Sam Hopkins - Angel Publishing

Maryland Offshore Wind Power

New research from Baltimore's Abell Foundation shows that offshore wind power installations could add greatly to Maryland's clean energy capacity in the next decade.

With a target of generating 20% of its electricity from clean renewable sources by 2022, Maryland's state government is looking not only to the mountains in the west of the state for wind power, but now also off the Eastern Shore.

This map from the Abell Foundation and Baltimore Sun shows how wind power developers can wade into the Atlantic:

Equipment requirements get more intense as one moves farther offshore. Longer pylons have to be assembled, and the metal they're made of needs to be sturdier in order to withstand open-ocean conditions. Interestingly, though, the most distant wind energy plans now being drawn up involve no pylons at all.

Floating wind power turbines would be buoyed and connected enough to keep them from blowing over, and because of extreme depth pylons are pretty much out of the picture.

German engineering giant Siemens and Norwegian oil producer StatoilHydro installed the first fully functional floating wind turbine off Norway's coast last summer, with a ballast and cables tying the turbine stand to the ocean floor. Hywind, as the bobbing new cleantech model is called, can work in water from 400 to 2,200 feet deep.

2,200 feet is only 670 meters—not yet at the upper end of the Abell study, but that's plenty deep and far enough offshore to cause none of the visual intrusion that has stifled some wind projects in places like Massachusetts and California.

Abell researchers say that Maryland could scale up to 2,900 turbines within a 15-mile band 28 to 43 miles off the state's shore in time for the 20% by 2022 target, with enough space for up to 12,000 turbines to ultimately be installed farther out into the Atlantic.

-Sam Hopkins

Sugar and Cellulosic Ethanol Stocks

Editor's Note: Last Thursday, before nearly 27 inches of snow decended on the Baltimore-Washington corridor, my colleagues Nick Hodge and Sam Hopkins of Green Chip Stocks headed to D.C. to the annual RETECH Expo, sponsored by the American Council on Renewable Energy. There, they gathered notes on updated global policies, and took in new perspectives on the short- and long-term scenarios for the green sector.

Today, I want to share with you Sam's newest research on ethanol investing. It's important to stay on the pulse of this commodity, the likes of which Shell is betting billions on. And anyone who knows a little bit about the oil industry is aware of what high oil prices will do in making ethanol a hot commodity on a global scale...

Stay Ahead of the Curve,

Ian L. Cooper
Wealth Daily

————————————————————————————

Sugar and Cellulosic Ethanol Stocks: Shell Bets Billions on Brazilian Ethanol
Sam Hopkins, for Wealth Daily

I'm writing from Washington, D.C. and the American Council on Renewable Energy's RETECH Expo, where I'm mining the showcases and speakers for new stock picks.

Not every technology or company here will be a home-run investment. To tell the truth, many of them won't even make it ten years without being bought out or folding...

Others will make headlines and drive market returns, like longstanding Green Chip International play Cosan Ltd. (NYSE: CZZ) is doing right now. Cosan is entering into a joint venture with an oil giant that could be worth $12 billion, and its happy beginning to 2010 signals a renewal of interest in ethanol and entrance of some unlikely participants into the biofuels fold.

The Most Profitable Energy Transition The World Has Ever Seen!

On November 12, 2008, the International Energy Agency (IEA) officially confirmed that every fossil fuel resource we rely on today will simply not be able to keep pace with demand.

As a result, the IEA stated in very clear terms that renewable energy will soon become the second largest source of energy.

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Cosan, a Brazilian company that processes more sugar than anyone else in the world, is now joining with Royal Dutch Shell (NYSE: RDS), the #2 oil producer in Europe. And this isn't a new trans-Atlantic trade Shell is inaugurating... Rival BP (NYSE: BP), Europe's top petroleum producer, has been piping pounds into a smaller Brazilian sugarcane ethanol producer called Tropical BioEnergia since 2008.

BP's Brazilian biofuel foray cost it $500 million or so. Even though quarterly profits just dropped by 40%, Shell is paying Cosan $1.625 billion for half of its core assets. As part of the joint venture that will emerge, Shell is also taking on Cosan's debt and opening up 2,740 Shell service stations to Cosan's sweet, green fuel. Shell will also give Cosan two small Brazilian companies — Codexis and Iogen — where Shell has been investing in cellulosic ethanol.

Cosan stands to gain big from an efficient system of turning agricultural leftovers into fuel in its own right.

Of all the money and knowledge changing hands, one part is most important: By gaining access to Shell's distribution system, Cosan will have the luxury of ramping up production without worrying if there will be buyers.

Shell wants to fertilize Cosan's cane-based business. Cosan output now has to grow from 2 billion liters per year up to the 3 billion that will be needed to satisfy a total 4,500 fuel stations in Brazil. From there, it's up to 4 and 5 billion liters annually and on to making ethanol a global commodity.

(Sugar) Ethanol as a Global Commodity

You'd be hardpressed to tell the difference between Shell and Cosan's statements on this joint venture if you removed a couple of words. Very simply, each company wants access to the other's expertise. "Cosan represents the best entry to sustainable biofuels in the market — the best entry of scale," Shell's Mark Williams said in London.

In Sao Paulo, Cosan Chairman Rubens Ometto said the tie-up is intended to be "the step forward that was lacking, in spite of all our efforts, to make ethanol a global commodity."

The next step is one that governments and consumers in the U.S. (which maintains a tariff on foreign biofuel) and Europe will have to take in order to give Shell and Cosan a real global market for their 2-3 billion liters of increased output.

Currently, Brazil's ethanol exports aren't living up to the state's expectations. Outbound shipments of the renewable fuel jumped by 46% when the oil price surged to nearly $150 a barrel, then dropped hard as air went out of the crude price bubble.

That bull run in black gold made ethanol much more attractive... but Shell, Cosan, and anyone who's being real about the industry knows that high oil prices will do more to make ethanol a global commodity than any sales pitch or "synergy boost" ever could. Low prices also help, as evidenced in Brazil where flex-fuel vehicles now account for 90% of new cars and truck sales.

Shell's 45,000 stations around the world will pump biofuel to vehicles that can run on gasoline, ethanol, or a mixture of the two (Brazil mandates that all gasoline have at least a 20% ethanol component). As it stands, Brazilians are the end users of the vast majority of the ethanol that their country produces (about 25 billion liters annually).

And you wouldn't know it from most of the media, but ethanol is more than just an automotive matter...

Flex-Fuel Power Plants Now Opening in Brazil

On January 19, the first ethanol-fired power plant whirred into action in Brazil. National oil company Petrobras (NYSE: PBR) and American systems giant General Electric (NYSE: GE) pitched in resources to turn an existing 87 MW plant into a flex-fuel power station that can alternate between natural gas and ethanol (which are both considered alternative fuels, even though only one is renewable). GE wants to see how its turbines can be adapted to work in flex-fuel plants in Brazil and in developed countries like Japan, where clean-burning power plants are gaining momentum.

My top takeaway from the GE/Petrobras collaboration on this flex-fuel plant in the Brazilian state of Minas Gerais is the following: Brazil's water-dependent hydroelectric infrastructure teeters during the dry season in places where natural gas isn't easily accessible.

It just so happens that wind power peaks at the opposite time of the year as the water in running rivers that drives dam-based generation. Ethanol and wind could supplant natural gas as the primary alternative source of electricity generation during the dry season in Brazil and other countries with similar climate.

President Luiz Inacio Lula da Silva said earlier this week in the Brazilian press that Brazil could be self-sufficient in natural gas after several pre-salt (read: incredibly deep) offshore fossil fuel pockets are tapped. That capacity is at least five years away. Ethanol is there now, and after wind power auctions started last December, 773 wind turbines will be turning across Brazil by 2012.

Shell, Petrobras, GE, and Cosan will surely push hard to get the government in Brasilia to initiate a nationwide "ethanol electricity" campaign to ensure that oil and automotive fuel aren't the key determinants of sugar ethanol's success.

As in so many other areas of the world, those communities that are now underserved by fossil fuels can benefit most from such clean energy advances.

Washington Waxes Brazilian

Brazil provides us with an example of a rapidly developing, energy-hungry economy in the Western Hemisphere where biofuel is a fact of life. Biofuel is also an investment imperative for energy investors and companies that want to make money in Brazil. As an important part of the #3 economy in the Americas, ethanol can't be ignored by the top dog, the United States — even if our homegrown bet (corn) wasn't as successful as we would like it to have been.

Corn ethanol will surely advance, as major crop science companies like Archer Daniels Midland (NYSE: ADM) work hard to keep it on our energy menu, but any American move to advance ethanol should include a couple of calls to Brazil.

The Obama Administration completed its revised Renewable Fuels Standard (RFS2) this week. Involving the EPA, Congress, the Department of Agriculture, and college researchers, RFS2 will move towards a national goal of 36 billion gallons of biofuel production by 2022.

I'll be gauging investor response to RFS2 here, and this week you can expect a full update on what the White House is doing.

Regards,

Sam Hopkins
Investment Director, Green Chip International

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Olympic Stocks

There are more than two feet of snow on the ground here in Baltimore. Meanwhile, record warmth has hit the Vancouver area. Go figure.

Nevertheless, Canada's westernmost metropolis is hosting the Winter Olympics starting this Friday, and that's where I'm looking for stock picks.

So let's look at some sponsors of the snowy season's premier athletic showcase and see where they line up on the market's medal stand.

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Vancouver Olympic Stocks

A wide range of international companies have ponied up the money to get their names on placards and on TV during the Games. We'll see the familiar logos of U.S. corporate giants Coca-Cola (NYSE: KO), General Electric (NYSE: GE), and McDonald's (NYSE: MCD) all over the commercials and sidelines.

Those three blue chips have all done relatively well over the past year. Let's look at why.

Coke shares are up 22% since last February. Heading into Q4 earnings, we can expect the company to reiterate its focus on developing well-managed supply chains in emerging markets like India and China.

As wealth spreads across those countries and rural citizens get more of a taste for sweet, fizzy soda, Coca-Cola's fortunes depend on beating Pepsi (NYSE: PBG) in distribution. Coca-Cola shares are sitting right at $53 per share, where support was established in October and November of 2009.

General Electric has gained 41% over the past year on improving demand for durable goods — the kind of heavy-duty machinery and systems GE cranks out as well or better than anyone in the world. Under CEO Jeff Immelt, GE is pushing its earnings expectations not just with big ticket domestic orders, but also with cleantech and green industrial acquisitions.

Two Brazilian companies have already asked GE to provide turbines for new wind farms that are being developed there in South America's top market, and across the world GE China President and CEO Jeff Norbom says he "absolutely" sees a recovery beginning to happen in China's manufacturing sector. GE wants to become an integral part of the Middle Kingdom's industrial landscape, partnering with companies like China Shenhua Group to develop clean coal technology and selling manufacturing systems to local manufacturers as they move up the value chain from cheap plastic and clothing to major equipment. Losses at GE's financing arm GE Capital are worrisome to some GE watchers, but the company's core operations are moving along.

McDonald's comes in last in this heat when you look at share price (it's only up 8% in the same year), but income investors are still saying "I'm lovin' it!" when it comes to Mickey D's dividends. Unlike GE, which drew much market consternation when it cut its dividend last year, McDonald's is continuing its 34-year track record of raising dividends. MCD shareholders can expect at least a 55 cent payment per share next quarter, as opposed to GE (10 cents) and Coca-Cola (41 cents).

Those are the big dogs you expect at the Olympics. Their businesses won't be made or broken based on how many slaloms they're associated with or which logo is closest to center ice.

But I've found a few lesser-known international companies that stand to expand their fan — and investor — base by a lot this February...

Here's My Medal Stand for Olympic Sponsors

Since I've just highlighted a few mega-cap American companies, why don't we start in the host country this time?

Teck Resources Limited (NYSE: TCK) has gained an astounding 663% dating back to this time last year, and even allowing for a pair of property sales in Mexico and Ontario, bulls have rewarded the Vancouver-based board of this copper company with higher highs and higher lows.

The former Teck Cominco operates mines that pull copper, metallurgical coal, gold, zinc, and even molybdenum out of the ground. Teck is also part of three projects in the Oil Sands of Alberta, where it's partnered up with Calgary's UTS Energy (TSE: UTS).

Teck is down 18% since early January due to projected weakness in copper prices (specifically potential decreased demand from China). It's good to see a healthy pullback after nosebleed highs like TCK shareholders have seen since last winter, but this is our gold medalist among the Vancouver Olympics sponsors for sure.

I'm giving the silver to Aggreko, a Scottish company that trades in London as AGK and on the pink sheets as ARGKF. Aggreko rents generators, heaters, and cooling systems for operations like movie sets or even the Olympics, where onsite power and temperature control needs are huge.

Aggreko's purchase of GE Energy Rentals back in 2006 moved Aggreko into the U.S., China, and other key worldwide markets where the conglomerate's leasing arm had operated. In the 2008 Beijing Olympics, Aggreko delivered units to keep athletes cool.

See You at the Next Olympiad!

On Super Bowl Sunday, Aggreko Event Services kept The Who rocking onstage with 47 miles of cable. During the 2010 Olympics, they'll keep everyone from snowboarders to bobsledders warm between races.

AGK shares have gained nearly 117% in the past year to just under 9 pounds currently. Like most of the global market, this stock is trading sideways to a bit downward, so use caution and limits when buying.

The bronze goes to France's Atos Origin, the Olympics' technology partner. Atos Origin's IT consulting services will keep the ones and zeroes flowing smoothly throughout the Games as hordes of media members and organizing officials e-mail, Skype, and generally strain British Columbia's bandwidth.

Atos Origin is listed on Paris's Euronext exchange as ATO, and on the pink sheets AEXAF. It's only up 51% since last February, but the company is pushing into new territory to drive earnings. Atos Origin is tapping the budding Green IT sector with its Atos Cloud program, which will bring carbon accounting and energy efficiency infotech into investors' earnings stream. That happens to be the next frontier of cleantech investments we're looking at in the Green Chip International recommendation service, too.

This year's medalists can move ahead or fall back plenty before the next frozen Olympiad rolls around, so of course we'll look for other corporate sponsor stars on the horizon.

In the meantime, keep your eye on these six companies and see what other stocks you can pick out during the Vancouver Games!

Regards,

Sam Hopkins

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Sugar and Cellulosic Ethanol Stocks

I'm in Washington, D.C. today for the American Council on Renewable Energy's RETECH Expo, where I'm mining the showcases and speakers for new stock picks.

Not every technology or company here will be a home-run investment. To tell the truth, many of them won't even make it ten years without being bought out or folding...

Others will make headlines and drive market returns, like longstanding Green Chip International play Cosan Ltd. (NYSE: CZZ) is doing right now. Cosan is entering into a joint venture with an oil giant that could be worth $12 billion, and its happy beginning to 2010 signals a renewal of interest in ethanol and entrance of some unlikely participants into the biofuels fold.

Cosan, a Brazilian company that processes more sugar than anyone else in the world, is now joining with Royal Dutch Shell (NYSE: RDS), the #2 oil producer in Europe. And this isn't a new trans-Atlantic trade Shell is inaugurating... Rival BP (NYSE: BP), Europe's top petroleum producer, has been piping pounds into a smaller Brazilian sugarcane ethanol producer called Tropical BioEnergia since 2008.

BP's Brazilian biofuel foray cost it $500 million or so. Even though quarterly profits just dropped by 40%, Shell is paying Cosan $1.625 billion for half of its core assets. As part of the joint venture that will emerge, Shell is also taking on Cosan's debt and opening up 2,740 Shell service stations to Cosan's sweet, green fuel. Shell will also give Cosan two small Brazilian companies — Codexis and Iogen — where Shell has been investing in cellulosic ethanol.

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As in so many other areas of the world, those communities that are now underserved by fossil fuels can benefit most from such clean energy advances.

Washington Waxes Brazilian

Corn ethanol will surely advance, as major crop science companies like Archer Daniels Midland (NYSE: ADM) work hard to keep it on our energy menu, but any American move to advance ethanol should include a couple of calls to Brazil.

The Obama Administration completed its revised Renewable Fuels Standard (RFS2) this week. Involving the EPA, Congress, the Department of Agriculture, and college researchers, RFS2 will move towards a national goal of 36 billion gallons of biofuel production by 2022.

I'll be gauging investor response to RFS2 here, and next week you can expect a full update on what the White House is doing.

Regards,

Sam Hopkins

P.S. We saw Cosan's potential way back in 2007 and told Green Chip International readers all about it. Shell has validated our optimism lately, and so has the stock market. Take a peek at GCI today to find out more about tomorrow's billion-dollar clean energy winners.

Cellulosic Ethanol Plant Opens

Corn cobs and switchgrass don't get much respect in the world of food and industry, but would-be waste is steadily being converted to fuel more cheaply than ever.

Using actual kernels of corn to produce ethanol fuel was deemed by most of the investing community to be too inefficient in its production to justify the process. Intensive water and land usage—as well as corn price surges and subsequent "tortilla riots" in Mexico—made corn a liability on large projects. At the beginning of 2010, we're seeing more momentum in more efficient sugarcane ethanol, and in cellulosic ethanol, which is made from plant-based agricultural waste.

DuPont Danisco, a joint venture between the American chemicals giant and a Danish company, is opening a demonstration plant in Tennessee in February where cellulose-rich corn cobs and switchgrass will be converted to fuel.

The goal is to churn out 250,000 gallons of renewable fuel each year, at a cost competitive with $90 a barrel oil. That means each gallon will need to take about $5.50 per gallon to make instead of the current $8, so DuPont Danisco is working closely with crop scientists and fuel experts to bring those input costs down.

By 2012, investors and researchers hope to reach the point where production can begin in earnest.

-Sam Hopkins

Kazakhstan Oil Production

Fourth quarter results showed more bad news than good for Chevron, America's second largest oil producer.

Even though the company boosted production at its fields in Nigeria and Kazakhstan as oil prices justified an output increase, the company's Q4 profit dropped by 37% from the same period in 2008. That loss was attributed to losses in refinery operations.

Worse news for Chevron is developing now, because the government of Kazakhstan is essentially promising a reversal of its no-tax policy for foreign oil companies operating in that Central Asian nation.

Kazakh President Nursultan Nazarbayev said on Friday, January 29 that his country will establish a $90 billion fund with oil revenues by 2020. That money will be spent $8 billion per year on developing Kazakhstan's industrial base, which would lead the country's economy to be less reliant on oil revenues.

Good news for Kazakhstan's economic diversification is bad news for Chevron, Exxon, Shell, and other majors.

Energy Minister Sauat Mynbayev put it pretty clearly on Tuesday, Jan. 26 when he said, "If we abandon tax exemptions for these three or four projects [Chevron's Tengiz and one other unnamed project] ... then of course that means only annulling them because it's quite a radical review."

The first time I read that, I really did think it was a Chevron exec making that statement. The fact that Kazakhstan's leadership is upfront about the changes it's putting in place should send jitters through oil markets.

Production sharing agreements (PSAs) under which foreign oil companies operate in countries like Kazakhstan and Libya are the tenuous grip that those majors have on their operating costs on site.

Kashagan, Kazakhstan's largest oil field where several companies both foreign and domestic have a stake, was the largest oil field find in 40 years, and changing the terms on which that abundant new supply is pumped could severely impact oil prices in 2010.

-Sam Hopkins

Spain's Solar Power Market Meets Morocco

Today, I want to expand on Spain's role in the global renewable energy boom.

You'll remember that last week I detailed the role of Spanish investors and companies in Peru's clean power expansion. As it turns out, Spain is fast becoming the hub of not only a trans-Atlantic but also a trans-Mediterranean green energy economy.

Spain's investment in South America is nothing to sneeze at, and neither are its results. Latin Business Chronicle reports that Spanish lender BBVA (NYSE: BBV) is banking on expansion of its Western Hemisphere operations to keep it growing. The bank upped its income from countries like Colombia, Chile, and even Venezuela, helping to offset weakness back in Spain where the recession has hit construction and other industries hard.

While at home the going is still tough for Spain's #2 bank (and really any bank that isn't boosting earnings by cannibalizing its own recommendations), BBVA's overseas outposts provide a glimmer of hope about future earnings for execs and investors.

For the Spanish renewable energy industry, there's a market much closer to home that we expect to provide megawatts worth of opportunities in the next few years.

I'm talking about Morocco.

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More Energy for the Land of the Moors

Morocco lies just across the Strait of Gibraltar from Spain, but it's a world away economically. Spain's economy is over 19 times the size of Morocco's, and because the industrial base is so much stronger on the Iberian Peninsula (also including Portugal), Spain consumes 10 times the amount of power that Morocco does.

The only reason Spain doesn't eat up the same proportion of power as its GDP would suggest is that Morocco's energy intensity (usage per unit of GDP) is highly inefficient.

Despite the current disparities between the two countries — or maybe because of them — in 2010, we will see Morocco take the baton from Spain in solar power generation plans against a backdrop of previous Spanish strength in the sector.

Over the past several years, the Spanish government in Madrid stimulated the global market for solar power modules and components with attractive subsidies. The goal with such incentives is to guarantee residential and commercial solar power customers that they won't hemorrhage money from high-cost installation and panel prices. Instead, feed-in tariff (FIT) plans for solar PV in Spain and Germany, and for wind energy in Denmark, effectively bring clean power technology down to coal or natgas prices.

In 2008, Spain saw solar power capacity jump by 380% over 2007 as the national subsidy quintupled, but at the end of that year Madrid hit the brakes. Spain dialed down its solar subsidy, put a limit on the amount of sun power it would subsidize (500 MW per year), and effectively gave whiplash to worldwide suppliers and module makers like Germany's Q-Cells and China's Yingli Green Energy (NYSE: YGE), who had expected a hungry Spanish solar market for years to come.

So many assumptions came crashing down in late '08, as the credit crisis shocked companies into deep job cuts, investors ran from the market's falling knife, and politicians looked for any tourniquet they could find.

Over a year after the you-know-what hit the solar panel, Morocco, which imports 95% of the energy it uses, is launching a bidding round to start building 500 MW in concentrating solar power (CSP).

Moroccan Energy Minister Amina Benkhadra announced that the first bidding round to build and supply the solar plant at Ourzazate will be held in late February, just over a month from now.

That auction could put Spain in the driver's seat as a primary producer rather than a primary consumer of solar power products.

Empty Land, Full of Promise

One downside of large-scale solar power that its detractors like to point out is just how much land a major array takes up. Yet the desert Southwest of the U.S., Spain's southern desert regions just across from Morocco, and Morocco itself possess vast, virtually uninhabitable areas where solar power plants make sense.

Though Morocco won't get to 500 MW overnight, the country's goal of drawing 38% of its power from five local solar projects will in turn draw money and technology from around the world. Japan — one place where they don't have much land to play with, let alone sun-soaked deserts — is putting up $7.4 million for photovoltaic plant in Morocco. That announcement came along with commitments to up Japanese involvement in water access and rural electrification in Morocco.

Greentech Media reports that Spanish companies Cuantum Solar, Siliken, and Fotowatio are moving into the U.S. market to offset domestic weakness, and we're sure those firms are willing to hop the ferry over to Morocco for new business, too.

Let's not forget that even though Morocco gets lumped in with the Middle East, North Africa is a distinct region with history and potential. At this week's World Economic Forum in Davos, Switzerland, Francis Beddington of emerging market investment house Insparo Capital told Reuters, "Not investing in Africa is like missing out on Japan and Germany in the 1950s, Southeast Asia in the 1980s and emerging markets in the 1990s."

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Morocco's primary industry is textiles. It won't get anywhere beyond being the European Union's poorest southern neighbor without energy. Spain has the practical and political expertise to get Morocco off the ground and even make it part of the EU's Desertec plan to draw 15% of continental electricity from North Africa by 2050. The grid linkup technology is there (high voltage direct current HVDC), and so is the resource.

You can take a peek at the future in this Desertec map from the Club of Rome:

From Brazil to Japan to Israel, Spain, and Morocco... it's time to tie all these international experiences in together for comprehensive energy development action.

Regards,

Sam Hopkins
International Editor

P.S. From February 3-5, Nick Hodge and I will be at ReTech, the premier technology conference and exhibition in Washington, D.C. There, I'll be focused on the "International Markets and Competition" track, one of six different "courses" over 5,000 attendees will follow to get updates on the state of the global industry.

I'm looking forward to catching up with old company contacts and meeting new ones, as well as getting a clear picture of how different regions and companies are adjusting to tough financial conditions to keep their clean energy progress rolling. You read my report from the ACORE Phase II Renewable Energy Policy Forum direct from Capitol Hill this fall, and I expect the info from ReTech to be just as vital for investors. There are still spots open if you want to attend ReTech. Find out more here.

Wind Energy in South America

Publisher's Note:

It takes a special kind of researcher to hit the road for long stretches and report consistent, solid intelligence back to base. That's why I brought Sam Hopkins onto the Wealth Daily team back in 2005. Time and again, he's trekked all over the globe, riding planes, trains, and automobiles with little more than a backpack, passport, and business suit. For the most part, though, Sam simply keeps his eyes open.

By looking around in places like China, Brazil, Israel, and Peru, he sees the companies gaining a foothold in emerging markets — very often, they're ones you wouldn't hear about if you just took CNBC or the Journal's word. Today, you'll learn about the linguistic and cultural connections that are giving Spain's clean energy companies an advantage in Latin America's burgeoning wind power market, and why noticing market movement now will lead to hefty returns in the coming years.

Good investing,

Brian Hicks

———

An armada of Spanish investors is riding a stiff breeze across the Atlantic to their former Latin American colonies.

Among them, two wind power companies are set to profit big time from a clean energy reconquista.

Let me explain...

Over the course of the past couple of weeks, I've been privy to Peru's national renewable energy auction process, which aims to bring clean power production in this leading Latin American economy up to the needs of GDP growth and a growing population. Last Monday, bids in closed envelopes were delivered to the Ministry of Energy and Mines for the first major round of clean power pricing.

And I have a good handle on who the winners will be...

Just a few days before, I met with Juan Coronado, head of one of the bidders, Energia Eolica (which means "wind energy" in Spanish). Señor Coronado echoed lessons I learned in Brazil in 2009 about the need to alternate between abundant but seasonal hydropower resources and sizable breeze-blown power potential.

It's a matter of math.

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From 2006 to 2008, Peru averaged 8.8% economic growth each year, and similar levels of expansion are going to be needed to give jobs to the 370,000 people who enter the workforce annually.

The stakes are high, as my other local contacts here reinforce with stark statistics. Cesar Peñaranda, Executive Director of Economics at the Lima Chamber of Commerce, told me in our meeting that 85% of Peruvians in areas with little or no infrastructure are poor.

That means that roads, water, and above all, energy, are hard to come by for large sections of this strategically important country between China and Brazil. As a result, the denizens of those underserved slums and shantytowns are scarcely involved in the economy except to sell inflatable toys and bubblegum-flavored Inca Cola to the middle and upper class as they escape to the beach for the weekend.

When the global economy turns down, the lower classes get knocked two steps back for every one step forward they took during boom times.

The lesson is that even if commodity prices of Peru's natural resources like gold, silver, natural gas, and rice are on the rise, the government needs to initiate and attract a lot more investment in infrastructure to achieve first world status — which President Alan Garcia says Peru can do by 2021.

This is where Peru's clean energy auction comes in, and where you'll see why Spain is leading the charge.

Spain's Clean Power Pole Position in Latin America

Spain has become the top source of foreign direct investment (FDI) in Peru, as major Madrid companies like petroleum giant Repsol YPF (NYSE: REP) seek dynamic new markets.

Historical and cultural ties make Latin America an easy choice for expansion beyond Europe, and in the current clean energy bidding in Peru, Spanish clean energy companies are — as my fellow Green Chip International editor Nick Hodge likes to say — in the catbird seat.

In fact, GCI readers already know about two Spanish companies that are sure to be among the winners when Peru names its clean energy champions on February 12.

Lima is celebrating 475 years as a city this week. Founded by the Spaniards as the City of Kings, Lima is now a capital in its own right.

Spain still has plenty to teach Peru about kick-starting a native clean energy industry. At the end of 2009, Spain reached a record 42% of its electricity capacity from wind power; the problem now is storage. Incidentally, Spanish leaders started chirping this week about a big national electric vehicle push, and we're hearing more and more from energy aficionados around the world that EV batteries could themselves become a widespread storage mechanism for the smart grid. More on that another time...

In Peru, Spain's top wind power firms can help ramp up generation right now.

But as forcefully as Spain is moving into this market, that country is not alone...

Why Peru is Our Global Green Stock Bellwether, and How to Benefit

The United Nations Conference on Trade and Development says that Peru was unique among emerging markets in bringing FDI up in 2009. Peru's foreign investment inflows grew by 28.1%, while mighty Brazil's gravy train delivered only half of its 2008 load last year.

Not only Spain but neighboring Chile, the United States, and of course China are pouring money into Peru.

What this means, quite simply, is that Peru is establishing its own momentum as a target for global companies to establish themselves and tap growth that has already proven to reach China and India levels.

As I said above, Peru can't just bank on commodities to keep FDI and GDP flowing, so the country is searching for sustainable means of growth.

For our purposes, the best approach is stocking up on shares in the Spanish companies that are already the leading investors in Peru's highly attractive investment scene.

But not just any Spanish company will do... which is why I've traveled both to Spain and to Latin America to investigate precisely which firms have the best approach, and which will pay off biggest in the end.

And I've prepared a video report from Lima for Green Chip International subscribers. I'll be updating them on exactly how our portfolio will be affected when the February 12 announcement of winners in the Peruvian clean energy auction comes around.

These stocks aren't only attractive as long-term plays on international clean energy advancements — they're also trading at a discount right now, which means there's never been a better time to buy. Come what may in the market, Nick and I expect upwards of 60% returns in these two companies over the next several months.

And Peru isn't the end of the story. Other countries on this continent and elsewhere are engaged in similar auction rounds to draw money and create energy for growth, and the same companies we're talking about have a truly international edge.

To learn more, check out GCI today and get the global advantage so many investors already enjoy.

Saludos,

Sam Hopkins

Introducing the "Negawatt Box"

We installed it in our Baltimore office a few months ago...

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This report outlines why this stock will double as the entire world learns about the "Negawatt Box"... and the massive energy savings it produces.

Peru Wind Energy Projects

This past week, I've been privy to Peru's national renewable energy auction process, which aims to bring clean power production in this leading Latin American economy up to the needs of GDP growth and a growing population. On Monday, bids in closed envelopes were delivered to the Ministry of Energy and Mines for the first major round of clean power pricing.

And I have a good handle on who the winners will be...

It's a matter of math.

Uranium is Old News

The future of the nuclear industry is beryllium.

One company has just pioneered a new nuclear fuel additive - called beryllium oxide - that can prevent Chernobyl-like disasters... while saving billions in fuel costs.

Nuclear fuel suppliers like Westinghouse are already lining up... And soon, no reactor will be fired up without this new fuel.

The full report - including why the company behind it could triple in price - is available here.

From 2006 to 2008, Peru averaged 8.8% economic growth each year, and similar levels of expansion are going to be needed to give jobs to the 370,000 people who enter the workforce annually.

The stakes are high, as my other local contacts here reinforce with stark statistics. Cesar Peñaranda, Executive Director of the Institute for the Economy and Business Development at the Lima Chamber of Commerce, told me this Tuesday that 85% of Peruvians in areas with little or no infrastructure are poor.

When the global economy turns down, as it has in the past year, the lower classes get knocked two steps back for every one step forward they took during boom times.

Even if commodity prices of Peru's natural resources like gold, silver, natural gas, and rice are on the rise, the government needs to initiate and attract a lot more investment in infrastructure to achieve first world status — which President Alan Garcia hopes to do by 2021.

This is where this week's clean energy auction comes in, and where you'll see why Spain is leading the charge.

Spain's Clean Power Pole Position in Latin America

Spain has become the top source of foreign direct investment (FDI) in Peru, as major Madrid companies like petroleum giant Repsol YPF (NYSE: REP) seek dynamic new markets.

In fact, GCI readers already know about two Spanish companies that are sure to be among the winners when Peru names its clean energy champions on February 12.

Lima is celebrating 475 years as a city this week. Founded by the Spaniards as the City of Kings, Lima is now a capital in its own right.

In Peru, Spain's top wind power firms can help ramp up generation right now.

But as forcefully as Spain is moving into this market, they're not alone...

The Economist Calls it "The Fifth Fuel"...

After uranium, coal, gas, and oil...

And there's one company that has a monopoly on it.

Giant banks like Citigroup, Credit Suisse, and Goldman Sachs... are all investing in it.

But this report is about to blow the lid off "The Fifth Fuel" story... And how investors can buy the company that makes it for less than $1.00.

The share price will easily double - or triple - as word gets out.

Why Peru is Our Global Green Stock Bellwether, and How to Benefit

Not only Spain but neighboring Chile, the United States, and of course China are pouring money into Peru.

As I said above, Peru can't just bank on commodities to keep FDI and GDP flowing, so the country is searching for sustainable means of growth.

For our purposes, the best approach is stocking up on shares in the Spanish companies that are already the leading investors in Peru's highly attractive investment scene.

But not just any Spanish company will do... which is why I've traveled both to Spain and to Latin America to investigate precisely which firms have the best approach, and which will pay off biggest in the end.

And I've prepared a video report from right here in Lima for Green Chip International subscribers. I'll be updating them on exactly how our portfolio will be affected when the February 12 announcement of winners in the Peruvian clean energy auction comes around.

These stocks aren't only attractive as long-term plays on international clean energy advancements — they're also trading at a discount right now, which means there's never been a better time to buy. Come what may in the market, Nick and I expect upwards of 60% returns in these two companies over the next several months.

To learn more, check out GCI today and get the global advantage so many investors already enjoy.

Saludos,

Sam Hopkins

Haiti Energy Supply

As the world watches and contributes relief assistance to the Caribbean country of Haiti following the earthquake that ravaged it on January 12, energy supplies will play a key role in the recovery effort.

So what does Haiti normally do for power?

The United States Department of Energy's Energy Information Administration shows that Haiti has absolutely zero oil and gas production, and that nearby Trinidad & Tobago is the biggest hydrocarbon producer in the Caribbean.

Though the country also uses relatively little energy, Haiti's energy intensity has been on the rise since the mid-90s, more than tripling to 1,298 BTU per $2000 of economic output.

Haiti's economic output has been extremely low in any case, keeping its status as the poorest country in the Western Hemisphere.

As the United States marshals resources and equipment, the large machinery and ad hoc emergency stations that are set up throughout Haiti will require massive amounts of fuel. Since there is no electricity, generator power will provide most of the light and power for the country for the foreseeable future, and of course automobiles and other petroleum-fueled vehicles will need gasoline and diesel to run.

Today's problems require immediate solutions, and we at Energy and Capital encourage you to contribute to the Haitian disaster recovery effort in any way you can. Looking forward, though, we hear many commentators on television and in the news talking about how Haiti can help itself more in the future, whether with better building codes or more robust relief systems.

Renewable energy can and must be a part of reshaping Haiti for better economic and energy health.

Regards,
Sam Hopkins

International Editor

The Renewable Energy Landscape in Peru

I came here to Lima, fresh from a nasty cold snap on the East Coast.

I'm here reporting on what's happening in the renewable energy industry, including several meetings with wind energy companies this week.

My local contacts already tell me that one of our top European clean power plays in the Green Chip International portfolio is heavily involved here in Peru with the development of different regional renewable energy initiatives.

The story of how Peru got to be an investment hot spot in early 2010 is what I want to tell you today.

Now I'm sitting in a cafe in Lima, writing to you in English via wireless internet while I read the newspaper in Spanish. Outside I see the freshly paved, grass-lined streets of a city many foreigners had given up on just a few years ago.

In the 90s and 00s, Peru endured earthquakes and terrible political scandals. Both rocked investor confidence and kept many locals feeling isolated from and inferior to the rest of the world. Now international banks like HSBC and energy companies such as Brazil's Petrobras are clamoring to establish themselves in Peru, where they hope to tap economic growth that is expected to lead Latin America in 2010.

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Economic Growth to Lead Latin America in 2010

In 2008, Peru's gross domestic product grew by a sizzling 9.8%. That cooled in 2009 — but only moderately, since Peruvian financiers steered clear of the derivatives that drove the credit crisis and rich-country recession. In 2010, U.S. investment bank BCP Securities expects 5.7% growth, with government finances improving and the financial system not showing any deep cuts of the global credit crisis (other than the impact on some poor souls who invested with American fraudster Bernard Madoff).

Our GCI European wind power firm is angling toward well over a gigawatt in installed wind power capacity, from Lima to far-flung poorer areas in the Andes.

Interestingly, the experience I've had talking to national leaders and businessmen in Brazil about that country's renewable energy rollout and recent wind power auction will inform my research here in Peru. Peru is right on the border with Brazil, and as I wrote this week in Wealth Daily, this country is becoming a conduit between China across the Pacific and Brazil just to the east.

Peru, like Brazil, has both extensive river-based energy potential and strong winds that can compliment each other. I hear that the government of President Alan Garcia has mixed feelings about clean energy because of his efforts to make Peru a natural gas hotbed, but the World Bank and other international organizations are pushing for Peru to keep the natural beauty and ecosystems of its Amazon and Andes healthy, so clean energy is a must for economic development that safeguards the country's ecological endowment.

The natural views and experiences of Peru at sites like Machu Picchu are, after all, the reason that millions of tourist dollars pour into this country every year.

As a case in point, Lima is just now drying out from a week's worth of rain that totaled as much as the city normally gets in six months! The impact of climate extremes can be tempered and even harnessed with advanced water and energy infrastructure like run-of-river power and urban hydroelectric generation.

Peru is Set to Embrace Clean Energy

If Presidente Garcia wants more reasons to embrace clean energy, Brazilian renewable energy pioneers can tell him that in their country, wind and water energy resources tend to alternate throughout the year; this means a basic level of clean energy capacity is maintained in all four seasons.

How about the slick new streets I mentioned? Well, new cars — many of them Chinese — are all over Lima. Even the taxi that picked me up from the airport had a clean-burning natural gas tank in the trunk!

Like Brazilian motorists, Peruvians are zooming away from gasoline dependence. The growing exposure of Peru's expanding automotive market to China's EV-heavy burgeoning car industry is another trend I intend to learn much more about while I'm here.

I'll be spending my time here looking at how 2010 will be a pivotal year for Peru's government and people to attract billions in foreign direct investment from international clean energy players. You'll hear plenty more from me during my stay.

And as our portfolio companies take advantage of opportunities in Peru, Green Chip International readers will profit!

Saludos desde Lima,

Sam Hopkins

International Editor

iShares Peru EPU ETF

Some of my favorite economic indicators are delicious.

The Economist has its Big Mac Index, which shows price distortions in places like China or Norway based on the cost of the same beef, bun, and special sauce.

For Peru, my destination this week on a multi-industry research junket, I'm thinking about avocados. I take great pleasure in taking advantage of cheap tropical produce in South America. Like in Chile, where the locals slather guacamole, or palta, on hot dogs and hamburgers.

Peru, for its part, is advancing its avocado exports deeper into the U.S. market, and both sides of that tasty trade will benefit. The Department of Agriculture ruled on January 4 that Peruvian avocado farmers will be able to ship as much as 19,000 metric tons of Hass avocados to the States every year. Prices for the fruit in American aisles could drop by 6%, adding layers to domestic dips while padding the incomes of thousands of farmers in the shadow of the Andes.

Of course, raw numbers can be appetizing too — especially when you get a whiff of Peru's 9.8% increase in gross domestic product in 2008 and expected region-leading growth in 2010! 2009's GDP numbers only moderated to around 6% year-on-year, because Lima financiers steered clear of the derivatives crisis while it brewed.

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Peru's Pole Position for Global Growth

Peru's position on the Pacific Rim has for centuries made it a key port for Asian fishermen and traders who want access to Latin American markets. These days, hungry China's resource appetite on one side is nearly balanced by bullish Brazil on the other...

A giant new highway bridging the Pacific coast and the country's eastern border with Brazil will make Peru a transit market worth salivating over. That road alone may add a full percentage point to Peru's GDP, according to a recent report in the Christian Science Monitor.

The truth is that Peru's location is incredible in terms of both international and internal economics. Peru has a system of microclimates that can jar a person's system with precipitous drops in temperature and altitude, while benefiting businesses that want a variety of natural resources within easy reach.

In a few days, I'll be meeting with local and international entrepreneurs, as well as government officials who have helped usher Peru through periods of serious political tribulations to today's rising prosperity. All these people are part of a puzzle that investors need to see fully in order to maximize the profit potential that Peru presents.

So where can you invest in Peru?

Let's start with the whole menu: a U.S.-traded Peru ETF!

Play Peru Easily with this Exchange-Traded Fund

The iShares MSCI All Peru Capped Index Fund ETF (NYSE: EPU) captures a cross-section of the industries and companies that already have deep roots in one of Latin America's sleeper emerging market sensations of 2009-2010.

EPU beat its Chilean counterpart (NYSE: ECH) by about 13% in 2009, and that's music to Peruvians' ears. You see, Peru and Chile are locked in a border dispute and Peru recently arrested one of its own air force officers who was suspected of spying for Chile.

The two countries even clash over pisco — a sweet grape liquor popular straight down the Andes — the origin of which is a topic of hot debate.

As far as ETFs go, the flavor you savor may have more to do with the kind of stocks you prefer than which flag you'd like to see on a liquor bottle.

EPU, the Peruvian ETF, is far more heavily weighted toward mining companies like Buanaventura Mining Co. and Southern Copper (NYSE: PCU). Chile, though it's the top copper producer in the world, has its national metal industry controlled primarily by the government, which pushes resource wealth into pension funds and national savings.

International investors in Peru can do more with their money than they can in Chile to tap the commodity hunger of mega-builders like China, India, and Dubai.

So we see that you can take advantage of publicly-traded miners in Peru. But EPU also gives you access to the financial institutions that are helping to link Peru's growth from government-led investment campaigns like ProInversiones (which I will detail during my trip), to the small-to-medium-sized businesses that line Lima's streets.

Credicorp (NYSE: BAP), EPU's top banking component and itself an ADR stock, rose by 57% over the past year. With that total, it walloped the Financial Select Sector SPDR (NYSE: XLF) while showing that emerging market financial institutions are not too hot to touch.

Peru's national finances are on the up-and-up, too.

The country just completed the trifecta of "investment-grade" ratings upgrades from Moody's, Fitch, and S&P. Investors are buzzing that Peru is a country with resource wealth on par with many African countries, but with only a fraction of the governance and corruption problems of the continent just across the South Atlantic.

When it comes down to value, Peru also beats Chile on its ETF's price-to-earnings ratio. EPU is a full 5 points lower than ECH, which trades at more than 22 times earnings.

If you want more for your money, Peru is the place.

I've got a full docket of meetings and site visits that will bring me up to speed on everything from mining projects to large-scale renewable energy efforts across Peru. China comes into play there, too; the Chinese clean energy market is expanding rapidly, and entrepreneurs in the Middle Kingdom are looking for inroads in developing economies like Peru.

And I'm looking forward to delivering the latest information that will lead you to superior returns while most investors continue to snooze on this amazingly dynamic emerging economy.

Saludos,

Sam Hopkins
International Editor

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The Outlook for Geothermal Energy Stocks

Before the geothermal energy sector can generate significant steam, it may have to simmer for a while yet...

To kick off 2010, let's take a look at government-funded projects and public companies, and their various stages of success in drawing power from "hot-rock" technology.

AltaRock Deep-sixes the Geysers Project

In the U.S., geothermal company AltaRock Energy recently packed up its drill rig and called it quits on a pilot project out west. AltaRock's "Geysers" demonstration in Northern California drew nearly $36 million in interest from the U.S. Department of Energy, Google's investment arm, and venture capital firm Kleiner, Perkins, Caufield & Byers.

In December, AltaRock admitted that a breakthrough would be literally impossible: the company's drill bits were snapping as they attempted to probe caprock formations close to the surface. Without penetrating that shallow stone, deeper, high-temperature structures can't be exploited by shooting water through cracked rock to generate steam for turbines.

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Aside from the drill bits failing, AltaRock and its ultra-deep geothermal technology have come under increased scrutiny for potentially creating small earthquakes. By drilling down as deep as three miles below the soil, AltaRock's methods are similar to Geothermal Explorers, a European firm now being prosecuted for causing tremors of up to 3.4 on the Richter scale below the Swiss city of Basel.

Will a Swiss court case bring AltaRock operations in the U.S. to a halt?

Well, the $6 million in federal funds that AltaRock got for its abortive effort at Geysers is just a fraction of the $25 the same company drew for a demonstration effort in Oregon. That project appears to be continuing, and the New York Times reported on December 12 that AltaRock may have pulled out of the California operation in favor of its Oregon endeavor.

We'll keep an eye on that one.

As far as government funding goes, it will take a lot more than cracked drill bits to break the Obama Adminstration's commitment to geothermal. The president and his energy team directed nearly $440 million into geothermal exploration projects in 2009.

But the thing to remember about geothermal is that the natural resource is as globally spread as the very tectonic plates that create earthquakes.

Pacific Rim Power

In Pacific Rim countries like the Philippines, we are witnessing the impressive emergence of geothermal energy companies such as Energy Development Corp., whose locally-traded stock has more than doubled in the past year.

EDC has a 150 MW geothermal plant up and running near the south of Luzon, the Philippine island chain's biggest landmass and the center of economic and political power.

Importantly, EDC does not focus on geothermal capacity exclusively — the company also has significant hydropower and wind energy operations throughout the Philippines.

Looking around the world, industry estimates put geothermal capacity growth at 9.5% per year through 2015, as illustrated in the chart below:

That growth won't just come from tectonic hotspots like the Philippines, where the volcanic eruption of Mount Pinatubo in 1991 was a full ten times stronger than the Mount St. Helens blast in the U.S. in 1980...

Even the UK, traditionally tame when it comes to temblors, is getting into geothermal.

UK Geothermal Development

The Department of Energy and Climate Change in London is funding exploration toward a 65 MW geothermal turbine plant in Cornwall, in England's extreme southwest. That site is being developed by Geothermal Engineering, Ltd. with 1.5 million pounds in government money.

That would be Britain's second operating geothermal plant, adding to one already in Southampton where water is heated at a depth of 1.8 kilometers (about 1.12 miles).

Geothermal Engineering isn't the only company drawing funds from the Energy and Climate Change department...

EGS Energy has drawn two million for a borehole also in Cornwall, and £461,000 has been allotted to Newcastle University to bring geothermal online at the Eastgate carbon-neutral village in Durham.

All three projects are part of the UK's Deep Geothermal Challenge Fund, which aims to push British geothermal past the 5,000 shallow-earth heat pumps already installed across the country.

As for publicly-traded geothermal energy companies, U.S. Geothermal (AMEX: HTM) has moved in a tight price channel since August, and Ormat Technologies (NYSE: ORA) is dipping down from its early December high of just above $43. Ormat is a good buy at around $35 per share.

Even though you won't hear as much about it in the media as wind and solar, we'll do our best to keep you informed about progress in the geothermal sector in 2010.

Regards,

Sam Hopkins

International Editor

P.S. Next week, I'll be writing to you directly from Peru, where the investment scenario for clean energy is heating up quickly. Green Chip International subscribers will be the first to hear about public companies making inroads down in South America's top sleeper market of 2010, so check out GCI today and don't miss a beat!

Russia China Lithium Batteries

Not far from the frozen tundra, green technological cooperation between Russia and China is heating up.

A technology transfer plan between the 11 year-old Chinese company Thunder Sky Energy Group and Russia's state-run agency for encouragement of nanotechnology, RusNano, will lead to joint production of Lithium-ion batteries for many industrial uses.

In energy and telecoms as well as the most prominent Lithium-ion target sector—electric vehicles—Russian production will ramp up with Chinese assistance.

The production facilities will be built in the Siberian city of Novosibirsk (literally, "New Siberian") and will add to Thunder Sky's output capacity while creating some 500 jobs in Russia and giving Moscow-led investment arm RusNano a quick start toward Russian prominence in the high-tech battery sector.

Just under $500 million in investment in 2010 and 2011 will draw more than $500 million in sales by 2011, it is hoped.

Russian project heads plan to use local materials and local labor to build on Thunder Sky's production model and solidify eastern Russia as an efficient production base that can serve both Asian and European markets with lithium batteries.

You can learn more about Lithium-ion batteries and their role in electric vehicle development here in the Green Chip Stocks archive.

-Sam Hopkins

China's Renewable Energy Boom

With 2010 just around the corner, evidence is steadily mounting that this will be the year of a Chinese clean energy boom like none we've ever seen.

This past Saturday — the day after Christmas — western investors as well as ones based in the Middle Kingdom all got a gift from the National People's Congress in Beijing...

A Lump of Clean Energy in Your Stocking

In a country where the bulk of electricity still comes from coal-fired plants, the NPC has decided to supercharge the Renewable Energy Law passed in 2006 by demanding that every bit of renewable energy capacity generated in the country's hinterlands be connected to commercial grid networks by major utilities.

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Electricity networks that do not integrate clean energy into their power delivery mechanisms with haste will face major fines. From here on out, the burden of getting China's green power percentage to 15% by 2020 will rest squarely on the shoulders of grid administrators — not on wind and solar power plant operators.

Until now, projects like the 10-gigawatt wind energy farm in the western Gansu province, which I told you about back in August, have faced the prospect that the renewable resources they harness wouldn't be able to reach consumers.

Local industry analysts say that up to one-third of China's current clean energy capacity is not tethered to utility grids. Having spent time in China's western reaches, where natural resources from coal and silver to wind and sun are bountiful, I don't doubt for a second that they're having trouble linking far-flung raw power supplies to the central and eastern cities where more juice is sorely needed.

In China, as in the United States, regional utilities tend to operate too independently for a large-scale national clean energy rollout to be implemented smoothly.

Here in the U.S., as you read in my account of the American Council on Renewable Energy Phase II Policy Forum in November, clean energy companies hope that the Federal Energy Regulatory Commission will assert its oversight rights to integrate Washington's goals from the Atlantic to the Pacific.

In China, the central government in Beijing does pretty much what it wants. Like it or not, the nucleus of power in that still-Communist country can catalyze market changes with more force than D.C. policymakers ever could.

As my colleague Nick Hodge wrote recently, it's shaping up to be a China vs. U.S. clean energy battle — and China is currently on top.

The Power of Forceful Clean Energy Policy

At the Copenhagen Climate Conference, Chinese negotiators showed up with major carbon intensity reduction targets in hand: they intend to cut carbon output per unit of GDP by 40%-45% before 2020, based on 2005 levels. Officials are also maintaining their raw target of a 15% clean energy portion of total electricity generation over the next decade, up from 9% today.

China's sitting on a massive surplus of money that they use primarily to buy foreign assets like U.S. Treasury bills, but the combination of Communist Party authority and filthy lucre can be used domestically to ensure that the carbon intensity and clean energy targets are met and exceeded.

While we dance around hard-charging grid connectivity plans here in the States, the Chinese know that smart grid technology like intelligent load metering can only be maximized if all resources are linked to end-users in residential and commercial areas.

This new mandate for clean energy grid integration in China is part of a big picture that energy companies and investors are all optimistic about heading into 2010.

China isn't just linking power supplies — the government just announced plans for 42 high-speed rail lines that will run nationwide at an average of 217 miles per hour. Speed is known to be a key factor in pulling commuters and long-haul transit customers out of their cars and off of planes, both of which are heavy polluters that will hamper China's carbon intensity targets. So Beijing planners are committed to getting rail done right.

Even more broadly, the Financial Times reported on Tuesday, December 29, that China-focused equity funds took in $6.8 billion in 2009, leading emerging markets in absorbing a record amount of investment inflows during the year.

That's right — while the rich-country recession hasn't come to an end, investors have positioned themselves to profit from faster and more robust recoveries in China and other rapidly-developing economies that are instituting smart growth policies.

Nick pointed out that electric vehicle companies Hong Kong Highpower (NASDAQ: HPJ) and China BAK Battery (NASDAQ: CBAK) have delivered extraordinary gains in 2009, proving how broad the green stock spectrum is in China. Best of all, China's top clean energy companies are bringing shares to Wall Street on a platter.

It's not too late to get in on the action... not by a long shot.

You can learn more about the next frontiers of green investments with Green Chip International. We just completed our year-end review, and if you sign up now you can get up to speed on our entire strategy for 2010 and where we've taken gains in 2009.

Happy New Year!

Sam Hopkins

International Editor

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The Canadian ETF Outlook

Here in Montréal, the holiday shopping frenzy seems to come a little late.

French-speaking Canadians and Anglophones alike bide their time in December, while Americans shop like chickens with their heads cut off from Thanksgiving through to Christmas.

Why? Well, Canada's British colonial past left a Yuletide tradition here as in Australia, New Zealand, and of course the U.K. itself. It's called Boxing Day, and if you get in the door to your favorite store early enough, you can enjoy discounts of up to 70% on top-shelf goods.

One Québécoise I saw interviewed on Boxing Day, which falls on the day after Christmas, put it this way: "I bought little gifts before Christmas," she said, "but I waited until today to get the big gifts." She was talking about flat-screen TVs and the Nintendo Wii, and even designer clothes that fill Montréal's many boutiques.

It's a smart way to shop, really, and hopefully your loved ones would be proud to know that you didn't go into debt up to your eyeballs just to check something off their wish lists.

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And heading into another year of economic uncertainty, many retailers are going all-out with prolonged Boxing Week sales that will carry over into 2010.

Whether you're Canadian or not, you can grab shares of plays on Canada's investment trends for the new year.

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Keep Those Stockings Stuffed With Canadian Stocks During Boxing Week

Canadian stocks have traditionally been the most prominent and accessible of all non-U.S. shares on Wall Street. These days, that includes a bunch of easy-access offerings like the iShares MSCI Canada Index ETF (NYSE: EWC).

EWC is an exchange-traded fund that allows you to invest heavily in the natural resources that have padded Ottawa's national coffers and helped the Canadian dollar soar against the greenback in recent years. More about the Canadian "loonie" in a moment...

The index fund includes many companies that are listed individually on the NYSE. If you look at them one by one, you can see why EWC holders have enjoyed a 55% return since the beginning of 2009 and more than doubled the S&P 500's run during the same period, as shown in the chart below:

Toronto's Barrick Gold (NYSE: ABX) rose and fell more or less with the price of gold as represented in the SPDR Gold Trust ETF (NYSE: GLD). ABX is dipping right now and could be a nice Boxing Week bargain on its own and as part of EWC.

Oil and natural gas explorer Canadian Natural Resources (NYSE: CNQ) is up 77% in 2009.

Fertilizer giant Potash Corp. of Saskatchewan (NYSE: POT) was downgraded to "hold" by TD Securities on December 23, with a $95 price target giving you reason to wait (it's currently at just over $112). The long-term case for fertilizer stocks given water and food shortages remains strong, so keep an eye on Potash Corp.

Finally, natural gas producer Encana (NYSE: ECA) moves hydrocarbons from its Calgary headquarters, and the stock just split to current levels near $33.

All of those are large-cap companies with large share price changes that have affected the EWC Canada ETF more broadly over the past year. Because of its holdings, that index fund is outperforming the S&P TSX benchmark by a sizable margin—the Toronto leaderboard has only gained 30% compared to EWC's 55% in 2009.

How about some smaller swings in Canadian trades you can access on Wall Street?

For that, we'll turn to a currency-based ETF that capitalizes on the rise in the Canadian dollar.

Playing the Canadian Dollar with Rydex CurrencyShares

Yesterday I saw Prime Minister Stephen Harper answering questions on CBC national news. One of the first questions his interviewers posed had to do with Canada's national balance sheet. Specifically, are Canada's zero interest rate policy (ZIRP) and national debt dangerous?

As Harper responded, Canada's current-account balance as a percentage of economic output is not in dire territory. It's -2.7%. The United States, by comparison, is at -3.1% of GDP. Greece, which is reeling right now, has a -6.6% account balance.

Though that spread is small, the Canadian dollar (affectionately known as the "loonie" because of the bird on the $1 coin) is up significantly against the U.S. dollar over the past year.

If you consider a currency to be like a country's share price, you should definitely take a look at a line of currency-based ETFs offered by Rydex, called CurrencyShares.

This graph shows the CurrencyShares Canadian Dollar Trust (NYSE: FXC) vs. the PowerShares US Dollar Index Bullish ETF (NYSE: UUP) and the United States Oil Fund, an exchange-traded fund that aims to capture the movement of crude oil prices (NYSE: USO).

The clear loser here is the dollar, which sags next to the loonie and black gold.

I'm heading to Québec City today, leaving English and my U.S. dollars behind.

Here's to a new year of health and wealth for you, wherever you are!

Regards,

Sam Hopkins
International Editor

P.S. - Of course most Canadian stocks are available on the Toronto and Vancouver stock exchanges, and you'll hear plenty about resource companies on those markets in 2010. Stay tuned!

Brazil Wind Energy Auction

It's been eight months since I first wrote you from Rio about Brazil's burgeoning wind energy market. Back then, investor fervor over wind power caught me off guard...

"Perhaps the biggest surprise so far has been the enthusiasm I see for wind energy investments here.

The national wind energy resource potential is estimated at around 250GW, concentrated in the northeast, coastal south, and northwest of the major cities Rio, Sao Paulo and Belo Horizonte. As this "Wind Map of Brazil" from the Brazilian Center for Wind Energy shows:

There will be a major auction of wind energy permits in Brazil on November 25, and I've found that both local and international utilities like France's GDF/Suez are lining up to compete and get their bids low enough that the government accepts."

Well, after a delay of the auction from late November to December 14, 71 farms and 773 turbines were approved at an average price of 148 R$ (reais, the plural of the local currency the real), or about $85 per megawatt-hour, last Monday.

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Why Brazil's Wind Energy Auction Matters

In November, when a massive power outage hit 60 million Brazilians in 800 cities across the sprawling nation, we covered the energy imperative that Brazil has ahead of it as the Olympics and World Cup come to the country.

The auction generated $5.4 billion worth of interest, and 339 projects were authorized to take part.

The total wind energy output from this month's successful bidders will be 1.8 gigawatts, and that will expand to 10 GW over the next decade through subsequent auctions. The goal is to push wind power to a 5% contribution portion of the national electricity supply.

Over 7.5 hours, hundreds of companies bid on 20-year concessions during which the government will pay above-market prices for power. As in England and other feed-in-tariff countries like Germany, Brazil wants to bring capacity up by paying more for solar, wind, and biomass than it does for hydropower and coal (thermal) power.

In the case of last week's online auction (sort of like an eBay for Brazil's wind energy future), average prices came in below expectations and just above hydro and thermal.

Brazilian wind energy producers are willing to take R$148/MWh, compared to the pre-auction estimate of 160 and upper limit of 189. A recent biomass energy auction balanced at R$154, and hydropower and coal both draw R$144.

So what does that mean?

Here are a couple of choice quotes from Reuters News:

"I consider this auction to be a success given the quantity and average price that we received," said Marcio Zimmerman, Deputy Minister of Mines and Energy. "Wind power is an excellent opportunity for Brazil."

"This auction showed that the price gap between wind and thermal (generation) is shrinking and today is quite small," said Mauricio Tomalsquim, chief of a Brazilian government energy think-tank.

That bit from Tomalsquim, of Brazil's Energy Research Corporation, is key. Around the world, the success of renewable energy depends on grid parity that means clean energy can be as cheap as coal.

The Importance of Information

Now, some reports early in the week of December 14 contended that Brazilian utilities like CPFL Energia (NYSE: CPL) dropped because of lower-than-expected demand in the auction.

In fact, it was partly mistaken reporting in the week leading up to the auction that caused CPFL to rise and then fall. Bloomberg reported on December 9 that Brazilian electricity distributors that own existing wind-power plants "may benefit from increased demand... after the government canceled an auction for energy licenses due to the predominance of thermal power plants."

I scoured the Portuguese-language press and found no basis for that report; it was misinformation, plain and simple. To boot, CPFL's U.S.-traded ADR shares are still well into positive territory over the past month.

With a share price that has nearly doubled in the past year and a dividend yield of 6.50%, CPFL is one of the top energy infrastructure plays on our radar for 2010.

Companies like India's Suzlon, our Spanish holding Iberdrola, Energias de Portugal Renovaveis (the Portuguese utility's clean energy arm, which trades over-the-counter as EDPFY), and Denmark's turbine king Vestas Wind Systems are already involved in Brazil's wind power market. Vestas kicked off its Brazilian involvement in 2008 with a 92-turbine deal.

All of the companies mentioned above are on our watch list. So are a few privately-held firms operating in Brazil's wind energy build-out: Spain's Acciona and Brazilian domestic wind energy titan Wobben Windpower (a subsidiary of Germany's privately-held turbine builder Enercon), are keen to add to their clean energy portfolio in South America's leading economy.

The effects of this December's auction will ripple far beyond Brazil...

Betting Big on Latin American Wind Power Beyond Brazil

From start-ups to full-fledged Green Chip Stocks, this January I'll be checking out investing opportunities in Brazil's neighbor to the west: Peru.

Peru's economy is only about 1/8 the size of Brazil's, but the country quietly received the seal of approval of Moody's Investor Service this December, as that ratings agency became the last to raise the country's credit rating to "investment grade." With the upgrade to Baa3, Moody's rewarded Peru and leaders in the capital Lima for fiscal and monetary policy successes that are drawing increased foreign direct investment (FDI) while cutting national debt.

Santu Hulkkonen, director of a consortium called Cleantech Finland, announced in November at a biofuels and renewable energy conference in Lima that 10 Finnish energy companies will invest in Peru's wind power sector in 2010.

Just across the border from Brazil, there are clear synergies for wind power developers operating in both countries to take advantage of.

You'll get all the latest to make 2010 your most profitable year yet investing in clean energy.

Happy Holidays,

Sam Hopkins

Cleantech Finland in Peru

Peru quietly received the seal of approval of Moody's Investor Service this December, as that ratings agency became the last to raise the South American country's credit rating to "investment grade." With the upgrade to Baa3, Moody's rewarded Peru and leaders in the capital Lima for fiscal and monetary policy successes that are drawing increased foreign direct investment (FDI) while cutting national debt.

Now, as 2009 draws to a close, Peru's friendly investment environment is being validated by companies from Latin America and beyond as they announce plans to gain a foothold in the Peruvian market.

The latest news of Peru's FDI appeal comes from far across the Atlantic from South America in frozen Finland.

Santu Hulkkonen, director of the Cleantech Finland consortium, announced in November at a biofuels and renewable energy conference in Lima that 10 Finnish energy companies will invest in Peru's burgeoning wind energy sector in the first half of 2010.

Finland's environment minister, Paula Lehtomaki, said at the same conference, called COBER III, that over the next 3 years, Finnish companies are expected to invest 6 million euros in Peru. For Finland, moving into the Peruvian market for wind power development helps cement the Nordic country's leadership on the global clean power scene.

Cleantech Finland's website says that Finland itself has a cleantech market that is growing at a 15% annual clip since late last decade, and over 1300 companies at all levels are participating in the country's cleantech expansion.

Success beyond Finland, however, is what will define the most successful Finnish cleantech ventures. In Peru, Cleantech Finland gains access to a Pacific Rim market with around 29 million residents and great potential for bringing new energy technologies to underserved communities.

I will be in Peru January 12-22, meeting with business and community leaders from both inside and outside the country who are busy matching world-class entrepreneurial acumen with local needs.

Green Chip International readers will be the first with access to exclusive multimedia reports on how the investment landscape for South American renewables continues to shape up with worldwide participation like what we're seeing from Finland now.

Click here to learn more about GCI in this special report.

-Sam Hopkins

NYSE USO Oil ETF

Editor's Note: The following article, Oil Price Outlook 2010, first ran in Energy and Capital's sister publication, Wealth Daily, on Monday, December 14, 2009.

As of the first trading day in 2010, USO is up to $40 per share, a 14% gain since we first noted the trend reversal.

===

There's no better time than now to go long oil.

NYMEX futures hit a 9-day slide downward. A rising dollar, robust U.S. domestic petroleum stockpiles, and a potentially momentous Fed announcement are all being counted against crude.

From a technical standpoint, though, we're staring at a key reversal point for oil heading into 2010.

Below, we see a chart of the United States Oil Fund ETF (NYSE: USO). USO tracks high-quality West Texas Intermediate crude through bets on black gold and various refined oil products in forward-looking trades:

Watching Technical Indicators for a Reversal in United States Oil

The first thing to note is that since late October, USO (shown here in candlestick view to give more information than just day-to-day plot points) has traded in a similar channel to the S&P 500, shown in red.

By setting Bollinger Bands to show relative price levels over this 3-month period, USO is clearly nearing oversold territory and even threatening to break below the lower boundary.

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Our candlesticks point to similar potential for a bounce here. The 8-day slide of crude futures into Friday, December 11, led traders to become more ambivalent about USO's direction, and that gave us a Doji cross that can signal a reversal.

The Williams Percent Range (W%R), another favorite technical indicator you've heard about from my colleague, trading guru Ian Cooper, also shows "Oversold" in big neon letters.

With the W%R down near 100, this is textbook technical fodder for an upswing play — just look at what has happened the other times W%R dipped this low!

Of course, we need confirmation of all these reversal signals in the actual price movement, which we can't see... yet.

That's why it's important to establish a long position in oil now, whether through USO or an ETF like AMEX: OIH that holds oil services companies. There are even supercharged long positions you can take, like the ProShares Ultra Dow Jones-AIG ETF (NYSE: UCO). UCO will double every one of oil's upside moves, offering you the opportunity to reap quick rewards in the imminent upswing.

Now, both of the ETFs I've mentioned here are based on domestic oil price action in the U.S. But there's a lot more to crude market dynamics than just American economic forecasts, Fed interest rate levels, and the greenback's value...

Looking Beyond the Oil Market's "Dollar Obsession"

A rising dollar could weigh on commodities as traders flock away from oil, metal and other material investment havens in favor of the global reserve currency. After all, the inverse relationship between the U.S. dollar and oil ("Dollar up; oil down") is practically part of investing Canon Law.

There's also new talk of Iraq's pent-up oil reserves flooding into the global crude market. (I've seen that same movie every year since 2003!)

You're putting your money in peril, however, if you ignore the news out of China. Coinciding with a fresh International Energy Agency forecast that global petroleum consumption will increase by more than previously expected in 2010, last week the Middle Kingdom let us know just how rapidly its manufacturing economy is recovering from the credit crunch and market downturn.

Industrial output in China rose by 19% in November over the same month in 2008. Though the U.S. Department of Energy's Energy Information Administration (www.eia.doe.gov) and oil cartel OPEC don't see the demand scenario as fleshing out until 2010, the IEA outlook is bolstered by JP Morgan Chase (NYSE: JPM), a U.S.-based financial services giant.

JP Morgan analysts upped their oil price forecast for 2010 from $67.50 to $78.25 last Thursday, which would put crude about 12% higher than current levels around $69.90 per barrel.

JPM's 2011 view puts prices even higher at $90, meaning you stand to gain nearly 29% if you get in now. It's a simple medium-term trade for those bold enough to ignore what the Wall Street Journal has rightly called a "dollar-obsessed oil market."

Oil Companies Won't Let the Rug Get Pulled Out

If the dollar is a haven for commodity and forex traders, let's consider oil companies' own sense of safety, too.

The biggest petroleum players are now investing record amounts in non-traditional revenue streams like natural gas for transportation and clean energy (see BP Wind Energy, for just one example).

Those investments rest on sustained higher oil prices as their capital base. If the oil price keeps plummeting, intensive exploration will also drop precipitously, which will lead firms like OIH components Schlumberger (NYSE: SLB) and Halliburton (NYSE: HAL) to raise hell. There is simply too much energy market momentum today that is banking on high oil for this drop to continue.

Today you've seen the technical case for a rebound in oil, and hopefully the logic of why the 9-day freefall will end is clear to you, too.

For more about the shifting energy investment tide and some astounding trends now playing out in the world's oil producing heartland, check out this special report from my Green Chip International energy investment service: The World's Longest-Running Drug Deal.

Regards,

Sam Hopkins

International Editor

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Atlantis Marine Energy

In 2010, the wind-whipped Orkney Islands north of Great Britain will become a key global testing ground for marine energy.

Ocean-based power systems are already being tested there in Scotland's northern reaches, at the European Marine Energy Center (EMEC) testing facility. OpenHydro, an Irish company, and the UK's Tidal Generation, Ltd. both have tidal energy conversion tests in the works, but Atlantis Resources Corp. hopes to take the lead in advancing tidal power to commercial scale.

Atlantis Resources, founded in Australia but based in London, is installing its 1-megawatt AK-1000 model turbine underwater at EMEC with a $25 million commitment to see the project through and show it to potential large customers.

With 18-meter rotors, Ak-1000 is as big across as a 5-story building is tall. Yet that doesn't mean Atlantis will treat it with extra care.

CEO Tim Cornelius says that up at Orkney, the AK-1000 will be tested in "one of the harshest environments in the world." That could be a boon to Atlantis and to marine energy in general.

You see, as with wind power and even solar energy, conditions that are intolerable for most humans generally point to abundant natural resources that can be used for large-scale energy production.

Scotland, whose national clean energy targets are separate from London's UK guidelines, is angling toward a goal of generating a quarter of its household energy from renewable sources by 2020.

With marine energy alone, the Edinburgh-based Scottish Executive hopes to power half a million homes a decade from now. Test projects like Atlantis Resources' AK-1000 in the unforgiving Orkney offshore waves could drive Britain to a far greater share of green energy than was previously thought possible.

-Sam Hopkins