Giving a speech at an alternative vehicle conference
recently, I asked the crowd when they thought hydrogen, battery, or biofuels
would be the norm and petroleum would be the “alternative”. Most hands went up
at 20 years; some at 10; a very few at 5. None would have said “last year”.
But that’s the remarkable fact, according to a report issued
last week by the United Nations. In 2008, $140 billion was invested in wind,
solar, and other renewable sources of energy. Only $110 billion was invested in
coal and other fossil fuel generation. What may be more remarkable was that
investors would put anything into fossil-fueled power plants, knowing they were
committed to buy billions more for the fuel itself over the fifty year life of
those power plants, compared to zero fuel cost for wind or solar.
So with our personal investment portfolios in tatters after
the market meltdown of the past six months, can average investors make money on
this trend that puts renewables into the mainstream? My son and his college
fund certainly hope so.
To take advantage of this massive movement of capital and
policy, I would focus on three things:
Energy efficiency – – 30 states have mandates
for a % of electricity to come from renewables in the next few years. To meet
that goal, utilities are adding more renewables, but also investing in making how
we use electricity more efficient. Invest in companies that make
energy-efficient lighting, doors/windows, insulation, system controls, heating
and a/c units.
Renewables – – Hard to buy a wind farm or solar
array, but lots of companies make things needed by the developers of
renewables. Wind turbines, solar panels and controllers, digesters, and
companies that install solar on residential rooftops (a growth area in an
otherwise slow building industry).
Financing – – Some interesting plays out there
on companies that finance building retrofits and get repaid from energy
savings. Others finance solar projects for utilities or school districts
(reliable customers, so good bets).
I don’t recommend specific companies in these categories
because half the fun is doing your own research and finding them, but also
because many of the best are privately held, so you may want to investigate
venture, equity, and hedge funds (depending on your risk tolerance) that invest
in this space and put your money with the best of those.
Or, you might invest to retrofit your own home or business
to make it more efficient; then add some small solar or wind; maybe even a
battery system to take you off the grid completely. You’ll save money on
electricity, help the environment, and probably add a lot of value to your
buildings. What better “alternative” is there to that?!