS) of 15% (no date provided)
2. A complete building code overhaul that will eventually improve energy efficiency in buildings by 50%
3. Net-metering laws ensuring renewable energy adopters can deliver their electricity to the grid
4. A massive increase in Federal R&D spending for clean technologies (which currently stands at 1/55 the cost of the Iraq War)
5. The domestic establishment of a European-style feed-in tariff for renewably-produced electricity, and most importantly
6. The creation of a national cap-and-trade system for carbon emissions

As Mr. Inslee noted, these are just one man's words. But he seemed fairly confident that most of the initiatives he mentioned could get through both Houses. Naturally, the results of November's election will be the determining factor in exactly how much clean energy legislation gets passed.

Ultimately, he said, the U.S. needs to reemerge as a technology leader and implementer, with reference to Germany's domination of the solar business and Denmark's successful wind industry. (Both of which are investment hotspots for cleantech, whether in Vestas (CPH: VWS), Q-Cells (FRA: QCE), SolarWorld (FRA: SWV) or the numerous other success stories.)

And the need for rapid advancement in clean technology isn't just about rising temperatures or emissions, it's also about dollars.

China, as you know, is developing quite rapidly. And they're trying to do it, albeit with a few glitches, in a somewhat sustainable fashion.

To conclude, Inslee suggested that the U.S. be the ones selling billions of dollars worth of clean technology products to China, rather than having them come from Europe. You can get a piece of that pie too.

In addition to Clean Technology 2008, I'll also be attending the Renewable Energy Finance Forum later this month.

Information gathered at both events will ultimately culminate in profits as I learn which companies will have an edge going into 2009.

These events always offer insights that can't be attained behind a desk. In fact, it was at the Alternative Fuels and Vehicles conference in early 2007 where I learned about the lucrative opportunity of "Clean Air Cashouts." You may want to check it out.

Call it like you see it,

Nick

Renewable Energy IPO

In the Alentejo Forest, money really does grow on trees.

Located in Portugal, inland of the southwestern coast of the Iberian Peninsula, the Alentejo Forest is home to a remarkable crop: the cork tree.

In fact, the area is so laden with the trees that it's responsible for about half of of the world's total cork supply.

Cork—despite its superficial blandness—is actually a remarkable species of plant. Native to southwestern Europe and northwestern Africa, the tree must mature for 25 years before its bark can be harvested in the form of cork.

But what makes the tree really special is its unique ability to regenerate bark, which most trees cannot do. Over time, the bark grows increasingly thick and rough until it is ready for the next harvest, typically in 10 to 12 year intervals.

Once again on the brink of flourishing, a few years ago the cork industry nearly faced extinction.

The Opposite of the Renewable Energy Problem

In May 2003, around the same time our current energy issues were being framed (with a new war, an upcoming election, the beginning of rising oil and the early days of publicized climate change), the cork industry was also in a transitional phase.

Plastic and metals were still relatively cheap, and many wine producers began switching to plastic corks and aluminum screw tops. Not only were the novel wine plugs cheaper, they were also better at preventing an apparently serious problem in the wine industry: cork taint.

Cork taint, as defined by Wikipedia, "is a broad term referring to a set of undesirable smells or tastes found in a bottle of wine, especially spoilage that can only be detected after bottling, aging and opening."

It's caused by the cork tree's absorption of chloroanisole, a pollutant found in pesticides and wood preservatives.

And so the cork industry had to make a choice: adapt or die. After all, about 66% of cork-related revenues come from wine corks, but only 15% of global cork is used to make them.

Thus began the modern evolution of the cork industry alongside a revolution in the way the world sees and uses energy. Only in cork's case, it was the incumbent trying to reinvent itself. Regarding energy, there was a new show in town. . .

Renewable Cork, Renewable Energy IPO

Since cork is a renewable resource, its future availability wasn't the limiting factor. What cork really needed was a production process makeover (to eliminate the chloroanisole) and some good PR campaigns.

It got both. And a cork renaissance—along with a renewable revolution—is now in full swing.

First and foremost, the world's largest cork producer, Amorim (Lisbon: COR), invested 40 million euros to keep cork free from compounds that cause cork taint, mostly through sterilization processes. The company now has a new automated factory that produces 4.5 million corks per day.

But the cork industry also used the marketing momentum associated with sustainability to make its case. Amorim launched corkfacts.com and began documenting the sustainability of cork harvesting and production, as well as touting the benefits of cork usage and recycling.

Now, just five years after the origination of the cork scare, the trend toward plastic stoppers and screw tops seems to be over.

Of course, the transition to a low carbon energy economy won't be quite as rapid. Yet there are many lessons to be learned from the cork scenario.

The main takeaway is that evolution and adaptation are as critical for energy—both fossil and renewable energy— as they were for tainted cork.

Renewable energy must create economies of scale, drive down prices and be able to compete for base-load power applications. Efficiency and storage are also main issues.

Fossil fuels, for their part, must be able to be burned more cleanly and efficiently and, in some gases, have their gases trapped and stored (carbon capture) after combustion.

As you know, these types of energy transitions are creating billion dollar investment opportunities. To get an inside edge, I'm headed to the Renewable Energy Finance Forum mid-June in New York. You may want to check it out.

But you won't have to go there to here about this opportunity, which, incidentally, comes from the cork country itself, Portugal.

Next month, Portugal's largest Utility, EDP Energias de Portugal (Lisbon: EDP) will IPO its renewable division, EDP Renovaveis.

The IPO, slated to begin trading June 4^th in Lisbon, should debut in the eight to nine euro range. The renewable energy IPO is so anticipated that rumors are circulating about its immediate inclusion in the PSI 20, Portugal's exclusive stock index.

What's more, EDP Renovaveis will reportedly become the world's 2^nd largest wind power producer by 2012. Using the proceeds from the IPO, EDP Renovaveis will pay off debt and finance the addition of 1.4 gigawatts per year of installed wind capacity through 2011.

At that point, Renovaveis would be second only to its competitor (and neighbor) Iberdrola Renovables(MCE: IBR).

While getting a piece of this company is probably a good idea, wind won't be a cure-all.

You see, it's not one company or one technology that will bail us out of this energy mess and help us turn a profit in the process. It's a mix of technologies and processes, both fossil and clean, that will be necessary.

Gas to liquids, biomass, hybrids, solar, and carbon capture for coal and oil will each have their place—and their associated investment opportunities.

That's the essence of the Alternative Energy Speculator, a service focused on taking profits from whichever energy alternatives emerge to help battle peak oil and increasing emissions.

Cork may have one the battle for wine stopper domination, but there will be several winners in the energy mix.

One of them could be this emerging technology right here.

Call it like you see it,

Nick