Nick Hodge - Angel Publishing

Investing in Renewable Energy Companies

The doubters are still out there.

I'm referring to those who question the validity of renewable energy. . . those who think it's government-sponsored. . . who think it's not scalable.

Or even worse, those who think it's not profitable.

If you're one of them, you're wrong. Plain and simple.

Let me explain...

Biggest Banks in the World

I had the pleasure of sitting in on a finance forum held at the Waldorf Astoria a few weeks ago.

One by one, representatives of the smart money took to the podium to talk about their renewable energy investment strategies.

These weren't socialists or greenies. They were hardcore capitalists. And they love renewable energy.

In the panel titled Global Financial Markets, the heads of the largest investment banks in the world lined the stage and praised renewable energy for its business sense, not for its environmental stewardship.

Ray Wood of Credit Suisse said:

It's a phenomenal time to be involved with renewable energy. We actually have several titles for it within our firm and one of them is alternative energy. I'm very much looking forward to the day, which I think is coming soon, where the alternative part will be misrepresenting how important it is in terms of utility scale. And we think we're getting very close to that day.

And the other banks were just as sycophantic, rattling off their green investment expertise one by one.

Citi's Vice Chairman boasted they've advised on 8 of the 10 largest green mergers and acquisitions since 2008, including the largest wind transaction ever between EDP Renewables and Horizon Wind — worth $2.9 billion.

Jim Metcalfe, the Global Head of Power and Utilities at UBS, boasted his company is "the leading global franchise in advising and raising capital for renewable energy companies." And he had the chart to prove it.

This chart represents IPOs, M&A, Follow-on offerings, and Convertibles:

Nearly $8 billion worth of deals come from UBS alone. And that's without the other $30 billion coming from other global banks.

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And the bragging didn't stop there.

Kevin Genieser, Managing Director at Morgan Stanley, had the following to say:

We look at this as a global business. We have been extremely active all throughout the various markets around the globe, whether it be Europe, Latin America, North America, or even parts of Asia.

We have been doing different types of transactions. It's been everything from early stage private placements through IPOs through follow-on offering, project finance and, in particular, M&A. And based on the number of transactions we have been extremely active even in this down period.

We've done things in solar. We took First Solar public. We've done things within the smart grid having taken EnerNoc public. We just last night filed the IPO for A123 so hopefully we'll be kicking off, once again, the clean technology space with regard to IPOs.

But it wasn't all about the past.

Looking to the Energy Future

It was mentioned during the panel that since 2007, over half of new energy capacity additions have been renewable-based.

Think about that. For every two new megawatts of power capacity added in the last two years. . . more than one came from a renewable resource.

According to the panel, that's because of simple economics. Not because of policy. Not because a greener earth makes them feel all cozy. But because, according to Parker Weil of Bank of America, "It comes down to unit economics. It is obvious that if you — for wind and solar, very capital intensive — invest the initially high capital to displace fossil fuels you will make a very profitable return on invested capital. Returns well in excess of invested capital."

That sentiment echoed throughout the room.

Each bank executive continually pointed to the growing external costs associated with fossil fuels. Some of them have ceased funding new coal plants altogether.

And they all said capital is ready, once again, to flow in all forms. But after having just been burned by a financial crisis, they are being more selective about potential deals, mostly waiting for federal agencies to release stimulus funding rules before they proceed.

As that happens, they are still pursuing investments in less-capital-intensive cleantech arenas. One of them happens to be the smart grid. Smart grid companies reach profitability sooner because many don't need large production facilities or the capital required to build them.

There was much talk about taking advantage of these opportunities now, before the release of stimulus rules and dollars shift the focus back to energy production technologies like solar and wind.

Make no mistake, the smart money is flowing into clean technologies. The largest and most well-capitalized banks in the world are chomping at the bit. And they are increasingly viewing long-term fossil fuel-related investments as liabilities.

If you haven't starting investing in cleantech yet, you're part of shrinking — and increasingly less wealthy — minority.

Call it like you see it,

Nick

P.S. The banks aren't the only ones looking at smart grid plays. I knew they'd do well when capital was tight. Three triple-digit gains in the sector have already proven me correct, but there are still more to come. Click here to learn all about the smart grid and the money you're leaving on the table by not investing.

P.P.S. If you're interested in learning more on the burgeoning renewable energy market, I highly recommend becoming a member of the free Green Chip Review e-letter. It's the original green investment publication, with a readership of over 150,000 profit-hungry subscribers. Simply follow this link to sign up, and we'll immediately send you our newest research report: Investing in Next-Generation Solar Power Technologies.

Investing in Wind Power

You should absolutely love wind energy.

If you live in the U.S., you should love it even more.

Worldwide installed wind capacity is expected to grow 63% by 2012, from 144,486 MW to 235,120 MW. Here's the chart provided by GlobalData:

But in the U.S., it's expected to grow 124% — nearly double the expected global growth — from just under 32,000 MW to nearly 72,000 MW. . . in just three short years.

By 2020, wind capacity in the United States will have grown 360%, all the way up to 147,500 MW.

At that point, the U.S. will account for at least a quarter of global wind capacity.

It's a growth market if I've ever seen one. But trouble still remains in the credit and capital markets. In order to successfully invest in the wind sector, investors need to be familiar not only with the flow of capital to the cleantech markets, but also with national and state renewable energy laws, current and future transmission corridors, government funding, planned projects, and relevant companies.

Seems like a lot to stay on top of, I know. But I'm here to help you wade through it.

Stake Your Claim in the Stimulus Goldmine

With $787 billion in pork now sloshing around Washington D.C., one industry in particular stands to grab the lion's share.

And for the investors that get there first, this moneymaking opportunity is one that may just turn out to be the mother lode.

To learn more about the Stimulus Goldmine that could easily double when all of that pork gets spent click here.

Doubling U.S. Wind Capacity

I was fortunate enough to be in the audience at the Renewable Energy Finance Forum-Wall Street a few weeks ago to catch a presentation from David Berry, Director of Finance for EDP Renewables North America.

Through EDP's acquisition of U.S.-based Horizon Wind Energy, the company has installed over 2,200 MW of wind capacity in the States. They've installed over 5 GW globally. Needless to say, I was interested in this man's perspective on investing in wind energy.

And he summed it up nicely with this graphic:

Basically, Mr. Berry is hinting at a perfect storm for investing in wind energy wherein the recession has driven down commodity prices and forced some players out of the game, resulting in declining construction costs and decreased competition.

Falling interest rates for project finance and government support via the stimulus and production tax credit make up the other two frames of this window for wind investment.

What's more, Berry (and his company) believe doubling U.S. wind capacity will require $50 billion of new capital. That won't all end up in the public market, but Green Chip will do its best to find out how much it does and when, then pass that info along to you.

But before the billions can flow and U.S. wind capacity can double, a few things need to be accomplished at the regulatory level.

Transmitting Wind Profits

At the top of Berry's list of what needs to be done to facilitate wind growth were the following two bullets:

Create a federal siting authority for cross-state transmission projects
Figure out a national transmission market structure

In addition to putting a price on carbon and adopting a national renewable energy standard, it's not hard to see that transmission is the main hurdle for wind expansion. (The other two aren't hurdles per se, but rather expediting factors.)

One look at this chart makes it crystal clear. The places with the most abundant wind resources use the least energy, so the key is being able to deliver rural wind power to urban areas.

Energy is only profitable if it has an end market. So, developers are looking for sites that already have access to transmission or have plans for its imminent arrival.

If you're looking to invest in wind development companies, access to transmission should be high on your list of diligence items. Of course, transmission isn't a necessary requirement for turbine producers.

My colleague, Jeff Siegel, will have a new report on a future stalwart wind developer as early as tomorrow. This one company already has transmission deals in place in one of the largest wind markets in the country, so keep an eye out for it.

When it comes to turbine producers, the dominant players so far have been foreign. Even though GE has significant turbine market share, it's not a big enough chunk of their overall revenue stream to consider it a pure wind play.

Other big players like Vestas (COP: VWS), Gamesa (MCE: GAM), and Suzlon (SUZLON.NS) can only be bought individually through a commission-based broker or via an often thinly-traded Pink Sheets version.

If you want to hold a group of wind companies at once, you may want to check out a wind ETF like the First Trust Global Wind (NYSE: FAN). It should prove to be a good buy-and-hold as global wind capacity surges forward.

Call it like you see it,

Nick

Big Oil to Cleantech: We're Coming

While attending the Renewable Energy Finance Forum Wall Street last week, I was almost surprised to see an entire discussion dedicated to how Big Oil plans on entering the cleantech business.

The talk was led by Don Paul, Executive Director of the University of Southern California Energy Institute.

In his former life, Mr. Paul was the Vice President and Chief Technology Officer at Chevron. He knows a thing or two about the oil business. And his presentation was right to the point.

The first bullet on his outline was: Why the global majors will be players in renewable energy. I'd like to share some of his insights here.

Why Big Oil Will Enter the Renewable Energy Market

Mr. Paul laid out five clear reasons why Big Oil will pursue clean energy opportunities.

They have global reach and scale
Strong balance sheets and cash flow
Technical, business, and market capabilities
Infrastructure, land, and supply chain management
Patience and longevity

In a sentence, Big Oil has enough cash, credit, know-how, and steel in place to pursue multiple clean technologies in numerous geographic markets—even if it takes years. And it probably will, because the majors need to walk a fine line between becoming cleantech companies and ensuring they exploit increasingly scarce oil for all it's worth.

That's why Big Oil's coming to cleantech.

How Big Oil Will Enter the Renewable Energy Market

This was another five bullet set.

First, of course, they're going to use renewable energy to produce oil, freeing up more natural gas to send to market. (Insight: this means Big Oil thinks nat gas will be more expensive than renewables.) The possibilities here have a broad range, from offshore solar powered platforms to wind turbines next to Texas oil rigs.

I guess there's no power like clean power to produce, well, oil.

Second is what Paul calls "adaptive re-use for production and manufacturing assets." In English that means putting wind turbines or utility scale solar on their dying, or soon to be dead, oil fields.

Third is by integrating power infrastructures. Read: We are salivating over the natural gas back-up opportunities (and that's why we're not going to burn it to produce oil).

Fourth should probably be number one. It's geothermal development, which is a natural fit for companies with decades of drilling experience and huge land holdings. In fact, oil companies are already involved in geothermal on a large scale.

Lastly is integrating infrastructures for biofuels, also a glove-fit for Big Oil. There are already increasing ethanol blend rates required by law. And though biofuels still make some people cringe, once we nail down successful enzymes for cellulosic and feedstocks for biodiesel (algae?), the market should blossom nicely once again.

Big Oil can leverage their infrastructure ownership and know-how to seamlessly enter this market. And they already are.

Real Life Examples

In the face of continued criticism of renewables by the uniformed, I find it reassuring to know that even the sworn enemy of cleantech is finally coming around. Big Oil's plan to enter these markets should be the final piece of tape on naysayer's mouths.

And it's not about carbon or altruism in any way, shape or form. It's about profits and a major energy transition—plain and simple.

It's why Valero is using clean energy to power a refinery. According to the Wall Street Journal, "Valero Energy Corp., which has the capacity to process more crude than any other U.S. refiner, recently installed 33 windmills to supply a refinery here with green electricity to produce gasoline and diesel."

The WSJ also pronounced, "The marriage is one of convenience."

It's also why Big Oil is scooping up biofuel assets that now have a recession discount.

Valero just bought seven Midwestern ethanol plants from now-bankrupt VeraSun. Marathon Oil has taken large stakes in two ethanol plants with a capacity of a million gallons each. Sunoco bought one, too. And just like that, Big Oil controls 7% of total U.S. ethanol capacity.

Yes, after a long abstention, Big Oil is finally coming to the cleantech party. It was only a matter of time, and it's a huge affirmation for those of us with skin in the game.

But be warned, they're going to do this Big Oil style, on their terms. That means employing patience, looking for high returns, and only pursuing projects with guaranteed payoffs—hence buying ethanol assets for pennies on the dollar.

So don't expect Big Oil to start producing thin film solar or trying to improve wind turbine design. But appreciate that they're finally coming to the table and the incredible validity it brings to clean energy.

—Nick

Clean Energy Investing

The capital markets are experiencing a time of great turmoil. And Washington's efforts to play babysitter have potentially made Pennsylvania Avenue the new Wall Street. The billions allocated to various industries via the stimulus has left banks looking to The Hill for lending guidance. Today, my colleague, Nick Hodge, takes a look at how this is affecting the clean energy market.

Enjoy,

Brian Hicks, Publisher

"It's never been better and it's never been worse."

That was the line ACORE President Michael Eckhart used to open the sixth annual Renewable Energy Finance Forum Wall Street.

ACORE is the American Council on Renewable Energy, a well-respected member-based organization that has been pushing renewable energy in DC for nearly a decade.

It was the perfect line to convey the current market climate.

The REFF Wall Street

Whenever I return from a conference, I always like to pass on what I've learned.

This is my third year attending the REFF, and it's grown to be one of my favorite cleantech events. Not because I learn about public companies—there are only a few there, and the conference is about finance—but because I walk away with a clear picture of the internal state of the industry from top to bottom.

Ormat (NYSE: ORA) and SunPower (NASDAQ: SPWRA) were there, but only to talk about access to capital from the public perspective. It's really all about where we are now, where we need to be, and where the hell all the money is going to come from to get us there.

Here's what I learned.

The Best of Times

There's a new, clean energy focused administration. Finally.

Green sentiment is growing to a boil both at the consumer and corporate level, with even behemoths like Wal-Mart greening their supply chain and giants like GE, Google, and IBM leveraging their know-how to get in on the action. This thing is real. We knew that.

The American Recovery and Reinvestment Act (the stimulus) has dedicated $56 billion to clean energy and efficiency via grants and tax benefits, and offered clear tax policy guidance for the industry.

There is meaningful and significant energy and climate legislation in front of Congress (passed the House since writing). For possibly the first time ever, the energy bill at hand seriously considers its environmental implications.

Indeed, for those of us with skin in this game, much ground has been covered in just a short time. It wasn't long ago when we were distraught over whether or not the investment tax credit (ITC) and production tax credit (PTC) would be extended.

Now, as was noted at the forum, that seems like ancient history. And we have much bigger issues than whether or not we're going to get tax break extensions.

Yes, the congressional majority and president are on our side. Yes, the stimulus money is going to help out in a big way. Yes, it looks as though the social sentiment is finally starting to shift.

But more importantly, with banks still unwilling to lend, where, exactly, is the money coming from to build the next solar plant? To get the financing for the next wind farm?

And for Green Chip investors, how is that going to affect the valuations of stocks?

The Worst of Times

Financial crisis. Recession. Withdrawal of lending. Loss of tax equity. Slow closing of deals. Stimulus money not being spent yet.

For all the things going for us, there are an equal amount going against.

For starters, banks are unwilling to lend until the government releases detailed guidelines about how the stimulus money is to be spent, because included in that money are loan guarantees.

The rules for those loans are still being written, and the financing structures and mechanisms still being devised. And the banks aren't willing to lend until all that's figured out.

So you can see the stalemate emerging. The banking industry is counting on government guidance before it lends to clean energy energy projects. This is because the government has thrown so much money out there that it's now a de facto lender, and its actions must be taken into account by banks when financing projects.

Neil Auerbach of Hudson Clean Energy Partners had the following questions, just to name a few:

Do grant proceeds count as equity?
Will grant proceeds serve as security?
Can project developers use both grants and loan guarantees for construction financing?
Can one JV partner in a clean energy project apply for a loan guarantee and not the other?

And his sentiment was echoed by top brass from numerous other global banks. They had many other questions like these revolving around senior debt, subordinated debt, tax equity and how the government's stimulus spending rules will affect lending practices.

So here's the concern. The procurement and construction timeline for cleantech projects can be long: 4-6 months for rooftop solar, 6-10 months for utility scale solar, and 9-15 months for wind.

The rate of new projects has already slowed dramatically because of current capital restrictions. Is the industry going to be able to survive the wait while the government hashes out lending details? How long can the industry tread water while capital continues to be choked off?

With several government officials in attendance, there were more than a few calls to speed the process or risk dying on the vine.

Cashing in on HR 1's Greatest Asset

Nobody hates pork more than I do, but buried within the hundreds of pages in the stimulus package, The Wealth Advisory Team has found an entire industry that's guaranteed to profit from it all - leaving early investors with giant-sized profits!

In fact, out of that whopping $787 billion, roughly 10% of it will fall right into the laps of the chemical sector, since it is an industry that literally ties into everything we use all the time.

That's $78.7 billion guaranteed - by law - to an industry that has its fingers in literally everything we touch.

That has left us on the doorstep of a Stimulus Goldmine that could easily double when all of that pork finds its home!

To learn more about this exciting opportunity click here.

Cautious Optimism

From Under Secretary of Energy Kristina Johnson to Senior Advisor to the Secretary for the Recovery Act Matt Rogers (the man in charge of spending energy stimulus dollars), bureaucrats in attendance recognized the need for urgency and assured they are doing their best to speed the spending of stimulus funds.

By all accounts, Q4 2009 is looking like the release of government rules for treasury regulations and DoE loan guarantees from the stimulus. Financing and procurement for clean energy projects can resume in a big way at that time, provided the rules meet the needs of all parties. Q1 2010 to Q3 2010 is looking like the construction period for the resultant projects with operation seen in Q4 2010.

It's fair to say that a significant clean energy stock recovery will not happen until the capital begins flowing and investors see increasing revenue on the horizon.

Here's how members of the Alternative Speculator have been combating the conditions facing the clean energy market.

For starters, we're locking in easy gains. This helps keep our total portfolio buoyant while freeing up cash for the next play. We've closed 27 winning positions so far this year by using broad market volatility to pick-off familiar stocks.

We're also building positions in less capital intensive industries that can expand without access to large amounts of capital.

And the smart grid fits right in this sweet spot because most of the solutions are software driven. Companies that pursue demand response, like Comverge (NASDAQ: COMV) and EnerNOC (NASDAQ: ENOC) can make innovations with the click of a mouse, not with construction of a new turbine or panel production facility.

Perhaps that's why smart grid stocks have been on such an aggressive path recently:

It's certainly why I've been intensively covering them for the past month or so.

If you haven't taken a position in the smart grid yet, this report will show you how to get started. Not only will these stocks prosper while capital remains tight, but the sector is also slated to receive a good chunk of stimulus dollars when they start flowing.

It's a win-win.

Call it like you see it,

Nick

Cap and Trade Legislation

In the ensuing media onslaught since the House passed the "Climate Change Bill," one thing has been lost.

It's not just a climate change bill. It's also an energy bill. Initially, at least, this was supposed to be advantageous to the bill's passage. It has proven anything but.

Lost somewhere among the dubious estimates of how much this bill would cost citizens and the clever, punnish names being used to decry cap and trade is the more important part of this bill. . . for energy investors and for the country.

It's the energy part of the bill. And it's been all but ignored. The bill, after all, is called the American Clean Energy and Security Act. No cap or trade in the title.

Let's not forget that carbon (and other greenhouse gases) will eventually be capped or taxed. The Supreme Court has already granted the EPA authority to do this via its ruling on a multistate lawsuit. That gives the EPA power to regulate CO2 — with or without Congress.

Perhaps you missed this gem of policy detail that broke earlier this year.

While it won't be necessary to regulate emissions, Congress's help would be nice for changing our energy future by leveling the playing field for renewables.

That's where energy security will come from. That's where the money can be found. And that's what we should be focusing on.

The Energy Bill of 2009

The forgotten energy portion of this bill requires us to get 12% of our power from renewable sources such as wind and solar by 2020. It also mandates as much as 8% in energy efficiency savings.

But it won't just guarantee our use of renewables will more than quadruple, from about 2% of the mix today. This bill, when it emerges from the Senate, could be an energy piñata with something for everyone. And everyone seems to be forgetting that.

If it passes that chamber, it's likely to emerge more closely resembling an energy bill that quietly passed a Senate Committee earlier this month. That version includes opening up large areas of offshore drilling, funds for cleaner coal, and a new gas pipeline in Alaska.

A separate Senate bill considers capping emissions.

If the Senate tacks on their provisions to the House version — and strips the cap and trade title — we could actually see passage of a meaningful energy bill this year. One that placates both sides of the aisle. One that significantly boosts renewables while still making significant contributions to the oil, gas, coal, and nuclear industries. One that would leave the door cracked for the EPA to regulate emissions sans Congress.

And one that would make energy investors nice profits as it was enacted.

20% Wind Energy by 2030

The U.S. Department of Energy has released a report stating that the U.S. could get 20% of its electricity from wind power by 2030.

For that to happen, $20 billion needs to be invested every year for the next 20 years, bringing the two-decade U.S. wind investment total to well over $400 billion.

In Europe, over one third of all new electrical generating capacity will come from wind for the next 10 years. After that, wind's share will grow to 46% of all new generation capacity.

The personal profits made from the wind industry will be more than legendary. Green Chip has composed an extensive report on how you can get your share of the profits.

Be sure to read it today.

The Non-Energy Bill of 2009

Of course, that's the optimistic scenario. The energy bill could always fall victim to the pedestrian partisan process we're all accustomed to by now.

I'll admit I'd like to see the House version signed into law. It would be a certain boon to green investing. But that's a political unreality and — dare I say it — probably bad policy.

So, we're either going to get a non-partisan energy bill that actually makes progress on all energy fronts, or we're going to get nothing.

But, I'll let you in on a little secret: renewables win either way. Other sectors only win if national legislation is passed.

It's a bold claim, I know. But here's the reasoning. . .

A national renewable energy policy passed by Congress would cover all 50 states, which sounds impressive and certainly generates headlines. What goes unmentioned, however, is that 32 states already have some form of renewable electricity mandates — some more strict than the national policy could dream of being.

Maine's 40% renewables requirement by 2014, for example, makes Congress's 12% by 2020 look paltry by comparison. And it will happen whether Congress acts or not.

By the way, 32 out of 50 is 64%, or about the percentage of Senate votes needed to pass legislation. Doing it at the state level could allow states whose senators would support the bill to proceed, leaving the remaining states to craft their own energy policies.

And that might not be a bad thing. States with good solar resources, like Arizona, could pursue a solar-intensive renewable energy standard. North Dakota could use more wind. And so on.

Energy policy could be tailored to individual states and could have better results than a blanket energy policy.

And renewables would still win.

Plus, you wait and see how many of those abstaining 18 states adopt progressive energy policies when 1) they see how well it works in other states, 2) they realize long-term energy prices would be lower with renewables, 3) fossil fuel prices once again reflect their looming scarcity, and 4) the executive branch sidesteps the legislative process to limit emissions.

We may not need a massive energy bill when 50 smaller ones can accomplish the same thing.

The bottom line here is that we should be focusing on the energy part of this bill. Doing a good job of that, even if it means nixing cap and trade at the moment, would do much to help secure our energy future, increase efficiency, and help stabilize long-term energy prices.

Those are all good things. And they can be even better for investors. The Alternative Energy Speculator is proving it day in and day out. That growing group of thousands of investors averaged more than one cleantech win per week for the entire first half of the year.

And that is just the beginning of a decades-long trend. Hundreds of opportunities will arise, but here's a peek at the next three.

Call it like you see it,

Nick

Advanced Water Technologies

Water is everywhere. At least when it comes to headlines and human interest stories.

When it comes to the actual resource, water is getting harder and harder to come by.

It's a profitable trend that I've been following for quite some time.

The premise is elementary: There is a limited amount of freshwater on earth.

Increased withdrawals to support booming populations and agricultural needs coupled with lax conservation practices and industrial pollution have led to a serious problem.

Add to that years-long droughts in the American Southwest and Southeast, and water is the new hot topic.

I've been saying this would happen.

Water Problem & Profitable Solutions

Truth be told, the water industry isn't very exciting.

For years the industry has lumbered around, offering decent dividends but not much else. But falling supply, incessantly rising demand, and a failing infrastructure are changing all that.

Now that the stimulus has allocated $20 billion to improving and updating our water infrastructure the industry and investors are buzzing with excitement.

All the standards still apply. Engineering and planning firms like Veolia (NYSE: VE) and Tetra Tech (NASDAQ: TTEK) will do well by designing new water treatment facilities. Companies like Jacobs Engineering (NYSE: JEC) and Layne Christensen (NASDAQ: LAYN) will do well building the new facilities. And companies like Northwest Pipe (NASDAQ: NWPX) and Badger Meter (NSYE: BMI) will do well supplying pumps, pipes, and parts.

You can do well by investing in them.

But even more exciting than the brick and mortar business of water management is the next wave of water opportunities.

Water 2.0

Technology has advanced so far that computers can now be used to conserve water.

This opens up a whole new world of water investing.

Lindsay Corp. (NYSE: LNN), for example, makes a crop irrigation system that farmers can monitor and move remotely from their homes via embedded GPS technology, ensuring each acre gets no more water than it needs.

Other advancements are making farm equipment incredibly savvy. New John Deere (NYSE: DE) tractors are equiped with sensors that tell farmers exactly how much water and nutrients a crop should receive based on data accumulated and analyzed in real time.

And NPR just ran a story on a company called PureSense, which makes underground sensors to monitor soil moisture and other factors. Farmers can check the status of their crops with an iPhone application.

Indeed, desperate water times call for desperate water measures. And more than a handful of them will prove profitable for informed investors.

I'll continue to cover this trend, as I have been for years, here at Energy & Capital and at our sister site, Green Chip Stocks.

Call it like you see it,

Nick

Renewable Energy Finance

The following is derived from an update I sent to readers of the Alternative Energy Speculator upon my return from the Renewable Energy Finance Forum Wall Street, minus the premium stock information.

"It's never been better and it's never been worse."

That was the line ACORE President Michael Eckhart used to open the sixth annual Renewable Energy Finance Forum Wall Street.

ACORE is the American Council on Renewable Energy, a well-respected member-based organization that has been pushing renewable energy in DC for nearly a decade.

It was the perfect line to convey the current market climate.

The REFF Wall Street

Whenever I return from a conference, I always like to pass on what I've learned.

Here's what I learned.

The Best of Times

There's a new, clean energy focused administration. Finally.

The American Recovery and Reinvestment Act (the stimulus) has dedicated $56 billion to clean energy and efficiency via grants and tax benefits, and offered clear tax policy guidance for the industry.

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Now, as was noted at the forum, that seems like ancient history. And we have much bigger issues than whether or not we're going to get tax break extensions.

Yes, the congressional majority and president are on our side. Yes, the stimulus money is going to help out in a big way. Yes, it looks as though the social sentiment is finally starting to shift.

But more importantly, with banks still unwilling to lend, where, exactly, is the money coming from to build the next solar plant? To get the financing for the next wind farm?

And for Green Chip investors, how is that going to affect the valuations of stocks?

The Worst of Times

Financial crisis. Recession. Withdrawal of lending. Loss of tax equity. Slow closing of deals. Stimulus money not being spent yet.

For all the things going for us, there are an equal amount going against.

For starters, banks are unwilling to lend until the government releases detailed guidelines about how the stimulus money is to be spent, because included in that money are loan guarantees.

The rules for those loans are still being written, and the financing structures and mechanisms still being devised. And the banks aren't willing to lend until all that's figured out.

Neil Auerbach of Hudson Clean Energy Partners had the following questions, just to name a few:

Do grant proceeds count as equity?
Will grant proceeds serve as security?
Can project developers use both grants and loan guarantees for construction financing?
Can one JV partner in a clean energy project apply for a loan guarantee and not the other?

So here's the concern. The procurement and construction timeline for cleantech projects can be long: 4-6 months for rooftop solar, 6-10 months for utility scale solar, and 9-15 months for wind.

With several government officials in attendance, there were more than a few calls to speed the process or risk dying on the vine.

Cautious Optimism

It's fair to say that a significant clean energy stock recovery will not happen until the capital begins flowing and investors see increasing revenue on the horizon.

From there, I went on to tell members of The Speculator how we're going to combat the conditions facing the clean energy market.

We're also building positions in less capital intensive industries that can expand without access to large amounts of capital.

Perhaps that's why smart grid stocks have been on such an aggressive path recently:

It's certainly why I've been intensively covering them for the past month or so.

It's a win-win.

Call it like you see it,

Nick

Renewable Energy Statistics

I spent yesterday elbow deep in breakout sessions at the sixth annual Renewable Energy Finance Forum (REFF) Wall Street. So did 700 other top level cleantech executives, the "smart money" if you will.

But rather than whittle down my eight pages of notes into a lengthy piece about the worldly state of the industry-which I will do eventually-I'd rather offer you a simple set of statistics today that can paint the picture just as clearly.

These are numbers pulled right from my notes, in no particular order. They come from various primary sources, from Under Secretary of Energy Kristina Johnson to Executive Director of the International Energy Agency (IEA) Nobuo Tanaka.

If you don't want to invest in cleantech after reading these statistics, you may need to check your pulse.

Cleantech Statistics from the REFF Wall Street

$56 billion. That's the amount of grants and tax incentives available to the renewable energy and efficiency industries-just in the U.S.

75%. That's the percentage growth of global renewable energy capacity since 2004.

2.8 gigawatts. The amount of wind energy installed in the first quarter of 2009.

1.4 gigawatts. The amount of wind energy installed in the first quarter of 2008, pre-recession.

42%. The amount of new power capacity installed in 2008 attributed to wind energy.

83%. The current U.S. administration's carbon dioxide reduction goal set for 2050.

3.6 million barrels. The amount of oil we import from the Middle East every single day.

2.5%. Renewable energy's share of the energy mix in 2008, less hydropower.

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30%. Renewable energy's share of the energy mix forecast for 2030. Growth, anyone?

85,000 gigawatt-hours. The amount of annual energy production potential for small scale hydro.

$0.05 per kilowatt-hour. The target cost for solar energy by 2020.

$50 million. Amount of funding for DoE home geothermal heat pump initiatives.

$100 billion. Amount spent every year on heating and cooling buildings.

$6.5 billion. Amount spent every year powering refrigerators.

18%. The percentage lights attribute to a buildings energy cost.

75%. The efficiency advantage of LED and CFL lights.

87%. The percentage of CO2 attributed to energy production per the EIA.

97%. The percentage increase in CO2 emissions coming from non-OECD countries by 2030 per the EIA. 75% will come from China, India, and the Middle East alone.

$134 billion. The amount of new investment capital coming cleantech's way by 2011.

$217 billion. The amount of new investment capital coming cleantech's way by 2012.

$184 billion. The amount of stimulus dollars afforded cleantech by global governments-China leads.

25%. Percentage of GE Energy Financial Services' portfolio dedicated to clean energy by 2010.

Bottom Line

The only statistic not included is how much your portfolio stands to benefit by investing in the mega-trends emerging from the data above.

The bottom line is that the use of renewable energy will double several times over in the next 15 to 20 years, from 2.5% of the global energy mix to well over 15%, attracting trillions of dollars in capital.

By default, that means other fuels will lose market share.

Where do you want your money: in the energy sector certain to at least quadruple or in the energy sectors whose market share is slipping with every panel and turbine installed?

Scarcity may earn you a few bucks in the fossil fuels market. But fundamental solid growth will make you a killing the cleantech sector.

I'm proving it each and every day-to the tune of 25 closed double digit winners already this year. Many more are on the way.

You can read about the next three winners right here.

Call it like you see it,

Nick

Investing in the Smart Grid

The smart grid is delivering two-fold profits. I know this because I've personally reaped dividends from both folds.

First, from what I call the non-sexy side of smart grid: efficiency. And secondly from the very sexy side of smart grid: investing.

Here's an account of each. . .

Smart Grid Savings

We've barely reached the first rung on the ladder of smart grid deployment, and it's benefits are already apparent.

When it comes to wealth, protecting it can be just as important as growing it. Limiting how much goes out is one way to protect it. And the smart grid can help you do that.

This past winter, months before air conditioning was on anyone's mind, I made a call to my local utility, Baltimore Gas & Electric (BGE). Through their Smart Energy Savers Program, they offer something called Peak Rewards.

In a small nutshell, Peak Rewards offers a discount electricity bill to anyone who signs up. I got a $36 credit last month. My bill was $130, so I had to pay $95-a 27% savings. I, and several thousand other customers, will enjoy that same discount throughout the summer.

Peak Rewards is a fancy way of saying the smart grid has arrived. Upon signing up, an appointment was made for a switch to be installed on my outside air conditioning unit. On days when electricity demand is excessively high, a radio frequency will be sent to my switch telling it to cycle my unit.

Cycling means my fan continues to run, but the unit doesn't cool the air, saving electricity that can then be used where needed. During a cycling event, which don't happen that often, the temperature in my home can be affected by a degree or so. And they usually happen during peak hours, when I'm at work anyway.

So the smart grid is already paying me $35 a month. But this is only the beginning. The very beginning.

Because over the next 20 years, over $2 trillion will be spent on revolutionizing our electricity infrastructure. When complete, my switch will seem archaic.

The Green Energy Gold Rush

$148 billion was invested in the renewable energy sector last year. Are you getting your share of those profits?

The world's wealthiest investors are... and they're doing it outside the U.S. In fact, half of the world's wealthiest investors -- those with assets greater than $1 million -- are invested in green markets.

This report contains all the information you need to start investing just like the richest people in the world. You can't afford to continue leaving these unchecked profits on the table.

That's because the grid will finally be in the 21st century, instead of lumbering around like Edison was still here. You'll monitor your home's electricity use from a webpage, charging your car and turning off lights with a click of the mouse from your laptop. I'm serious.

You may even be able to choose which wind farm you want power from.

It'll help consumers save billions of dollars (and kilowatt-hours) by engaging them in electricity use, rather than alienating them from it with a complex monthly statement. But it's also a mega investment opportunity.

Smart Grid Investments

Somewhere down the line BGE partnered with a smart switch provider. A contract undoubtedly worth millions. In this case, Honeywell is the name stamped on the switch.

This process is being, and will be, repeated hundreds of times as utilities across the world adopt smart grid practices. As I said earlier, the total will top $2 trillion.

But it's not just switches.

It's smart meters. Software. Batteries. Transmission wire. LEDs. Substations. And more.

Hundreds of multi-million dollar contracts will drive related stocks higher. It's the second fold of smart grid profits. . . and they directly affect your portfolio.

So while you're knocking a third off your utility bill on the front side, you can be reaping double and triple digit winners on the back end. It's going on right now:

If you're not on board yet, don't worry. This is a decades-long process, and the benefits will only grow.

Call your local utility and see what kinds of new programs they're offering. Encourage them to adopt an efficiency or related rebate program if they don't have one already.

And by all means, start investing in the companies making the smart grid a reality. But don't do it on a whim. Take a few minutes to read this detailed smart grid report.

It explains how the smart grid will come to be, what technologies it will encompass and, most importantly, how you can start profiting today.

Call it like you see it,

Nick

The Alternative Energy Industry

The alternative energy industry has surged onto the scene over the past few years, growing from a tiny market segment to a ubiquitous industry.

Once on the sidelines, cleantech is now a marketing and social magnet. Companies and factories are going green. So are homes and individuals. Cars are now eco-friendly.

The use of renewable energy is not only doubling and tripling, it's being forced to grow by the government. Well over half the states have laws that mandate the use of renewable energy must expand several times over. A bill currently circling Congress would do the same for the entire country, as well as put a cap on carbon emissions.

Of course, the adoption of the smart grid and energy efficiency is marching right in step.

And I'm not just talking about the U.S. I'm talking about the entire world. Even countries you've never heard of have renewable energy targets.

With so much happening so quickly, I figured it was time to offer a green report card of sorts. And as a Green Chip Review member, you can access this report - absolutely free - right here: http://www.greenchipstocks.com/report/alternative-energy-a-2009-report-card/449.

Call it like you see it,

Nick

Water Problems & Solutions

Given the current state of their region, you'd think the Western Governor's Association would have plenty of pressing issues to discuss. . .

California can't pay its bills—funding for education, healthcare and welfare have already been cut as the state's deficit continues to balloon to over $24 billion. In all reality, state-paid workers could soon be paid with IOUs.

The source of swine flu, now a global pandemic per the World Health Organization, lies right below Western states. And then there's the ongoing immigration and drug problems stemming from their southerly neighbor.

Indeed, Western governors have much to worry about and prepare for. Yet conversation at the recent three-day Western Governor's Association meeting was largely dominated by water issues. The topic is gaining such importance that several presidential cabinet members, as well as water experts from the Middle East and Australia, were in attendance.

According to the Associated Press, "Although many of the controversies in the West center around urbanization, natural resources and energy development, water - and often the lack of it - comes up again and again."

Alleviating water issues in the West and elsewhere is proving to be a very valuable, multifaceted business. And the gathering of minds at the recent governor's summit offered a bit of insight about where to look for profits.

Tributaries of Water Profits

One of the key panelists at the forum was preeminent water expert Dr. Peter H. Gleick, president and co-founder of the Pacific Institute, and someone whose work I've been following for some time.

With respect to "urbanization, natural resources and energy development," Gleick believes, "Water is connected to all those things." This is a theme I've conveyed to you in articles about the energy-water nexus.

To combat the compounding of problems, Gleick and policymakers are pushing numerous solutions that focus on both the supply and demand sides of the water issue. And each one has its own investment angle.

On the demand side, officials are pushing ubiquitous conservation. And this means water prices are going to rise.

Los Angeles has already given customers a monthly usage allowance. If they go over, their water rate nearly doubles. And the European Union's Water Framework Directive will heavily tax water after 2010.

Just as consumers are adapting to higher energy costs, so to will they adapt to higher water costs. Smart meters being used for electricity are being engineered to work for the water industry as well.

Retrofitting millions of homes and businesses with smart water meters will be big business. And some of the same names apply. IBM (NYSE: IBM) and Itron (NADAQ: ITRI) are involved in all things "smart."

President Obama just forked over $350 million to the geothermal industry.

But which geothermal company will get the lion's share of this massive subsidy?

Perhaps the only one that just got $84 million from the DOE to build its next power plant!

Want a piece of this action?

Click here now.

But reducing demand is less than half the picture in this scenario. The big solutions—and the big profits—will come from altering water supply.

Oceans of Water Profits

Pretend for a moment that water is oil.

Conservation is great. But it doesn't really change the macro market. Tightening water use standards is like increasing CAFE standards: it makes headlines, but that's about it. It's a purely political victory—no automaker was doing cartwheels over having to make more efficient cars.

Now imagine changing the supply picture.

This is why throngs of investors get so excited about offshore oil, oil sands, and the arctic reserves. . . because it increases supply. And the companies that have access to the new supply make an absolute fortune.

The entire business of wildcatting was built on this premise.

And it's about to play out in the water sector on two fronts.

The first is water reuse. By actively treating and reusing water, rather than purging it into rivers and down storm drains, the supply picture begins to improve.

As water problems mount, a multi-billion dollar effort will ensue to revamp our water infrastructure, erecting many new treatment and distribution plants. Much money was dedicated to this in the stimulus, and related stocks are starting to feel the results.

Industrial water plays like Tetra Tech (NASDAQ: TTEK) and Flowserve (NYSE: FLS) are the main beneficiaries. Not to mention all the parts and pump suppliers that will provide the backbone for the expansion.

The second, and most lucrative, supply-side solution is desalination. If it were oil, desalination would be like finding limitless Saudi Arabias in your backyard. There's an infinite supply. . . oceans of water and oceans of profits.

It's why blue chip conglomerates are pursuing the technology full bore. GE and Dow have been in the desalination game for years. So has Siemens. They've been exploiting desalination in the Middle East where oil money and arid conditions have allowed it to prosper. But growing water issues are about to make desalination a global necessity.

A recent industry report by Lux Research stated the industry will triple in the next decade. Related stocks could fare just as well.

If fact, I've found one company whose technology is certain to succeed. Berkshire Hathaway and a handful of institutions agree with me—they've each bough millions of shares.

You can learn all about the technology, the company, and its profit potential right here.

Call it like you see it,

Nick

Smart Grid Companies

If you're not aware of the smart grid, you're in the minority. Hundreds of billions are being spent to completely overhaul the way we distribute and use electricity. . . and it's creating a mega investment trend in the process. My colleague, Nick Hodge, has been covering the topic for some time. Green Chip investors have already doubled their money by listening to his smart grid advice. Enjoy.

—Brian Hicks, Publisher

Dear Reader,

"$700 billion in new electricity generation will be needed over the next 20 years."

"Overall transmission modernization, including new higher capacity lines along with the communications technology, could cost as much as $1 trillion."

"A promise of $4.5 billion in economic recovery money for smart grid development, much of it going to help pay for installing new meters, has produced a rush by utilities and technology companies to start or accelerate projects."

All that came from just one Associated Press story this week.

You think there's a bit of interest in the smart grid?

Everyone's trying to get a piece of this thing.

For investors like me (and my readers), who have seen this coming for a while, taking profits has never been easier. It's really been like shooting fish in a barrel. We've had more double-digit winners in 2009 than weeks in the year.

And the media is pumping up the smart grid like crazy. . . selling it like an infomercial.

Here's how the AP categorized business interest in the opportunity:

"Hundreds of technology companies, fledgling venture capitalists, longtime corporate icons and almost every major electric utility company want to be part of [smart] grid modernization."

Given the serious implications for savvy investors, you should want to be a part of it as well.

This Is the Energy Internet

The technology the smart grid will usher in is also making mainstream news.

Here's how the same AP article described the future you've been waiting for:

. . . Home thermostats and individual appliances that adjust automatically based on the cost of power, and water heaters that can draw power from a neighbor's rooftop solar panel. They see a time when, on a scorching hot day, a plug-in hybrid electric car charges one minute and a few moments later sends electricity back into the grid to help avert a brownout.

Also coming are utilities that get instant feedback on a transformer outage or shift easily among energy sources from wind turbines to coal-burning power plants and back to the turbines when the wind begins to blow again.

And, from miles away, power companies will peer into homes and businesses, then automatically lower thermostats or adjust power use, depending on demand and prearranged agreements.

Indeed, the technology is impressive. Bob Gilligan, a VP at GE, says, "It's the marriage of information technology and automation technology with the existing electricity network. This is the energy Internet."

Buffett Loves Batteries

And so do members of Green Chip International.

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But just like the global cleantech market, this play is just getting started.

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And according to Michael Jung, director of the highly successful smart grid start-up Silver Spring Networks, "The hurdles are not technological. They're really policy hurdles."

But even those are being worked on as Uncle Sam shows his support for the smart grid.

The stimulus alone dedicated $4.5 billion to the cause. And the DoE recently opened the funding gates when they raised the individual grant limit to $200 million. . . from just $20 million.

Plus, the energy bill working its way through Congress contains a minimum nationwide efficiency standard that will bolster the effort.

Bureaucratic bigwigs are also flexing their muscle. Obama and Biden have offered dozens of sound bites on the subject. Energy Secretary Chu has called implementing the smart grid an "urgent national priority."

That's not the only thing that's urgent— so is staking your claim.

I'm not joking when I say some of these smart grid stocks have gained 300% since Obama was elected. Take a look:

I've guided Alternative Energy Speculator readers to multiple double-digit wins in this sector. And I'll continue to cover it here in Green Chip Review as the trillion dollar market unfolds.

Call it like you see it,

Nick

Algae Biodiesel

From New Hampshire to South Carolina, local news outlets are busy covering the appearance of many different types of algae.

It's big news in the Granite State, where "a potentially dangerous blue-green algae has been observed in Lake Monomonac in Rindge, prompting the town to post warning signs to residents."

Down South, ABC affiliate WCIV reports, "So far, the red algae is not causing a problem in Georgetown, but. . . local experts believe it's a matter of time before the red algae hits in-shore."

Even here in Baltimore, our Inner Harbor has been inundated with what is officially being called Prorocentrum minimum— yet it caused an estimated 3,200 fish deaths and had a maximum stench.

But for all the trouble algae is currently bringing, its presence may be a saving grace in the future.

Algae Biofuels Offer "Great Promise"

According to the draft algae biofuels roadmap issued by the Department of Energy last week, "Microalgae offer 'great promise' to contribute a significant portion of the renewable fuels target specified in the Renewable Fuels Standard."

And that's not even the exciting part.

The roadmap went on to say:

Algal biofuels could provide sufficient fuel feedstock to meet the transportation fuels needs of the entire United States, while being completely compatible with the existing transportation fuel infrastructure (refining, distribution, and utilization).

Of course, that's a long way off. The technology needed to get us there is still in its "infancy."

Bear with me for one more snippet from the roadmap:

There is a general consensus that a considerable amount of research, development, and demonstration (RD&D) needs to be carried out to provide the fundamental understanding and scale-up technologies required before algal-based fuels can be produced sustainably and economically enough to be cost-competitive with petroleum-based fuels.

That's in DoE speak. In investor's English, they're screaming, "Ground-floor opportunity!"

And how could it not be? If the technology is in its "infancy" and could eventually meet all our liquid fuel needs. . . there is only one direction to go, right?

Same as in the early 1970s, when the DoE launched the Aquatic Species Program to further the same cause. . .

I guess the return of cheap oil after the embargo has kept the ground floor intact for nearly 40 years now. But with peak oil knocking on the door and global governments determined to reduce CO2 output, algae is once again in the limelight.

The Green Energy Gold Rush

$148 billion was invested in the renewable energy sector last year. Are you getting your share of those profits?

This report contains all the information you need to start investing just like the richest people in the world. You can't afford to continue leaving these unchecked profits on the table.

Wait for It, Wait for It

Now, the government seems to be a bit more serious. $800 million has been given to biodiesel research by way of the stimulus, much of which will go to algae biodiesel research.

Research.

It's hard to profit from research unless a private company makes a major breakthrough.

What's worse, the DoE's Algal Roadmap puts it in plain terms that:

The current state of knowledge regarding the economics of producing algal biofuels are woefully inadequate to motivate targeted investment on a focused set of specific challenges. Furthermore, because no algal biofuels production beyond the research scale has ever occurred, detailed life cycle analysis (LCA) of algal biofuels production has not been possible.

In short, the science of algae cultivation (algaculture), agronomy-for-algae, if you will, does not exist. It is thus clear that a significant basic science and applied engineering R&D effort including a rigorous techno-economic and LCA will be required to fully realize the vision and potential of algae.

Nonetheless, several companies are in hot pursuit, trying to eliminate every hurdle to commercialization they can and securing a windfall payout in the process.

Investors are doing the same. But so far, finding a winner has been as successful as the hunt for commercialization. Here's a handful of algae hopefuls over the past two years.

Anywhere from flat to bankrupt. And believe me, Chapter 11s have been filed in this sector.

But the research goes on. And a few companies, including private ones, seem to be making strides— at least to the extent that venture and private capital are still flowing to the sector.

Algae start-up Solazyme, for example, secured another $57 million this week. They've raised cash in several rounds already.

Eventually, a breakthrough will happen. It's just too early to tell when and who will make it.

In an effort to explore the topic further, I've conducted an interview with the CEO of one of the top companies in the field.

I'll be releasing it to readers of Green Chip Review in the coming week. Sign-up for that FREE newsletter here to get the new algae report along with other profitable coverage from the alternative energy market.

Call it like you see it,

Nick

Smart Grid Stocks

Here's how the same AP article described the future you've been waiting for:

. . . Home thermostats and individual appliances that adjust automatically based on the cost of power, and water heaters that can draw power from a neighbor's rooftop solar panel. They see a time when, on a scorching hot day, a plug-in hybrid electric car charges one minute and a few moments later sends electricity back into the grid to help avert a brownout.

Also coming are utilities that get instant feedback on a transformer outage or shift easily among energy sources from wind turbines to coal-burning power plants and back to the turbines when the wind begins to blow again.

And, from miles away, power companies will peer into homes and businesses, then automatically lower thermostats or adjust power use, depending on demand and prearranged agreements.

349% Gains. Against 62% Losses

That adds up to a 286% net gain in Steve Christ's Wealth Advisory portfolio.

And while most other investment advisories are getting ripped to shreds, Steve's showing his readers a way to steer clear of the financial melee... and actually profit.

It's a bulletproof strategy giving investors exactly the thing they're looking for to protect and preserve their wealth in today's market: safe, steady income.

To learn more about this winning investment strategy click here.

Nick

Battery Power Stocks

Last week, we talked about Buffett's bullish bet on battery stocks.

To recap, last September Oracle-owned MidAmerican Energy took a 10% stake�worth $232 million in a Chinese battery/auto manufacturer.

The company, BYD (HK: 1211), is up 306% since.

But Buffet isn't the main story here. In fact, he's more of a catalyst bringing an extremely lucrative investment opportunity to the public eye.

The real story here is energy storage, which I recently covered in a two-part series you can read here and here.

It's not a very sexy topic, I know. But easy double-baggers make it a bit more appealing.

The Case for Energy Storage

Do you remember when Obama was talking all that crazy stuff about doubling the use of renewable energy, laying new power lines, and improving energy efficiency?

Well, you should because he's been doing it for about a year now, half of which he's been the leader of the free world. And even if you haven't noticed (or don't care). . . others, including myself, profitably have.

This is because of the unique dynamic of the energy storage market.

You see, Congress is about to mandate that we get a certain percentage � probably 15-20% � of our electricity from renewable resources in the next decade. The bill has already passed committee in the House.

Thing is, not many people realize the full implications of this move. This is guaranteed market share and crystal clear visibility. Imagine if a new law required Sprint to have a guaranteed increased market share. You'd buy that stock, right? Thousands of investors would.

This is exactly what's happening in the renewable energy market right now. Solar and wind stocks, on average, have tacked on ~30% or more in the past few weeks.

But we're not talking about them today because energy storage stocks have proven even more lucrative.

And that's because energy storage is needed no matter the energy source. It's the only technology that will allow renewable energy to meet its new growth targets.

Going forward, nearly all new solar and wind projects could use an energy storage device to store excess power. This way, wind energy generated overnight could be used the next morning.

Industry insiders are forecasting inelastic demand for this market. If you know anything about economics, you know that means prices can be raised without affecting demand.

And it's been estimated that even if only 1% of projects that could use energy storage adopt some form of it, the market will be worth $600 billion in the next decade.

But profits are being made right now.

International Companies are Leading the Cleantech Revolution

Think Detroit has an ethanol answer to Peak Oil and black gold's dark days? The Brazilians have been on the ball for 30 years, and their sugar-based technology knocks the socks off cornfield fuel. From solar to wind to wave energy, water infrastructure and everywhere in between, the best solutions to humanity's most pressing problems are actually coming from outside the U.S.

Click Here to learn more.

Four Energy Storage Stocks You Missed. . .

But I (and readers of Alternative Energy Speculator) didn't.

That's because when I see a looming opportunity, I take it. This market is being forced to grow, for crying out loud.

And the billions set aside for smart grid and battery development in the stimulus were a clear buy signal for this market.

Other investors obviously agreed. And look what happened:

Readers of Alternative Energy Speculator have cashed out of three of those stocks for double-digit gains. And they're sitting on the other one for even more profits.

Were you in these stocks? Have you even heard of them?

These are the companies providing the backbone of a new energy economy. There are plenty more of them, and AES members have been reading about them for months.

If you're serious about investing in energy, you need to be reading about them as well.

China's got a $300 billion deal on the table to get 15% of its energy from renewables by 2020. India is shooting for 10% by 2012. And in addition to the coming U.S. targets I discussed above, the recent stimulus allocated $112 billion for the sector.

Have you heard anything about increasing the use of oil by law? Any mention of a fossil fuel stimulus?

Sure, there's money to be made there, but only because economic scarcity will drive up prices.

I'd want to get in on the ground floor of the new energy industry rather than jump off the top floor of a dying one.

Call it like you see it,

Nick

P.S. I'm not pushing any ideology or political spectrum. I'm just calling it like is see it. And so far this year, I've called 27 winners in the cleantech space � 23 of them were closed for double-digit gains. Stop thinking about it and start profiting from it.

Battery Technology Stocks

Warren Buffett's favorite word from this year's spelling bee has to be ophelimity, which means economic satisfaction.

As we all know, he loves making money. And he's good at it.

He also loves the cleantech market for all the ophelimity it brings.

It's no secret clean energy is big business. I've heard more than once that Buffett's MidAmerican Energy Holdings generates more wind power than any other regulated utility. But it's hard to tell, since megawatts (and profits) are added every day.

So, it shouldn't be big news — or surprising news — that The Oracle is interested in other segments of alternative energy. That's why I was somewhat shocked to see Buffett in the headlines of major news outlets this week as they touted his "new" interest in batteries.

I've been telling you the battery market — and energy storage in general — is heating up in a big way. And I've known about Buffett's "new" interest in batteries since 2008.

A Buffett Battery Buffet

In fact, it was last September when MidAmerican took a 10% stake in BYD (Build Your Dreams), a Chinese battery and auto maker. I recommended it to readers of Green Chip International on the December dip, and you can see how we've done since then:

Up 188% and running. The Dow's down about 30% for the same time frame.

Why? Because BYD is doing what American carmakers failed to: focus on efficiency and hybridization early.

Here's how that worked out:

Any company can make a car. Only a few are successfully making hybrids. And you can see where investors think the future will be.

But really, BYD's success has more to do with its battery than anything else. The battery is the keystone of the entire hybrid market, and the Achilles heel of the Chevy Volt, among others. It's easy to form sheet metal into a sedan.

Stake Your Claim in the Stimulus Goldmine

With $787 billion in pork now sloshing around Washington D.C., one industry in particular stands to grab the lion's share.

And for the investors that get there first, this moneymaking opportunity is one that may just turn out to be the mother lode.

To learn more about the Stimulus Goldmine that could easily double when all of that pork gets spent click here.

It's the Battery, Stupid

As it turns out, hybrids are great. But Buffett went after BYD for their batteries because they can not only transform the global auto market (BYD cars will hit Europe next year and the U.S. shortly after), but they also have very profitable implications for the smart grid and energy storage markets, as we learned last week.

Here's the Christian Science Monitor blurb I referenced a few weeks ago:

While the Obama administration presses to expand renewable energy with emphasis on growing wind farms and utility-scale solar, these efforts could vastly increase the need to build new backup power plants — much of which today involves firing up natural-gas turbines when the winds die down. The only way to avoid using fossil fuels is to develop grid storage.

What we're talking about is storing some of the power generated by solar and wind to use it when the sun isn't shining and the wind isn't blowing. Buffett thinks BYD's batteries would do that nicely.

MidAmerican is starting the testing process now, building a 2-megawatt storage facility in Portland. And BYD is building a Chinese version as well.

This is all because of how potentially lucrative the energy storage market could be. According to a recent industry report by Piper Jaffray, "The total available market for energy storage will be at least $600 billion over the next 10-12 years even if just 1% of the total worldwide stationary energy generation market adopts some form of energy storage for stationary power."

What happens when 2% adopt? 3%?

Well, I think it's safe to say we'll see more of this:

Those are three stocks from the energy storage arsenal in just the past three months. And readers of Alternative Energy Speculator have played each of them.

But this will be a years-long profit process. Warren Buffett knows it. And now you know it.

All you have to do is take advantage.

Call it like you see it,

Nick

Water Stocks

This article originally ran on our sister site, energyandcapital.com. But the content fits so well into the ongoing Blue Gold series, that I thought Nick should share it with you this week.

Enjoy,

—Brian Hicks, Publisher

I've covered the water industry for some time, waiting for the problems that I knew were coming to rise to the surface and create serious profit opportunities for those in the know.

In the States, investors that get the big picture have seen this coming for a while. Those unfortunate enough to live in water-scarce areas—and they number in the billions—have been living with the stark water reality for decades, or longer.

But only in the past few years have water problems made headlines here. As our infrastructure teeters on the brink of collapse, you undoubtedly hear about one of the thousands of water main breaks that happen each and every day.

And you've probably also heard that, in addition to cash flow, California's water supply is also drying up. In fact, most of the Southwest and Southeast are in years-long droughts.

It all sounds very bad but, if you play it right, the results of this impending water crisis can be very good.

Worldly Water Wealth

That's mostly because we're a relatively wealthy, prosperous, developed nation, with a government that will ensure its citizens' access to freshwater. That may not be the case in other parts of the globe.

Take, for example, the $11.28 billion recently allocated to improving our water supply via the stimulus and the president's budget. Here's how that sum breaks down:

$3.9 billion for EPA Water Loan Programs
$6 billion for EPA Clean Water State Revolving Funds
$1.38 billion for the USDA Rural Water and Waste Disposal Program

The total sum is greater than the entire gross domestic product of Cambodia. And it's all going to alleviate water our problems.

Such is the benefit of living in a wealthy nation. The cumulative "they" won't let anything too bad happen. We're spoiled enough to know that Uncle Sam will always provide.

But there's more to it than just having the simple things readily available. . . water at the tap, a well-connected highway system. You can also profit from them.

Because Uncle Sam is just like, well, a rich uncle. He'll pay for you to get things done, but he won't do them himself.

This oft overlooked bridge is the key to easy profits.

Buffett Loves Batteries

And so do members of Green Chip International.

Both took positions in a tiny Chinese battery maker. And both are up nearly 200%.

But just like the global cleantech market, this play is just getting started.

Click here to start banking serious international energy profits today!

A Bridge to Somewhere

The government is just providing the funding for these projects. Funding that you contributed to via taxes or from debt we've outsourced.

Those funds then go to companies that provide desired services. . . companies that you can invest in for profit. I'll call this the funding bridge. And most government projects have it.

It's why Northrup and Lockheed profit during wartime. And it's why biotechs soar when they get government funding or approval.

I'm sure even the "Bridge to Nowhere" would've had a profit bridge to somewhere.

This time around, over $11 billion is about to make its way onto the balance sheets of water companies. The key to profiting, and to taking double advantage of government spending, is to find out which companies are getting the boost.

This is one of the ways Alternative Energy Speculators get an edge on the cleantech market. If you haven't noticed, politicians from all sides are stumbling over themselves to give money to clean and green projects.

It's why we bought into Tetra Tech (NASDAQ: TTEK) at the end of March. As one of the preeminent environmental engineering firms, I knew Federal money was about to head their way.

Since then, TTEK has been awarded a $20 million water resource planning contract with the U.S. Army Corp of Engineers. And we're sitting on a 20% gain. We've also cashed out of several other water plays in the double-digit range.

But this funding bridge is just getting started. According to Recovery.gov, only $36.8 million of stimulus dollars have been spent. The Feds will be spending that money for the next four years.

And if you get into the right companies now, you could be profiting the entire time.

Companies are lining up to get the funding. And serious investors are lining up right behind them.

In fact, I've found one water company that the big boys are salivating over. It'll easily double as more attention is paid to water woes, and as more money is doled out to combat them.

Berkshire, T. Rowe Price, and more have already increased their positions, but there's still time to get in. Take a moment to read all about the water company that's got Buffett hot and bothered.

And keep an eye out for more on water opportunities in the future.

Call it like you see it,

Nick

Oil Prices to Rise

Make no mistake, recent low oil prices are only a function of the recession.

During a recession, production of goods is slowed across most sectors. This means fewer factories buzzing, fewer workers driving, and fewer deliveries being made.

All this implies subdued oil demand, and that's been reflected in the price. Oil's price has been more than halved in the past year.

But don't think $60 oil is here to stay. Two factors will ensure its imminent rise.

Slowed Oil Investment

It's a well-known fact that capital investment slows during a recession. This means less money is spent looking for new sources of oil and ramping up existing sites.

That's fine for now, while demand is subdued. But as the recession fades and demand returns to normal levels, we'll realize that failure to maintain oil investment has its consequences.

The missed period of investment during the recession will mean supply won't be able to keep up with demand when normal market conditions return.

And oil prices will climb much higher.

Here's what Saudi Arabian Oil Minister Ali Naimi had to say about the situation and his country's involvement:

"We are maintaining our long-term focus rather than being swayed by the volatility of short-term conditions. However, if others do not begin to invest similarly in new capacity expansion projects, we could see within two-to-three years another price spike similar to or worse than what we witnessed in 2008."

He's been warning about the lack of oil investment for month.

Changing Oil Sources

The recession has done oil prices another disservice. It's delayed the realization that "cheap" oil is becoming more scarce.

Post recession, we'll quickly realize (again?) that consuming 86 million barrels per day and producing 85 million barrels is not sustainable.

As we work through the hundreds of millions of barrels displaced by the recession, it will become apparent that the light sweet stuff we're used to is fading fast.

Sure, there's plenty of oil left. But it's harder to get: offshore, shale, oil sand.

And it's much more expensive. And it takes longer to produce.

I'd say we're in for an oil wake-up call by years' end.

Saudi Arabia, according to the Financial Times, thinks that oil "could spike to beyond the near $150 record high of 2008 within three years."

I've been playing the trend through bullish oil ETF (NYSE: DXO). But alternative energy will also benefit as high oil prices serve as a catalyst for investment in that sector.

Stick with Energy & Capital as the energy market continues to evolve and change.

Call it like you see it,

—Nick

Smart Grid Investments

You can often get a pretty good pulse on emerging cleantech themes by reading the pages of the Green Chip Review.

Going over my articles from the past two months, I noticed a clear trend: water and smart grid are the themes of the day.

And it's not hard to see why.

The American Southwest and Southeast are three years into the worst drought in decades. As river flows dwindle and reservoirs dry-up, mass media is beginning to cover a story we've been on top of for years.

Expect both those trends to continue: more coverage on and profits from the water sector, and Green Chip's continually beating the evening news to the punch.

The other hot theme of late — and the one I'll expand on today — is the inception of the smart grid.

If you're not up to speed on smart grid basics, click here. But we're essentially talking about a complete overhaul of how electricity is delivered and monitored.

The best way to think of it is as an internet for electricity, a system that will let you see electricity use and price data in real time, rather than 30 days later.

Buzz around this sector is booming, and some related stocks have doubled in the past few months. Billions were allocated to the cause in the recent stimulus, but there's reason for a lot more optimism since then.

Here are three recent cheers for the smart grid.

President Obama just forked over $350 million to the geothermal industry.

But which geothermal company will get the lion's share of this massive subsidy?

Perhaps the only one that just got $84 million from the DOE to build its next power plant!

Want a piece of this action?

Click here now.

Smart Grid Cheer #1: DoE Funding

Among the $4.5 billion set aside for smart grid development in the recent American Recovery and Reinvestment Act were grants capped at $20 million apiece.

But deploying the smart grid — and all the efficiency advantages that come with it — is proving to be so critical, and the projects so large, that the DoE recently raised the grant cap to $200 million.

That's a 900% increase in the cap for DoE smart grid grants so giants like IBM, GE, and even Google can dip into them to execute large projects.

Smart Grid Cheer #2: Google It (or IBM It, or GE It)

Another promising trend in smart grid development is the eagerness of the big boys to participate.

Google (NASDAQ: GOOG) has already spent millions funding smart grid start-ups like Silver Spring Networks and providing software for smart grid projects in partnership with GE (NYSE: GE).

The search giant is also forging ahead with its own smart grid project using its PowerMeter software. They've partnered with eight major utilities in the U.S., Canada, and India (more to come) that will install smart meters at their customers' homes and business. Those customers will then be able to monitor their energy use and costs in real time on a customized Google page using customized Google software.

Itron (NASDAQ: ITRI) is the first announced smart meter partner in that foray. That stock got a nice bump when the news came out last week.

IBM (NYSE: IBM) has "committed $2 billion to fund start-ups and utilities working on smart-grid and green technology projects." And that's on top of the multi-million dollar smart grid projects they're directly involved in via component manufacturing — not to mention their recent PR blitz about it all.

GE is in. You've seen the scarecrow commercials, right?

And Cisco's (NASDAQ: CSCO) in, too. The tech giant is trying to take a lead in networking standards for the smart grid because it sees a smart grid market worth $100 billion in the near future.

Smart grid validation couldn't be any more apparent.

Smart Grid Cheer #3: Making It Law

The House Energy and Commerce Committee passed a much-awaited energy and climate bill last week, paving the way for the committee to pass a full vote later this year.

In addition to requiring a 15% renewable target, that bill also requires a 5% energy efficiency gain by 2020.

If states can't meet the 15%/5% by 2020, they can opt for a 12% renewables mix with an 8% efficiency gain.

Either way, energy efficiency is now law. By default, so is the establishment of the smart grid.

In addition to being a $100 billion market, Cisco also thinks the smart grid will be "100 or 1,000 times larger than the Internet."

Stay tuned to Green Chip as that plays out.

Call it like you see it,

Nick

Investing in Water Companies

I've covered the water industry for some time, waiting for the problems that I knew were coming to rise to the surface and create serious profit opportunities for those in the know.

And you've probably also heard that, in addition to cash flow, California's water supply is also drying up. In fact, most of the Southwest and Southeast are in years-long droughts.

It all sounds very bad but, if you play it right, the results of this impending water crisis can be very good.

Worldly Water Wealth

Take, for example, the $11.28 billion recently allocated to improving our water supply via the stimulus and the president's budget. Here's how that sum breaks down:

$3.9 billion for EPA Water Loan Programs
$6 billion for EPA Clean Water State Revolving Funds
$1.38 billion for the USDA Rural Water and Waste Disposal Program

The total sum is greater than the entire gross domestic product of Cambodia. And it's all going to alleviate water our problems.

Such is the benefit of living in a wealthy nation. The cumulative "they" won't let anything too bad happen. We're spoiled enough to know that Uncle Sam will always provide.

But there's more to it than just having the simple things readily available. . . water at the tap, a well-connected highway system. You can also profit from them.

Because Uncle Sam is just like, well, a rich uncle. He'll pay for you to get things done, but he won't do them himself.

This oft overlooked bridge is the key to easy profits.

Are You Prepared For Oil's Second Super-Spike?

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In fact, considering the rapid surge from $33 in December to the near-$70s today, you could say that it already started. And there's nothing that you, me, or the president can do to stop it.

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