Sam Hopkins - Angel Publishing

Desertec Update

The World Bank is kicking off 2011 with indications that it will help fund a far-reaching expansion of renewable energy connections between the oil-rich eastern Arab states and poorer North African countries.

North Africa is already the planned site of the 400 billion euro Desertec Industrial Initiative, which involves dozens of international companies in an effort to develop clean energy in the region.

Under Desertec, Morocco, Tunisia, Algeria, Egypt, and even Ethiopia are appraising their domestic potential to produce electricity from solar, wind, geothermal, and other renewable energy sources.

In 2050, it is hoped that Desertec will have developed brand new resources to power a North African economic expansion and simultaneously meet up to 20% of the European Union’s electricity needs.

Until now, the eastern side of the Mediterranean had been largely left out of Desertec plans, since countries along the Persian Gulf have large endowments of oil and natural gas. However, surging temperatures in recent years have driven Saudi Arabia and Egypt to research a $1.5 billion plan to connect their grids. The benefit to each nation would be a buffer in supply when peak demand hits, because Egypt and Saudi Arabia experience their peak demand levels of 3 to 4 GW at different times.

From Morocco in the West to Oman in the East, the Arab world spans five time zones.

If the World Bank decides to fund smart grid development from North Africa to the Indian Ocean, oil-rich states like Saudi Arabia will become unlikely allies in the quest for energy options that is driving development and investment around the globe.

Wave Energy

With some of the strongest wave power potential in the world just beyond its shores, Ireland is pumping more and more money into its wave energy sector.

But Irish companies aren’t the only ones getting in on the ocean action...

One Maryland-based clean energy startup already has a lead on the US competition, as it develops power generation technology tested in the choppy waters off the Emerald Isle’s western coast.

Wave Energy Conversion Corporation of Ireland (WECCI) CEO Brian Cunningham hopes to use production and testing facilities near Galway to further prove the Wave Energy Conversion System's capability after several years of trials in the Atlantic.

“You can’t get cute with the ocean,” Cunningham says. He should know--having more than 1,000 dives under his belt as a submariner in the U.S. Navy and later experience as a naval ordinance and NASA physicist, Cunningham respects the waves. He also holds a passion for spreading good ideas through entrepreneurship, which he himself did with two successful technology companies.

In addition to his naval experience, Cunningham brought Computer Entry Systems from himself to 1,000 Associates to achieve an IPO and an 8 year run on the NASDAQ. That led to a lucrative buyout (returning an average of 34X to founding CES shareholders) by another public company.

Before that, he helped jumpstart the national market for computer peripheral devices (many of which, like mini computers, magnetic tape storage, high speed line printers and high speed modems became essentials to the IT revolution) with colleagues from NASA.

WECCI has already secured a letter of intent (LOI) from Energia, Ireland's largest independent electricity supplier, to buy all of the wave energy generated power that its Amplified Wave Energy Converter can produce. In that power purchase agreement (PPA) scenario, Energia would pay WECCI €220 ($308) per megawatt-hour for electricity that the company expects it can produce for €50 ($67)/MWh.

“Simple and robust engineering is key,” Cunningham says, emphasizing that the articulated barge design of the Wave Energy Converter--first developed in Ireland by WECCI’s Chief Technology Consultant Dr. Michael McCormick--is right on the money. Already a seasoned entrepreneur, CEO Cunningham decided to come out of retirement to meet the challenge of soaring world energy demand while tapping into a sharp rise in money rushing into the wave energy sector.

On November 10, the European Union's executive branch announced a trillion-euro energy investment strategy for the next decade.

European Energy Commissioner Gunther Oettinger said on Wednesday, "Looking at our networks for gas, oil and electricity, we are still stuck within the borders of 19th-century principalities... We don't have the quality or the capacity compared to goods and services."

Even before that announcement, wave energy investment activity in Ireland alone has been increasing at a furious pace. To meet the country’s goal of drawing 40% of national electricity supplies from renewables by 2020--that’s double the European Union’s “20 by 20” target--Irish utilities are putting millions of euros down on companies like WECCI.

In early November, major gas utility Bord Gais Eireann acquired a 20% stake in Tonn Energy, a joint venture between Sweden’s Vattenfall (the #5 power utility in Europe) and Irish wave energy company Wavebob.

Bord Gais CEO John Mullins put his country’s political and industrial commitment to wave energy in very certain terms: “The potential of the Irish wave energy resource is enormous and Irish utilities are determined to capitalize on that.”

The global investment increase in wave energy echoes Ireland’s determination. In all of 2009, $13,679,360 was invested in wave energy companies. In just the first quarter of 2010, that amount increased to $22,684,000.

That’s a 64% increase in the first three months of 2010 over the full twelve months of 2009!

And on November 8, US Energy Secretary Steven Chu visited the headquarters of Wavebob, which has offices in Annapolis, Maryland, and which received $2.3 million from the Department of Energy to support its US-based R&D. In WECCI, we see an American business venturing across the ocean to brave the rougher Irish waters, but as the saying goes...

A rising tide lifts all wave energy companies!

The numbers aren’t in for FY 2010 yet, but you can bet that wave energy will be one of the hottest sectors to watch in 2011.

You can learn more about WECCI’s wave energy conversion here.

-Sam Hopkins

American Solar Development

This land is your land, this land is my land... This land was made for solar energy.

At least that’s the feeling I got from a top Obama administration official at the Atlantic magazine’s Green Intelligence Forum in D.C. this week.

David Hayes is Deputy Secretary of the Department of the Interior, and he’s spearheading an industry-focused campaign to highlight the best spots on U.S. public land for the development of solar power projects.

“This is a lot more fun than dealing with the BP oil spill,” Hayes said, as he began outlining the Interior Department’s approach for unlocking huge amounts of “stranded” renewable energy through transmission infrastructure while directing private business to places where siting gruntwork has already been done by the feds.

Nobody in the room doubted that moving forward with renewable energy on public land has to be more of a satisfying and future-oriented goal for Hayes than cleaning up tides of crude oil from America’s beaches.

And it makes sense to limit potential environmental problems with a minimal burden to entrepreneurs testing and deploying clean energy technology. So Interior Secretary Ken Salazar and Hayes aim to make siting “smart from the start,” eliminating red tape and high survey costs for companies by directing them to locations the Interior Department has deemed ready-to-go.

To begin with, 24 areas in the western U.S. have been identified as well-suited for solar power development. That adds up to 770,000 acres of moneymaking potential through clean energy generation.

Just the day before, Salazar’s department approved the $6 billion Blythe Solar Power Project in California’s Mojave Desert. Palo Verde Solar, a division of Germany’s Solar Millennium, will develop 1,000 MW for grid connection by 2013. Blythe was given a leg up by the department’s priority treatment of clean energy projects on public lands, a power purchase agreement with Southern California Electric, and a landmark energy storage bill signed into law by Gov. Arnold Schwarzenegger this September.

Blythe will be the largest solar power project in the world, and there are more in the offing on public lands. Take for example Ivanpah, the 392 MW solar thermal facility being built by BrightSource Energy. BrightSource counts Chevron and Google as its investors, and many industry observers expect the company to go public once Ivanpah is finished.

In Nevada, Salazar also recently okayed that state’s first large-scale solar project on public lands.

This being election season, you’re probably hearing a lot of talk about how Washington is broken. But over at the Interior Department, they’re moving from a year marked by the country’s worst-ever fossil fuel fiasco into a new drive to create green energy investment and capacity on U.S. public lands.

With this assistance for international and American companies with U.S. solar power operations, investors are sure to benefit as public power producers prove their mettle in vast, open areas.

Veolia Environnement Stock

Publisher's Note: Green Chip's Sam Hopkins is in New Orleans this week, reporting on the city's pressing water and transportation needs, and the company behind its massive infrastructure overhaul...
— Jeff Siegel

—————————————————

More than 200 years after the Louisiana Purchase, the French are about to run New Orleans again.

The fleur de lis still graces everything from garbage cans to football helmets in this tropical American city, and as I've found in the past few days while looking for companies that are making the most of the Big Easy's post-Katrina renaissance, the famed fleur isn't the only nod to the area's erstwhile European rulers. . .

By 2015 there will be more than 1.3 million electric cars on the road...

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Most of it is expected to come from here:

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French multinational conglomerate Veolia Environnement (NYSE:VE) is becoming the company that handles New Orleans' most basic water and transportation needs.

Veolia has been a major player in this sea-level city's water distribution infrastructure since the mid-1990s. Veolia Water North America built the largest water treatment plant in the United States here in 1992. Today, the company continues to operate and maintain filtration facilities near the Mississippi River, whose connection to the Gulf of Mexico gave New Orleans its historical strategic importance, as well as its fresh water supply.

Now Veolia, which trades on the Euronext Paris market as VIE, is taking control of the city's famous streetcars and buses from the New Orleans Regional Transit Authority (NORTA). NORTA has failed in its efforts to get public transportation back on track after Hurricane Katrina in 2005 (and Gustav and Ike in 2008), decimated the primary customer base for intra-city mass transit.

Veolia Takes Over Post-Katrina Transit

Consider this: the population of New Orleans is still about 30% lower than it was before Katrina, yet NORTA ridership dropped by 70% over the same period!

That's too low even for sea-level, and NORTA can't get the numbers up. So they're paying Veolia up to $600 million over the next decade to handle everything from payroll and pensions to network operation; security and timetables for the city system and its connections to surrounding parishes, as counties are called in Louisiana.

Perhaps most importantly, Veolia will take over the system's public relations, using lessons from Veolia Transportation's business in 70 countries to recover some of the 70% of customers NORTA lost.

To be fair, it's not all NORTA's fault. As you probably know, Katrina hit the poorest areas of New Orleans the hardest. The reason that many residents of places like the Lower Ninth Ward couldn't evacuate in time to avoid the storm and rising floodwaters is the same reason that NORTA ridership is down a full 40% more than the city's population. Those folks depended on mass transit to traverse the city and to escape it.

And we all remember the sight of entire bus fleets sitting chassis-deep in murky water, as the Superdome filled with panicked New Orleanians. As indelible as those images are to anyone who saw the disaster unfold on TV, the mental and physical scars of Hurricane Katrina are all the more apparent here.

Over four years after the storm and floods roiled, restaurants place post-Katrina recovery clearances in their front windows as if they were the standard bills of health. I've heard 10-piece bands sing songs about high water and helplessness, and I've seen signs saying, "Katrina broke our city and Capitalism isn't going to fix it."

But Katrina, among other things, demonstrated an epic failure of government at all levels to protect the citizens who bankroll it.

Veolia's job will be to prevent such breakdowns through effective disaster planning and management. If improvement comes through a "capitalist" five-year deal with an option to renew, so be it.

Beyond hurricane preparedness, Veolia is intimately involved in state and city-level efforts to bring federal stimulus money down to the Delta.

New Orleans: "Exhibit A" for Stimulus Funds

In February 2009, Newsweek called New Orleans "Exhibit A" for why a federal stimulus was not only needed to bring the world's richest country out of recession, but also to restore a basic level of service and civil life to one of its most precarious cities.

So far, 16% of Louisiana's federal stimulus money has been allocated to transit and water projects, according to the Louisiana Recovery Authority's website.

Transit and water projects are both right up Veolia's alley.

New Orleans is even seeking to expand Veolia's task by building three new streetcar lines. Estimated at around $150 million, the city wants federal stimulus aid to boost the project. Under the "Exhibit A" banner, New Orleans can legitimately say that by expanding service out to poorer areas, resettlement and reintegration into the local economy will be made possible for thousands of families now scattered all across the country.

Some of the currently un-served areas had older streetcar lines that were torn up, though the wealthier Uptown area kept its St. Charles conduit. So it's not an "If you build it, they will come" scenario, to paraphrase one of my favorite films. Instead, it's more a question of, "If we rebuild it, will they come back?"

People tell me this is the time of year to get work done in the Big Easy because you won't sweat too hard. It's not too muggy, and it's certainly not chilly enough for my temperate-zone bones to raise any objection. Veolia Environnement is bringing its international expertise and the weight of a conglomerate to New Orleans to rebuild old things and build new ones, too.

And as I reported a couple weeks back from California, Veolia is part of an expansive national consensus that infrastructure issues are paramount to economic vitality.

The market is looking wobbly right now, but if you want a piece of what Veolia is doing here and elsewhere, current levels around $32 give you a sound technical support base and an opportunity to start building a position in this water and transportation double-play.

As it happens, the Green Chip team is wrapping up a report on the newest addition to the Green Chip International portfolio. Like Veolia, it's a major force in some of the world's biggest markets for water services. But unlike Veolia, this is a country-specific play on an emerging market that investors are clamoring to get a piece of. This stock is a value investor's dream hidden by hype. You don't want to miss this winner.

Regards,

Sam Hopkins

Editor's Note: My colleague Nick Hodge will soon be attending GreenBeat 2009, the foremost event on the smart grid. Below are some details about the conference.

Call for submissions: Smart Grid innovators wanted! Renovating the power grid requires big ideas from start-ups, major technology companies and manufacturers, and university labs. Innovations will range from technologies that increase the grid's capabilities and efficiency, to new business models taking advantage of these new capabilities. To find out more about GreenBeat's Innovation Competition and to apply, click here.

Deadline to enter the competition is October 30, 2009. VentureBeat will name the top 10 innovations driving the future of the Smart Grid on November 19, 2009, at the GreenBeat 2009 conference. Keynotes include Al Gore and John Doerr.

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Natural Capital Investing

Plenty of companies have found ways to make millions from what’s underneath the earth. And the importance of minerals and hydrocarbons to the modern international economy brings along a need to assign monetary value to resources that are, in their natural state, buried.

Then there’s another world of above-ground riches like timber, flowers, animals and even mountain air that find their way to market just the same, but without a clear, global system for pricing what is removed and sold.

The United Nations is now in the process of creating the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IBPES) to address the challenge of measuring and monetizing the most uncommon natural resources.

While oil, trees, water and even carbon dioxide can be found in enough places to ensure a continuing exchange of money for each commodity for several decades (though not indefinitely), animals and plants are gone once they’re gone.

The International Union for Conservation of Nature says that 2% of the 48,000 species listed as verging on extinction in 2009 were in fact already extinct in the wild. This points to the difficulty of measuring finite populations of flora and fauna and in turn valuing them for their uniqueness.

The task now at hand for the IBPES is basically to convey that biodiversity is a concept almost opposite to the notion of commodity. A commodity is by definition the same no matter where it comes from or who produces it. The same can’t be said for areas of rainforest where each acre could hold thousands of species of what would normally be called the same insect.

So while countries like Indonesia are being paid billions of dollars not to destroy forests that counteract carbon dioxide buildups, the burgeoning market for emissions trading does not address extinction or ecosystem destruction that isn’t overtly tied to the oxygen-carbon scrubbing cycle.

The UN estimates that between $2 trillion and $4.5 trillion in damage is done to “natural capital” each year, which at the upper end would exceed the yearly economic activity of every country but the United States, Japan, and China.

And it’s not that no one stands to lose from the eradication of unique species...

Even the most mundane medicines come from plants – take Aspirin for example. Ancient Greeks first figured out that the bark of willow trees could have pain-killing powers when ingested, but it wasn’t until 1828 that the active ingredient was isolated for easy pharmaceutical use. Now consider the biodiversity of a tropical rainforest and its host of potential billion-dollar miracle cures, and it becomes clear that the un-commodities the IBPES is looking at are less like oil or coal and more like real estate, which can vary in value wildly based on location.

The European Commission – the European Union’s executive body – announced on July 13 that it has undertaken a major initiative, The Economics of Ecosystems and Biodiversity (TEEB), to tackle core questions of value. The TEEB’s research faces abstract monetization issues also being confronted by Internet companies like Facebook and YouTube.

If it’s out there and isn’t owned in a traditionally capitalist sense, what’s it worth and who gets paid?

The earth may not have intellectual property lawyers on retainer, but the UN has named 2010 the Year of Biodiversity, and the United Nations Environment Programme is using TEEB’s November, 2009 report Responding to the Value of Nature a keystone in its efforts to establish active environmental stewardship as a more realistic course of action for businesses and governments.

Among the top recommendations of TEEB may be a Green Development Mechanism that parallels the UN climate change emissions trading system, and several tax incentive structures that will credit public and private initiatives for preserving biodiversity.

You can learn more about the initiative at http://www.teebweb.org.

Offshore Marine Energy

A week after Obama's offshore drilling announcement, debate is running at full steam — even if new exploration and production haven't started.

One positive result of the back-and-forth on offshore energy activity is that wave and tidal power may draw increased attention in the United States.

As it stands, though, the Department of Energy doesn't give these ocean-based energy resources much more attention than a kids' energy education page on the Energy Information Administration's website.

If you want to see where the real action is, you've got to look across the pond to see what the British are doing with marine energy.

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Scotland: Leading in Ocean 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. Ireland's OpenHydro 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.

Due to a decades-long process of devolution — which means granting more and more administrative powers to the capitals of Wales, Scotland, and Northern Ireland — Scotland's national clean energy targets are separate from London's UK-wide guidelines.

The headline difference is a goal of generating a full quarter of its household energy from renewable sources by 2020, instead of London's 20% target.

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.

But the pounds have barely begun to flow into marine energy...

Gunning for 50 GW of Marine Power per Year

In March, the Scottish Government fired the starter's pistol in the race for what it says is the largest government-administered innovation prize in the world.

Engineers and business types from all around the globe will compete for a 10 million pound award called the Saltire Prize. Their task: to develop a commercially viable wave or tidal energy solution that will turn Scotland into an offshore hydro powerhouse.

As in the U.S., the UK government holds rights to its own offshore areas; this means the Crown Estate that administers rich ocean energy resources has to green-light research regions.

In a reprise of processes I've already witnessed in Brazil and Peru, this summer the Crown Estate will hold its first leasing round for marine energy R&D. If you feel like I do, you'd much rather see national governments opening up land for groundbreaking renewable energy research than watch offshore oil drilling get a hand-up.

Between 2012 and 2017, participants in the Saltire Prize contest will test their technology off the coast of Britain, primarily in Scotland's turbulent waters. Whoever takes the 10 million GBP prize home — or, more likely, reinvests it in the successful technology — will have proven that it is possible to generate 100 gigawatts over two years with marine energy.

Another Step in the North Sea's Energy Transition

The North Sea oil rigs within sight of the Scottish coast are seen as remnants of a dwindling fossil fuel industry.

When I visited a wind turbine manufacturing facility in Fife (about an hour outside of Edinburgh) back in 2006, I learned how thousands of jobs had been saved by Scottish investment in a transitional energy economy. Companies like Denmark's Vestas Wind Energy swept into places like Argyll and made use of facilities and local know-how to bring utility-scale clean energy to market.

From wind to waves, we're seeing Scotland's plan develop over the course of several years.

Now ask yourself, with only three years of U.S. oil supply estimated to come out of new offshore leases in U.S. waters, what will the Saltire Prize competitors have done in that time to increase the UK's energy independence, not to mention global competitiveness?

And how much of an opportunity is Washington missing?

I'll be back in the UK later this month as part of a trek from North Africa up to northern Europe, logging the various green energy attitudes and developments I see every step of the way.

I'd like you to get the first multimedia and stock recommendation reports every time I file them. To stay up to date, check out Alternative Energy Speculator today and learn why superior returns in international clean energy companies have become the norm for AES subscribers.

Regards,

Sam Hopkins

Latin America's Top-Performing Stocks

Even though the sun is plenty bright on the East Coast of the U.S. today, I've got my eyes on the tropics.

I'm looking at Colombia specifically. That's where the World Economic Forum for Latin America is going on this week.

The theme of this year's meeting: New Partnerships for a Sustainable Recovery.

As rapidly developing regional economies rocket out of the global recession, fresh arrangements of priorities and money will set Latin America's growth trends for years to come. So let's look now at where we can find the best returns...

This CEO Accidentally Reveals a Big Secret

Experts say North Dakota's Bakken Oil Pool may hold 4-6 billion barrels of sweet, light crude.

But the CEO of the biggest Bakken oil company just let it slip that there's as much as 24 billion barrels.

The thing is, there's very little land left for drilling leases...

And that means Bakken oil companies may be worth 300%-400% more than most investors now believe.

You can watch this CEO's incredible video footage HERE.

Different Economies, Same Growth Goals

The world wants what Latin America has. From bananas to copper, the region is resource-rich. Money is coming in like never before, driving up the price of local currencies like the Brazilian real. If a currency acts like a national stock price, money movement is pointing to rising future earnings for many countries in the region.

That doesn't mean we should take the whole area as a giant target, however. To make more than the average investor watching from afar, we have to differentiate.

Consider what "Latin" means in English-speaking countries. Generally, Spanish and Portuguese speakers and their countries — not the Caesars or Rome — are what comes to mind these days. Miami and many other cities have their large Latin communities, and the U.S. even hosts Latin Grammys every year to honor grandes estrellas (big stars) from their musically-infused culture.

But ask a Dominican if he's the same as a Brazilian, or try to lump the growth of a country like Peru in with Venezuela, and differences start to stand out quickly.

Same goes for the countries that will be represented in the coastal Colombian city of Cartagena this week.

Take Chile, which is riding high on copper demand despite the severe earthquakes that recently shook the country. Although reports indicate that Chinese demand for the malleable metal is slowing, the head of national copper company Codelco says higher production is "not at risk." U.S. and European demand will take up slack from the Middle Kingdom, CEO Jose Pablo Arellano said Monday.

Chile has seen copper rise from $2 per pound in April 2009 to right around $3.50 today — a new 20-month high. The Chilean peso has gained significantly over the past several years, rocketing from 750 pesos to the greenback, to 500 per dollar now.

Next door to Chile, Brazil's currency has gone from 3.75 per dollar to just 1.75 now, increasing the purchasing power of consumers and companies there in Latin America's largest economy. Sugar is selling well, and the country is advancing a renewable energy infrastructure rollout that will lead to greater energy supply security for its burgeoning middle class.

And Peru completes a nice growth triangle with Chile to the south and Brazil to the east, as the ancient home of the Incas will host traffic going from China to Brazil on Peru's stretch of the new Interoceanic Highway system. Peru is also upping its agricultural profile, and American guacamole lovers will be glad to know that Peruvian avocado imports may drive down prices for the tasty green paste by as much as 15% in the coming year.

With new money moving around inside each of these countries and around the region as a whole, my bet is that increasing numbers of Latin Americans will take to the skies.

Flying the South American Skies for the First Time

Rather than investing in avocados, sugar ethanol, or copper as individual sectors or stocks, you can tap a regional index fund like the SPDR S&P Emerging Latin America ETF (NYSE: GML). GML is heavy on financial stocks and energy — two sectors that are sure to grow as people buy new refrigerators, computers, and washing machines to put in the homes they've bought with expanded credit access. GML gained an impressive 83% in the past year, more than doubling the S&P 500 rally.

The Market Vectors Brazil Small-Cap ETF (NYSE: BRF), which aims to capitalize on smaller consumer-driven stocks, is up 206% over the same period!

Yet, the real story to me, someone who's traveled throughout the region, is travel itself. For example, most of the Brazilians I know who are part of the expanding consumer class have never flown on a plane; they haven't had a chance to explore their own country, let alone fly to Argentina or the United States.

So that's why we're seeing astonishing growth in Brazilian airlines TAM Linhas Aereas (NYSE: TAM) and Gol Linhas Aereas Inteligentes (NYSE: GOL), both of which trade handily on Wall Street as American Depositary Receipts.

TAM shares rose 15% from March 30 to April 6, bringing the company up to a 203% gain over just one year.

GOL did even better, soaring to 305% appreciation for shareholders from spring 2009 to now.

TAM and Gol are doing well despite each other's competition — or maybe because of it. A price war that began late last summer between the two carriers brought hundreds of thousands of new passengers on board, strengthening revenue while literally expediting the renewed flow of money in the region as the recession began to wane.

Brazilians flew with their money, and with 5.5% expected economic growth for Brazil in 2010, TAM is calling for another year of 14%-18% total growth in the Brazilian air market on top of the 18% increase in 2009.

Obviously, TAM chiefs think there are plenty of new butts they can still put in the seats.

Just for argument's sake, let's ask what if every Brazilian who wants to fly gets pulled into the market by low prices in the next couple of years? Well, there's still the 2014 World Cup and 2016 Olympics, and those mammoth sporting events are worldwide draws. To get around within Brazil, plenty of foreigners will fly TAM and Gol even if they came over on Continental or another big-name international carrier.

As it happens, Continental Airlines (NYSE: CAL) just pulled TAM into its OnePass frequent flyer program, meaning more non-Brazilians will have incentive to book flights on TAM.

Continental may not be a Latin American company, but this tie-up is certainly in keeping with the New Partnerships theme of the Cartagena World Economic Forum and the broader trend of increased movement that will lead to gains in consumer-oriented Latin ADRs.

And I think that even after triple-digit gains, we're only seeing the beginning of what these two Brazilian airlines could do for investors in the coming years.

Regards,

Sam Hopkins
Wealth Daily

The ONLY Metal More Precious Than Gold

Most investors obsessing over gold's luster are in for a major shock.

We recently uncovered another metal — now being fought over across the entire planet — that's far more precious, valuable, and profitable to investors than gold will ever be.

This rare video exposes the entire eye-popping story.

Duke Energy CEO Jim Rogers Talks Energy Independence

When I heard Obama's offshore oil drilling announcement Wednesday, I furrowed my brow a bit. Then, right away, I checked the Oil Services HOLDRS ETF (NYSE: OIH).

That index of companies, all of which bring crude oil up out of the earth, should benefit nicely from new fields in a stable geopolitical region... And sure enough, OIH gained about $2 overnight.

Then I compared OIH to the five top clean energy ETFs we follow here at Green Chip. After all, the White House's decision to open up coastal oil pockets to drilling for the first time in two decades is being pitched as a strategic move toward energy independence. Renewable resources factor into that scenario — big time.

I checked:

PowerShares WilderHill Clean Energy (AMEX: PBW)
First Trust NASDAQ Clean Edge US (NASDAQ: QCLN)
Market Vectors Global Alternative Energy (NYSE: GEX)
PowerShares Cleantech Portfolio (AMEX: PZD)
PowerShares Global Clean Energy Portfolio (AMEX: PBD)

Despite the President's pledge to double the number of hybrid cars and trucks in the federal fleet, improve Defense Department energy efficiency, and stiffen vehicle mileage standards, OIH got double the pop of any of the green indexes I put it up against.

What's happening with our national energy priorities? And, most importantly for us, will the market respond to the green side of Obama's new energy approach as favorably as it has to "Drill, Barry, Drill"?

HERE IT IS...

There's enough lithium right here to boost the value of this company's stock by 3,000%.

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Millions of cleantech and alternative energy investors want to know what's next.

So this morning, I headed down to D.C., where I found investment guidance in an unlikely place — the National Press Club.

Energy Independence in Our Lifetime

Arizona State University President Michael Crow chaired this morning's panel, which was put together by his school's energy research division and New America Foundation policy institute.

Their theme: "Is Energy Independence Possible in Our Lifetime?"

Crow kicked off with a half-joking answer: "There is some chance that once we're all gone, everything will be fine." It was dark humor that pointed to generational change the whole panel hopes is coming. However, a lifetime isn't an acceptable payback period for most investors.

Among those who chuckled at Michael Crow's icebreaker were some of the brightest minds in American energy, like cleantech venture capitalist Sunil Paul and Advanced Research Project Agency Energy (ARPA-E) head Arun Majumdar. Dr. Majumdar moved to the U.S. from India because this country has the best research and development infrastructure in the world.

Yet, even though he says we are at a "Sputnik-like moment" in history, the lead in key energy R&D areas has been relinquished to countries where the need for clean growth is felt more urgently. Consider Lithium-ion batteries: That technology was developed in the U.S., but Americans now make only 1% of those power packs sold worldwide. Companies from China, meanwhile, are drawing dollars from Yankees like Warren Buffett.

That's a real shame that reflects the reality of government and industrial will in the U.S. up to today.

Billions of greenbacks flow in that direction these days, because in China and India growth through clean energy is an imperative, not an option. Per capita energy consumption in those rapidly developing economies is rising, as is the number of energy consumers drawing from the grid for the first time.

Gary Dirks, the former head of BP (NYSE: BP) in China chimed in right away. "Scale is both an opportunity and a barrier" to advancing clean energy. That's our challenge in a nutshell: getting renewables to a level where they can serve everyone's needs while being cheap, reliable, and clean.

And that challenge is being met in China today.

Out in China's hinterlands, Dirks is seeing the future of that country's national energy supply playing out right now. "They're really good at doing large-scale demonstration projects," and in many cases, the companies Beijing uses to introduce game-changing alternatives to the Middle Kingdom are investor darlings.

Consider China Shenhua Energy (HKG: 1088), a coal company whose shares are up 87% over the past year. Shenhua isn't just a demand play on China's new electricity consumer class; it's a carbon capture and storage investment because of pilot projects it's been chosen to run.

If you know one thing about China, you know that development there is lightning-quick. Whether they're getting the power for astronomical GDP growth from clean sources or traditional, sooty ones, the Chinese are clearly operating at a different pace.

Duke Energy (NYSE: DUK) CEO Jim Rogers calls it "China time."

Getting America's Energy Transition on "China Time"

Jim Rogers and his insights as the head of a traditional energy company head provided the most food for thought this morning.

"We can reduce our emissions by close to 70%, stimulate our economy, create energy independence and have cleaner air at the end of the day," Rogers said in his distinctive Alabama twang. Rogers has as much credibility as anyone in the energy industry when it comes to vision.

He's been a CEO of electric utility companies for over two decades, so he knows about the scale challenges Gary Dirks highlighted. Jim Rogers' job is to deliver marketable change to consumers and return value to his shareholders. Even though Duke deals in coal, natural gas, and hydroelectric power, change is fine by Jim.

As the chief executive points out, it's been a hundred years since electrification swept the nation and made possible every kernel of American economic activity and global leadership in the past century. Those who pushed for a massive rollout of electrical infrastructure in those days couldn't see what was coming, but they had vision...

Then consider DARPA (the Defense Advanced Research Projects Agency), which came into being as a response to the Soviet Sputnik launch in 1958. Ten years later, DARPA launched the information systems that would become the Internet.

Again, no one knew that unleashing Cold War computer technology would change the way the world works the way the Internet has, but the government fertilized the soil for success and hoped to see something grow.

Jim Rogers says he'll bank on renewable energy and the transition from analog to digital-based power systems. It's the difference between wax cylinders and MP3s, and Duke Energy's head honcho is ready to embrace it. "I'm prepared to retire and replace every plant in 40 years," Rogers beamed, and I believe him.

He's thinking on China time and planning how his company can stay ahead in a rapid development race; using smart-grid data systems to get the most power to customers when they need it; using technology from companies that can help prevent outages and bring more clean energy resources online.

Back on Carolina time, Duke is giving coupons for energy-efficient compact fluorescent light bulbs to consumers in North and South Carolina.

"If all 1.3 million customers who receive the coupons redeem them and replace existing incandescent bulbs with the new CFLs, the amount of electricity saved over the lifetime of the bulbs would be enough to power more than 36,000 homes," the company said in a press release today.

So Duke is following the order of operations that every clean energy proponent knows is necessary — all the new, clean resources we develop won't be worth it if energy intensity can't be controlled.

And this brings us back to Obama's March 31 announcement: National energy policy is now being crafted in terms of what we have, how we use it, and what the national energy economy will look like if excuses become action.

As the President put it: "From China to Germany, these nations recognize that the nation that leads the clean energy economy will be the country that leads the global economy."

Damn straight.

Our Clean Energy ETF Winner from Obama's New Energy Plan

Out of all the ETFs I highlighted above, the PowerShares Cleantech Portfolio (AMEX: PZD) is doing the best job of capitalizing on the trajectory of worldwide energy changes.

It's up 61% since early spring 2009, riding companies like Johnson Controls (NYSE: JCI) that aren't pegged to one renewable fuel source or another.

North Carolina's Cree, Inc. (NASDAQ: CREE) is a top holding in PZD, letting you light up your portfolio with highly efficient light emitting diodes (LED). LED is becoming more common as consumers choose to minimize costs now while they weigh new generation methods like rooftop solar.

We'll continue to probe the White House's energy policy initiatives and compare the best options for you to profit in your portfolio.

Regards,

Sam Hopkins

Investing in Water Technology Stocks

It's been a "water week" so far here at Green Chip Stocks.

The theme kicked off on Monday, which the United Nations declared World Water Day. The UN says that more than 1 billion people are dependent on water resources that are hard to access, disease-ridden, or simply unavailable.

The United Nations Environment Program's "Sick Water" report put the result of that reliance on bad water in stark terms, pointing out that more people die each year from polluted water than from war or any other form of violence; over half of the hospital beds on earth are occupied by people who could die because the most basic element of life has been compromised.

Even though we didn't hear much about World Water Day in the U.S. press, as health care reform took every headline, Nick Hodge was invited to discuss water investments and give his five top water-related stocks on Canada's Business News Network Monday. (I've linked that video for you at the bottom of this article so you can hear all about those plays for yourself.)

Then, Tuesday evening, I sat in with a small group of investors, civil servants, and water entrepreneurs from Israel and the U.S. at the American Association for the Advancement of Science in Washington, D.C. as they explored the best ways for Middle Eastern companies to move their own hydro-tech into the American market. The event, put together by the law firm ZAG/S&W and the U.S.-Israel Science and Technology Foundation, served as a status update on the Israeli watertech industry.

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In its Mediterranean location, Israel is a microcosm of the global supply and demand situation in 2010, and it's also a hotbed of innovation.

But where does the rubber meet the road — or the water hit the ground — when it comes to growing profitable Israeli water-related investments that you can access?

That innovation to implementation link, or i2i, was the crux of our discussion, and I took the opportunity to follow up on years' worth of research with the experts themselves.

Here's what I learned...

I've Seen This Movie Before!

As you move from the southern Negev Desert to the north near the Sea of Galilee (which is actually a lake), yearly rainfall levels more than triple from a maximum of 200 mm/year to about 700 mm. In the middle, Israel looks pretty much like California, with a semi-arid coastal plain giving way to high country around Jerusalem and forbidding terrain closer to the Dead Sea.

So since the birth of the state in 1948, handling water resources has been job one for Israeli engineers. To make the desert bloom, Netafim — a company developed on a kibbutz cooperative agricultural settlement — became the world leader in drip irrigation. Drip irrigation basically entails poking holes in a hose very close to the plants you're watering, instead of spraying a large area and suffering major losses to evaporation in the hot Middle Eastern sun.

One of the panelists Tuesday was Booky Oren, the former head of Israeli water utility Mekorot and current President and CEO of water technology company Miya.

(Now, if you've ever heard an Israeli give a presentation, you may know that they like speaking idiomatic English. Listen to the Prime Minister, Benjamin (Bibi) Netanyahu sometime. His nearly flawless American accent comes from years spent in the Philadelphia area during his youth and then at Harvard and MIT, and when Bibi throws in expressions like "not throwing out the baby with the bathwater," it's like WD-40 for getting his message into Anglophone ears.)

Booky is also a fan of colorful language. At a New York cleantech conference back in 2007, I first heard him introduced as Israel's "water guru," on account of his experience with several water companies of all sizes. He dove right in to talk about the state of water supply and demand in the U.S., where important freshwater resources like the vast Ogallala Aquifer is depleted, parching parts of my home state of Kansas.

I remember how Booky began his talk a few years ago with an idiom. "We have a saying in Hebrew: Raiti et haSeret haze."

"I've seen this movie before," he quickly translated. Whichever language launched the expression first, the sabra water guru was right on... Israel's experience comes in an area the size of New Jersey where the population has multiplied 25 times in two generations (including Palestinians).

Do you think the rainfall has kept up? Not by a long shot.

Yet, Israel's net water consumption has remained steady since the 1960s due to early advances.

I know Kansans now using drip irrigation to grow grapes atop the drying Ogallala. The idea is remarkable for its simplicity, but what is more remarkable to me is that — having seen the movie before — Israeli water technology companies haven't been able to write a script for their own success in the stock market.

After all, Israeli companies are second only to Canadian and American firms in the number of Wall Street share listings they have. China is getting up there, but Israeli life-science stocks like Teva Pharmaceuticals (NASDAQ: TEVA) and even car-location system maker Ituran (NASDAQ: ITRN) have built millions and billions of dollars in market cap on their ideas since the 90s.

And Israeli tech wiz Shai Agassi is the golden boy of the electric vehicle world with his Better Place startup plan to put millions of EVs on the road around the world in the next several years.

Booky said a few years ago that water-tech should be Israel's top export sector in a decade. Three years closer, I wasn't hearing much progress toward that goal on Tuesday.

"I've seen this movie before... " I thought. Frankly, I expected to see a listed Israeli water-tech company on the NASDAQ by now.

So I asked Booky, "What happened?"

To get to the answer, we had to define what water technology really means...

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Defining Water Technology for Success

From ocean, lake, or pond to pump and then spigot, through desalination, filtration, or even co-generation that gives energy and purified water at the same time, "water-tech" can touch on several sectors.

Minister Ohad Cohen, the commercial attaché of the Embassy of Israel in Washington, observed that sensing technology similar to smart grid cleantech we've discussed extensively in Green Chip belongs in the realm of telecommunications. As utilities send and receive data on water usage, they can minimize wasted pumping power.

California currently devotes about 19% of its statewide energy consumption to water infrastructure, and data systems to sync water and power are worth millions to Golden State utilities.

That energy-water nexus is where I think Israeli water-tech companies will rise to prominence, but as Booky Oren told me, they're looking for a balanced approach between decades worth of track record in Israel and American utilities' reluctance to deal with international firms when it comes to delivering a resource as intensely local as water.

It could be a cultural thing, where Israelis came on too strong a few years ago without the links and comfort to gain customers in each individual market within the U.S.

Former Virginia State Rep. Bob Hull, the third panelist at the AAAS meeting, spoke of helping Israel's Environmental Protection Company (EPC) to forge connections here at the state and county level. State health departments are now taking control of septic tank and well-water system standards, which would at least mean Israeli market entrants will have to convince 50 capital offices instead of countless counties and municipalities.

As understanding of smart-grid technology spreads nationwide, we should see openness to water-related sensing technologies rise as well. Then there's the matter of onsite processing like reverse osmosis and aerobic treatment systems, and that's where utilities must have a sense that the water itself will be in responsible hands.

I don't need to tell you how dire things can get when water is bad — you can read the UNEP Sick Water report for yourself.

The good news is that this challenge is an opportunity, and the energy-water nexus gives us a springboard to jump into some investments.

In his interview with Business News Network, Nick highlights exchange-traded funds like the two PowerShares ETFs, its Water Resources Portfolio fund (NYSE: PHO) and Global Water Portfolio (NYSE: PIO).

PIO leads PHO over the past year, with a return of nearly 58% compared to just about 43%.

You can watch Nick's full interview here on our media page and learn about five of his top water stock picks right away:

Investing in Water - Nick Hodge on BNN

And for more on the international money flow into cleantech and water stocks we're already monitoring in the Alternative Energy Speculator global portfolio, check out this report we've prepared:

What Luck and Good Ears Can Get You

From innovation to implementation (i2i), I want to add another "i" — and that's for investment.

Regards,

Sam Hopkins
International Editor

Investments in Biofuel

Editor's Note: Our correspondent Sam Hopkins has been in Austin, Texas, this past week, tracking the next social networking technologies like Twitter and Facebook and seeing what locally-based computer giant Dell (NASDAQ: DELL) and data virtualization company VMWare (NYSE: VMW) are doing to tap millions of highly mobile and interactive consumers.

In addition to being the capital of the lower 48's biggest state, Austin is also the "Live Music Capital of the World." That makes it an ideal launching pad for firms that want to turn word-of-mouth marketing into money for themselves and investors. Sam is meeting with everyone from venture capitalists and iPhone app developers to — as you'll read today — biofuel scientists.

His first report from Texas takes you to the root of profitable plant-based fuel stocks like Brazil's Cosan Ltd. (NYSE: CZZ). The Wall Street Journal reports that oil titan Shell (NYSE: RDS) and other fossil fuel powers are doubling their next-generation biofuel investments, and those petroleum players are scouring laboratories all over the world to find the top green fuel science.

Here's a sneak peek at the future of fuel.

Good investing,

Brian Hicks

——————————

My Meeting with an Algae Biofuel Pioneer
by Sam Hopkins

Cell biologist and Dr. R. Malcolm Brown, Jr. was the first professor at the University of Texas to work on a personal computer.

"They told me I had to use the mainframe," Malcolm recalled to me over a meatloaf and catfish lunch last Wednesday at the Eastside Cafe in Austin.

"But I said 'no,' I'm gonna go ahead with this." I could tell the excitement he felt 30 years ago from the way he told the story. "You'd be amazed what you could do with 48K in those days!"

Even though he was a trailblazer in putting the PC to academic use, Prof. Brown has made a career out of playing with plants. His greenhouse and garden in the hills west of the Texas state capital are immaculately arranged, and at his namesake laboratory back on the UT campus, some beakers hold algae cultures that have been growing for 40 years.

Just as over time the rest of the world woke up to the possibilities of computing and connectivity, today the tiny organisms that Malcolm Brown and dozens of his graduate students have nurtured and examined for over a generation are recognized as potential biofuel powerhouses.

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The future of biofuels?

Dr. Brown got in touch with me early this year after reading my dispatch from the American Council on Renewable Energy's RETECH expo. I noted that Brazil's largest sugar processor Cosan (NYSE: CZZ) had entered into a $12 billion joint venture with Royal Dutch Shell (NYSE: RDS), Europe's second largest oil producer.

As I've stated a few times now, there are several pivot points between fossil fuels and renewables. Maybe it's an offshore oil rig being powered by wind turbines, or in the case of Dr. Brown's research, oil fields in west Texas where waste water is host to a cornucopia of productive organisms.

New federal rules and incentives are making collaborations between oil titans like Shell and biofuel powerhouses like Cosan commonplace.

The next step is bringing cellulosic ethanol to billion-dollar scale. That's something the U.S. government is already pushing for — big time.

On February 3, the Obama Administration released its Final Renewable Fuel Standard, known as RFS2. Under RFS2, corn ethanol's status will diminish over the next decade because of its weakness relative to sugarcane ethanol. This is a point of heavy contention from corn state lobbyists and corn ethanol enthusiasts across the board.

From farmers to Archer Daniels Midland (NYSE: ADM) crop scientists, many assert rightly that corn ethanol research and development should continue. I invite feedback from anyone involved in the sector.

However, the chain from research to policy to profit right now runs straight through what are known as advanced biofuels. Advanced biofuels have a greenhouse gas (GHG) footprint that is over 50% better than gasoline. Land use factors in heavily to the Environmental Protection Agency's GHG calculation, and RFS2 follows EPA stats showing that sugarcane ethanol has an International Land Use Change (ILUC) impact less than 1/6 that of corn-based fuel.

There's a step above sugarcane feedstock, however, and it's cellulosic ethanol. This is where Dr. Brown and his beakers come into play.

If you think of cellulosic ethanol currently, corn husks and switchgrass may come to mind. Yet, I've now seen time-lapse footage taken through a light microscope in Malcolm Brown's lab that shows a bug called acetobacter spinning out cellulose like a spider spins a web.

The strands produced by these micron-sized bacteria are nanometers wide, which means that when put together, a sheet of cellulose produced under optimal conditions can be as strong as steel. It can also be used to make paper, of course, since it's analogous to wood pulp.

There are other mighty bugs in Brown's lab, too.

One Man's Trash...

EPA calculations put cellulosic ethanol GHG emissions at 60% less than gasoline, but that includes land use just like corn ethanol. Being a Texan, Malcolm Brown has grown cultures in water from all over the state; he's found that some of the best water for growing bugs that produce sugar and cellulose is found in oil wells where brackish water is a waste product of crude extraction.

Even enhanced oil recovery (EOR) techniques now in use to get more oil out of dying fields can lead to bountiful bacterial produce, because the carbon dioxide from that process can be used to stimulate increased sugar production during photosynthesis.

Prof. Brown also showed me in his lab how cyanobacteria, commonly known as blue-green algae, can be shocked into producing more sugar than normal by changing the salinity of the water they're in. It's basic osmosis — the kind of stuff you learn in high school biology class — but seeing it applied to create next-generation biofuels is pretty amazing.

Now, as with every single renewable energy type under development, it's a matter of scale. These cyanobacteria have been tested in ponds and can be scaled up to testing in square-mile size tracts of foot-deep water. They can be placed next to power plants to take carbon dioxide into the fuel production process, or large tracts of scrubby west Texas land can be laid across with oil well water to grow the bugs.

The Brazilian Connection

Jose Goldemberg, the Brazilian scientist who set off that country's sugar-based biofuel revolution in the 1970s, has met with Malcolm Brown and marveled at the production he's been able to get out of such simple organisms.

In test tanks and ponds, the UT-Austin team has logged 14 tons of sugar per acre-foot per year. In laboratory conditions, that harvest rises to 94 tons of the sweet stuff, which is equivalent to 13,000 gallons of ethanol per acre-foot per year. That sucrose can then be added directly to yeast to create ethanol, instead of breaking down cellulose starch to get glucose.

The best part is that while these scummy powerhouses work, the sugar they put out can be taken without blasting the cells apart — this may be the ultimate renewable fuel.

You can learn more about Dr. Brown's work and goals here at his laboratory's website. He'd be happy to hear from you, and I can tell you that his enthusiasm for creating a high-efficiency, world-leading biofuel in the United States is contagious.

Just as Jose Goldemberg's vision in 1978 was turned into a national initiative to make Brazil a world energy power and investment target, researchers across the U.S. are working to make American biofuels maximally efficient and, ultimately, very profitable for investors who follow the idea flow from lab to market.

As my colleague Nick Hodge reported last summer, Exxon Mobil has already made a $600 million bet on algae biofuel. Surely that's not the end of the money movement into this sector.

We'll keep you up to date.

Regards,

Sam Hopkins

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From Pond Scum to Blue-Green Gold

The future of biofuels?

New federal rules and incentives are making collaborations between oil titans like Shell and biofuel powerhouses like Cosan commonplace. The next step is bringing cellulosic ethanol to billion-dollar scale.

On February 3, the Obama Administration released its Final Renewable Fuel Standard, known as RFS2. Under RFS2, corn ethanol's status will diminish over the next decade because of its weakness relative to sugarcane ethanol. This is a point of heavy contention from corn state lobbyists and corn ethanol enthusiasts across the board.

From farmers to ADM crop scientists, many assert rightly that corn ethanol research and development should continue. I invite feedback from anyone involved in the sector.

However, the chain from research to policy to profit right now runs straight through what are known as advanced biofuels. Advanced biofuels have a greenhouse gas (GHG) footprint that is over 50% better than gasoline. Land use factors in heavily to the Environmental Protection Agency's GHG calculation, and RFS2 follows EPA stats showing that sugarcane ethanol has an International Land Use Change (ILUC) impact less than 1/6 that of corn-based fuel.

There's a step above sugarcane feedstock, however, and it's cellulosic ethanol. This is where Dr. Brown and his beakers come into play.

If you think of cellulosic ethanol currently, corn husks and switchgrass may come to mind. Yet, this week I've seen time-lapse footage taken through a light microscope in Malcolm Brown's lab that shows a bug called acetobacter spinning out cellulose like a spider spins a web.

The strands produced by these micron-sized bacteria are nanometers wide, which means that when put together, a sheet of cellulose produced under optimal conditions can be as strong as steel. It can also be used to make paper, of course, since it's analogous to wood pulp.

There are other mighty bugs in Brown's lab, too.

One Man's Trash...

EPA calculations put cellulosic ethanol GHG emissions at 60% less than gasoline, but that includes land use just like corn ethanol. Being a Texan, Malcolm Brown has grown cultures in water from all over the state; he's found that some of the best water for growing bugs that produce sugar and cellulose is found in oil wells where brackish water is a waste product of crude extraction.

Even enhanced oil recovery (EOR) techniques now in use to get more oil out of dying fields can lead to bountiful bacterial produce, because the carbon dioxide from that process can be used to stimulate increased sugar production during photosynthesis.

Prof. Brown also showed me in his lab how cyanobacteria, commonly known as blue-green algae, can be shocked into producing more sugar than normal by changing the salinity of the water they're in. It's basic osmosis—the kind of stuff you learn in high school biology class—but seeing it applied to create next-generation biofuels is pretty amazing.

Now, as with every single renewable energy type we talk about in Green Chip Review, it's a matter of scale. These cyanobacteria have been tested in ponds and can be scaled up to testing in square-mile size tracts of foot-deep water. They can be placed next to power plants to take carbon dioxide into the fuel production process, or large tracts of scrubby west Texas land can be laid across with oil well water to grow the bugs.

The Brazilian Connection

Jose Goldemberg, the Brazilian scientist who set off that country's biofuel revolution in the 1970s, has met with Malcolm Brown and marveled at the production he's been able to get out of such simple organisms.

As Nick Hodge reported last summer, Exxon Mobil has already made a $600 million bet on algae biofuel. Surely that's not the end of the money movement into this sector.

What are you up to? We like hearing from the Green Chip community about the ideas that are driving investment. Contact us any time through www.greenchipstocks.com.

Regards,

Sam Hopkins

Birth of the Supergrid

I traveled to Britain in the spring of 2006 to see first-hand what I had been reading in the BBC — that Scotland was becoming a pivotal part of a worldwide energy economy in transition from fossil fuels to clean power.

I took the train early one morning from charming old Edinburgh to Burntisland, a drab manufacturing town of about 5,000 just over an hour's ride across the Firth of Forth. Burntisland was and is one of several North Sea oil and gas towns being revitalized by wind power projects that put industrial workers back on the job.

Despite the driving rain and a bird flu scare just up the road near golf holy site St. Andrews, I arrived to join a roomful of Scottish engineers to learn about an offshore wind farm demonstration project being spearheaded by Canadian company Talisman Energy (NYSE: TLM).

We headed by bus to a manufacturing facility in nearby Methil, where I watched workmen weld gigantic steel structural jackets inside an airplane hangar. That was an industrial operation unlike any I had ever seen.

All the bright-yellow pylons around me that day were soon moved by barge to a site 25 kilometers off the coast in the North Sea and then hoisted into place with a special crane; the two 5-megawatt turbines that crowned the structures I saw have now been powering the adjacent Beatrice oil field drilling platform since 2007.

This image of clean energy giving wattage to a fossil fuel operation as it taps a declining undersea oil resource perfectly exemplifies the transitional energy economy we are investing in.

Beatrice is a true pivot point between the old energy order and the new.

Building on that progress, a 34 billion euro (US$46 billion) European power connection project with a decidedly green bent is now taking shape among North Sea nations. We can expect to see large offshore wind farms become commonplace in the next decade as this "Supergrid" expands.

Investing in the Supergrid

This Supergrid already involves nine countries: Germany; France; Belgium; the Netherlands; Luxembourg; Denmark; Ireland; and the United Kingdom.

Those European Union member states are now being joined by a group of boosters from the business world. On Monday, March 8, the "Friends of the Supergrid" announced their support and hope for the EU to build a power infrastructure system that can completely wean the continental economy off of fossil fuel power by 2050.

These power pals are kicking off their partnership with momentum from national governments and the EU, as well as the electricity industry they represent.

Friends of the Supergrid is currently made up of ten charter companies:

Siemens (Germany); Areva (France); Visser & Smit Marine Contracting (Netherlands); DEME Blue Energy (Belgium); Mainstream Renewable Power (Ireland); Hochtief Construction (Germany), 3E (Belgium); Parsons Brinckerhoff (USA, EU-wide); Elia (Belgium); Prysmian Cables & Systems (Italy).

Of those ten, five are already available to international investors who want to play the Supergrid:

Siemens (NYSE: SI); Prysmian (Pink Sheets: PRYMY); Elia System Operator (Brussels: ELI); Hochtief (Xetra: HOT); and Areva (Pink Sheets: ARVCY).

This will — at the very least — be the foundation for a major offshore wind energy rollout in the EU. Even for Desertec, the German-led plan to link new North African renewable energy capacity with Europe, what goes on between the British Isles and their North Sea neighbors is of great importance, because it means clean power linkups have grown to continent-scale.

The Supergrid is also good news for hydropower generators, especially in Norway.

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Norway: The Saudi Arabia of the North Sea Supergrid?

In the global oil game, the Kingdom of Saudi Arabia has traditionally been the go-to producer when other OPEC members slash output. That role has earned Saudi Arabia the title of "swing producer."

With the need to balance intermittent wind energy contributions to the Supergrid, Norwegian energy companies may step in to make Scandinavia's western branch the swing producer of northern Europe.

Bård Mikkelsen, the CEO of state-owned renewable energy company Statkraft, told the Financial Times this week that hydro power in his country "should be valuable for compensating for the irregularity of wind power."

"That position — being a swing producer to the European market — is a very important role for us," Mikkelsen affirmed.

Statkraft has been busy both managing existing hydropower facilities in Norway and developing new methods of getting power from water. One example of Statkraft's state-of-the-art hydropower is its power plant at Tofte, where water filtration through osmosis has been kicking out wattage since late 2009. The project is set for commercial generation by 2015.

Oslo policymakers and Statkraft engineers hope to ramp up osmotic hydropower to 1600 TWh (terawatt-hours) per year. That's 13 times Norway's current annual hydropower output!

Each cog in the Supergrid wheel will have to move well for the entire network to grow to maturity. The UK alone wants 50 GW of offshore wind power capacity by 2020 — up from about 2 GW across the entire EU today. 100 GW of offshore wind projects are at varying stages of planning and development right now across the continent, but all the countries and companies I've mentioned here have to share technology to optimize that new capacity.

Offshore wind energy will tie in with onshore wind, hydro, solar, and nuclear power to give Europe a balanced distribution network. Transmission is a huge factor, too — Mainstream Renewable Power CEO Eddie O'Connor, speaking for Friends of the Supergrid, says there is as much as a 20 euro difference in the price of offshore wind per megawatt hour when optimal grid linkup scenarios are put up against connections through less robust cable connections.

The cooperation of companies that make up Friends of the Supergrid today should minimize transmission loss as the project unfolds, and the group is set to double in size to twenty members soon.

Some pieces of the Supergrid puzzle are still missing, like turbine manufacturers and even electric vehicle technology that can provide storage for wind power on the grid. So companies will be added... and I'll be on the lookout for which ones are best to maximize your profits.

Regards,

Sam Hopkins

Investing in Africa with ETFs

Are you still sleeping on Africa?

International Monetary Fund Chief Dominique Strauss-Kahn is there this week to say he underestimated the continent's resilience.

The IMF is revising its full-year 2010 economic growth estimate for Africa from 4.3% to 4.5%, making it the leading region in the global economic recovery.

Africa's resurgence is largely the result of help from the Washington-based institution, but Strauss-Kahn warned an audience in the Kenyan capital of Nairobi that vigilance is key to turning recovery into stability: "Africa will continue to face large, persistent and costly shocks. Without a secure standard of living, people might turn to unproductive or even violent activities, possibly leading to instability, a breakdown of democracy, or war—all compounding the initial suffering."

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Computer companies think it's the key to faster processing...

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As IMF Managing Director, Dominique Strauss-Kahn, a French economist, speaks for a large lender that has been the target of developing-world ire, even as it bailed out the weakest nations. IMF help usually comes with structural adjustment conditions that mean in order to get money, national governments have to make big cuts.

When the global recession rolled toward Africa like a tidal wave in late 2008, Strauss-Kahn and the macroeconomic maestros he leads took a different approach: they allowed African countries to expand their budget deficits and encouraged loose monetary policy to keep cash flowing. Inflation has been kept in check by zero-interest IMF loans that helped bolster currencies like Ghana's cedi against the dollar.

The Fund's Africa director now says 2009 growth doubled IMF expectations, so the IMF is now saying Africa grew by 2% instead of 1% last year.

Everyone there hopes that the momentum created by international lending can carry Africa into the 2010 World Cup in South Africa, and that greater visibility for maturing African markets will draw more investors like you.

So let's look at what Africa has to offer U.S.-based shareholders.

Africa Plays Leading the Way

It is true, if a bit trite, to say that children are the future. On the poorest continent, kids can either grow up swinging AK-47s or they can leapfrog schoolchildren in wealthier places with emerging technology like mobile phone payments.

In Kenya, 21 million people out of the 36 million population are expected to have mobile phones by the end of 2010. Of those new telecommunication customers, 6 million already use a system called M-PESA — m from mobile and the Swahili word for money — to exchange money and manage their bank accounts with just their handsets.

More than 4 of every 5 businesses in sub-Saharan Africa use mobile phones as their primary line of communication, since fixed-line infrastructure is weak or non-existent.

In Somalia, which hasn't even had a stable government since the early 90s, mobile money transfers through networks named Sahal and Zaad mean you don't have to carry cash or race to find a phone when violence breaks out and you want to reach loved ones.

The desire for communication in emergencies is something that has driven mobile telecoms growth all around the world, from volatile regions like Africa and the Middle East to peaceful places like the U.S., where a quick roadside 911 call can save your life.

Now, international mobile phone giant Vodafone (NYSE: VOD) has chosen Kenya and seven other African markets to debut its Vodafone 150, which it calls the world's cheapest cell phone. Vodafone, which was established in the UK 26 years ago, has been eager to tap African mobile phone trends and expand them into other emerging markets like China and India.

With mobile payment systems like M-PESA, Africa is leading rather than following... and using its traditional weakness in infrastructure to its advantage in wireless telecoms.

Computer companies are also eager to make their mark in Africa, starting with kids in the One Laptop Per Child campaign. Advanced Micro Devices (NYSE: AMD) was an early partner with the Massachusetts Institute of Technology to develop rugged, portable computers, and its chips are featured in the motherboards of OLPC's XO series laptops.

During his March trip, Dominique Strauss-Kahn is speaking at universities in South Africa, Kenya, and copper giant Zambia, stressing the importance of turning Africa from a dependent continent into one where capital markets can lead development. With IMF money, Kenya and its neighbors have increased budgets for health care and education, rather than tightening such social spending as the IMF has demanded with past loans. The new model seems to be that quality of life comes first, then economic health will follow.

Sweet, but not Sugar-Coated Opportunities

Over several years, I've seen major financial news organizations like Bloomberg go from ignoring Africa to featuring it as a key growth market. There's also been a proliferation of exchange-traded funds linked to Africa broadly and to some countries specifically.

For example, the Market Vectors Africa ETF (NYSE: AFK) taps growth in Nigeria and Morocco with a price-to-earnings ratio of 10. The S&P 500 is currently trading at about 14 times earnings.

AFK isn't doing very well over the past year, showing that all Africa plays aren't created equal. By investing in companies like Attijawarifa Bank (I hadn't heard of it either), that index fund's planners have gone a little too obscure to draw big volume, and that could trap buyers when AFK drops in trading.

Market Vectors also recently launched its Egypt Index ETF (NYSE: EGPT), which amounts to a play on both Africa and the Middle East at the same time.

The winner among Africa ETFs and pure-play stocks remains the iShares MCSI South Africa Index (NYSE: EZA). Though nearly 1/4 of the working-age South African population is jobless, investors have reaped 96% gains in EZA since last March. That beats the S&P, and what might surprise you is that South Africa's iShares has outpaced its Hong Kong counterpart (NYSE: EWH). That China-oriented ETF has climbed by 78% dating back to this time in 2009.

Nevertheless, Africa is vulnerable. Commodities drive index funds like EZA, which means that major drops in gold, oil, or copper can hit national markets and government coffers hard. Hundreds of people have been killed in ethnic rioting in Nigeria in recent days, and similar violence came after a disputed election in Kenya in late 2007.

For a balanced, pan-African economy to take its place next to the Asian Tigers and other emerging markets in the Southern Hemisphere, hard assets and international aid can't be the only sources of big revenue. The United Nations says agricultural business is critical to Africa's success, and Kenya is making major moves in renewable energy that could draw millions more dollars for local development.

To sum up: Africa has problems as well as potential. If fear is the main emotion driving your investment choices, you will miss big returns in favor of prevailing wisdom that carries its own huge risks.

Africa's risk outlook is changing by the year — and largely for the better. Make it a part of your portfolio today with some of the options I've mentioned here.

And in April I'll be updating you with more up-to-date news and plays from Africa itself, where I'll be attending the Agisson Vert Green Business conference in Morocco.

Regards,

Sam Hopkins
International Editor

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British Columbia Power Costs to Increase

Gold medals last forever, but Olympic cheer won't withstand an energy upheaval in British Columbia.

The Canadian province and its largest city Vancouver just hosted what many are calling the greenest Olympiad ever. With its reputation as a clean, coastal metropolis where quality of life is high, few observers or visitors seemed surprised that Vancouver set up online energy monitoring, made extra efforts in energy efficiency, and even aimed for carbon neutrality throughout this winter's Olympic fortnight.

Yet this week — just a few days after Canada's gold medal wins in men's and women's hockey over their neighbors to the south — Canadians and British Columbia residents in particular must confront per-capita energy consumption that beats the USA's average.

In 2006 (the last year for which data are available), Canadians used 8,262 kilograms of oil equivalent (kgoe) per person, compared to 7,768 kgoe for each U.S. resident.

As economic conditions fluctuate — 2006 was a boom year — intake numbers will move up and down as well. Nevertheless, provincial utility BC Hydro is preparing for a future with a clear upward trend in energy appetite and rising costs for Vancouver residents.

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15% in Rate Increases Loom for BC Hydro Customers

As February turned into March, BC government heads in the capital Victoria looked up every once in a while to watch their national heroes go for gold, but their attention was focused mainly on the provincial budget.

Everyone knows that the Olympics are seen by host cities and countries as a spending target unto themselves. Historically, the public spaces, transportation upgrades, and economic activity are an easy sell (not to mention every sports-minded person in the world knowing your city's name).

Across Canada, Montreal's Stade Olympique still stands, though the last race of the Montreal Olympiad was run almost 34 years ago. In Beijing, on the other hand, the famed "Bird's Nest" where the 2008 Opening Ceremonies were held is set for demolition — the Chinese evidently aren't interested in keeping urban mementos that hold 90,000 people.

Despite the desire to bask in Vancouver's afterglow, Finance Minister Colin Hansen announced on March 2 that he wants to pump up infrastructure spending in 2010 and 2011 while cutting funding in the out years to balance the budget. Where governments can rely on taxpayers to make such spending surges happen, BC Hydro is turning to ratepayers for the influx of funds.

BC Hydro customers are looking at 15% in rate increases over the next two years and up to 33% by 2013, with a 9.26% increase taking effect as soon as April 1. That adds up to about $7 extra on everyone's monthly bill — not enough to break the bank for most — but as incremental changes go, it's a sizable one that brings questions.

Namely: "What are we getting for the money?"

Instead of a winter sports wonderland, BC Hydro is upgrading hydroelectric facilities that are a generation old. The newest site slated for capacity expansion is the Revelstoke Dam, built way back in 1984.

The utility has already started bringing school-bus sized transformers to the generating station site, the local Revelstoke Times Review reports, and the goal is to bring new turbines online by October. Eventually, the Revelstoke buildout will add 500 MW to the nearly 2000 MW already up and running, and 40,000 additional residential customers are expected to be served by the upgrade during peak usage hours. In total, BC Hydro (whose full name BC Hydro and Power Authority, indicating a reach beyond just dam-based energy) serves 94% of the province's population centers.

Of those 1.8 million or so customers, nearly all are expected to ramp up consumption in the coming decades.

Gold for BC Hydro? Not So Fast

On its website, BC Hydro awards itself a "gold medal" for its consistent supply of power to the Vancouver Olympics. "By flawlessly powering the games," they say, "we feel we've won a gold medal, too."

Operating 30 hydroelectric plants plus a few natural gas ones, BC Hydro did avoid outages that could have left Bob Costas in the dark. Nevertheless, its upgrade plans don't seem to include any significant changes that will accommodate significant demand increases.

"The demand for energy could grow by as much as 40 percent over the next 20 years as the economy recovers, so we have to be ready for that," BC Hydro spokeswoman Susan Danard said in Thursday's edition of Canada's Globe and Mail national newspaper.

Canadian national net energy consumption grew from 309 billion kilowatt-hours in 1980 to 529 billion kWh in 2006 — a 71% jump. If the 40% in 20 years reckoning is correct, British Columbia electricity residents may be upping their wattage at a slower rate than the country as a whole. However, much of BC Hydro's current price pressure is due to declining non-residential consumption.

Third-quarter net income at the utility was down 50% in 2009 from 2008, as the provincial forestry market weakened and mills used less power. When the timber companies perk up, the power supply rope will tighten even more. The $7/month surcharge may seem like a small bump to avoid power shortages in the jewel of the Canadian Pacific.

If British Columbia is going to continue as a model for energy efficiency, it needs to diversify. The Canadian Wind Energy Association says that as of late last year, every Canadian province has wind energy capacity. Nationally, about a million homes can run off wind-generated power that totals 3359 MW. That represents a tenfold increase over the past six years!

By advancing beyond dam expansions, BC could help make another order of magnitude increase in Canadian clean power achievable.

Jeff Siegel is in Arizona today, but he's told me to let you know that a full report on British Columbia's top green power developer is coming your way very soon.

Regards,

Sam Hopkins

International Editor

P.S. - I'll be in Morocco in mid-April to take part in the Agissons Vert International Green Business Congress. There's a lot brewing in North Africa as European countries compete to establish utility-scale solar in the sunny region, and I'm going to see what's going and which companies are involved first-hand. You can find out how to join me in Casablanca here.

Venezuela and Peru Power Contrasts

More and more, Peru is becoming one side of a study in contrasts that has Venezuela at its other end.

The Peruvian government says that electricity prices have declined by 30% in recent years, due to encouragement of foreign investment in the country's natural gas infrastructure. The results of that government approach are primarily visible in the Camisea extraction and pipeline project in central Peru that came online in 2004. Now, Camisea is delivering greater supplies of hydrocarbons by the year.

In October 2009, the Ministry of Energy and Mines predicted that a World Bank-funded expansion of the Camisea pipeline would boost throughput capacity 43% by the end of 2010. Domestic demand, not exports, are the priority, even though President Alan Garcia is also targeting major liquefied natural gas (LNG) sales to other countries.

Peru's economy grew by 3.4% from the fourth quarter of 2008 to the same time in 2009, giving it full-year growth of .9%. Venezuela's economy shrank by 5.8% from Q4 '08 to Q4 '09.

Now, after expropriating the production and exploration properties of ExxonMobil and ConocoPhillips, President Hugo Chavez and his government are reported to owe American businesses $12 billion for seizures. The Venezuela-U.S. Chamber of Commerce puts at 28 the number of member companies whose operations have been nationalized by Venezuela.

Venezuela, an OPEC member whose economy is heavily dependent on fossil fuels, gloated when oil prices moved into triple digits before the global recession hit, but these days blackouts and electricity rationing are persistent threats in the capital of Caracas and elsewhere.

Down in Peru, the official Andina press agency reports that 94% of the population is expected to be covered by electricity access in 2011. The country's official investment and new initiatives to draw local and foreign companies into renewable energy production will keep moving prices down and access up in Peru.

-Sam Hopkins

Change Coming to German Solar Industry

On July 1, the training wheels will come off Germany's world-leading solar panel industry. Will investors stay for the ride?

The feed-in tariff (FIT) that the biggest economy in Europe has used to stimulate its domestic photovoltaic (PV) market for the past decade is about to be cut by double digits. That move is partly a response to complaints from some constituents and conservative politicians, but Chancellor Angela Merkel and her center-right Bundestag (German parliament) colleagues hope to maintain market dominance despite the changes.

Here's how the drafted FIT shift breaks down:

Rooftop solar PV installations will see a subsidy cut of 16%.

Ground-based modules installed in yards and other open, non-arable patches of land will be 15% less funded by the changed FIT.

PV projects at dumps and old army bases, which along with contaminated industrial plots are called "brownfields," are set for an 11% cut.

The most dramatic shift we can expect in the second half of 2010 is a complete elimination of incentives for large solar panel arrays on arable land. State news agency Deutsche Welle reports that farmers have been crying foul about investors snapping up fertile tracts to "harvest the sunshine." MP Peter Altmaier, a leader of Angela Merkel's own Christian Democratic Union party, insists, "There must be no more panels installed on arable land."

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Aside from that apparent inclination toward a total prohibition, the expected FIT changes for H2 are just that — expected.

Don't Believe the FIT Hype

Though the catchier headline may be to say that Germany's government is yanking the rug out from under its homegrown clean energy champion, the entire point of a feed-in tariff program is to phase the industry to grid parity with its fossil-fuel counterparts.

Coal and natural-gas fired power plants generate electricity for about 20 euro cents per kilowatt-hour. Under the FIT — which is set up to pay a premium for energy generated by photovoltaic panels (the same system can be applied to other sources) — Germany has already gone from a whopping 57 euro cents (c) per kWh in 2004 down to 39c now.

It's all part of a process initiated back in 2000, when the Bundestag passed its Renewable Energy Act. "Cleantech" hadn't dawned yet, and oil was far from record highs it reached later in the decade.

So Germany was ahead of its time and has reaped the benefits of a steroid-injected clean energy economy. Berlin's goal was always to wean producers and installers off the government juice, and that's what we're seeing now.

The come-down hasn't caused the German solar industry to fall flat on its face. Rather, companies like Q-Cells — whose facilities I toured in summer 2008 — are staying on their toes.

The FIT plan will be taken up again on Friday, at which point investors will have a more certain basis for what to do with their money. In the meantime, shares of Q-Cells (Frankfurt: QCE) rose on Tuesday, February 23, a day after draft FIT changes leaked.

Q-Cells investors turned bullish after the company announced that at the end of 2009, its cash position was nearly 65% better than they anticipated.

That stockpile leads me to believe that German solar companies are padding themselves for a blow. Their dominance as producers is due to the size of the market that was created by government mandates, not the other way around.

For installers at all levels — household, commercial, and large-scale "solar farm" developers — now is the time to get capacity in place.

Q-Cells says it's sold out of panels for the first half of 2010, and analyst reports I see every day from solar power suppliers around the world (especially China) indicate that nearly all shipments are being directed to Germany to feed the frenzy. That shift in focus for the first half of 2010 is going to be one of many in the full year and years to come.

German FIT Changes Spread Far and Wide

It costs about 1 billion euros per month to subsidize new solar schemes, and relief for rate-payers must be part of the political calculation going into the finalized FIT cuts. However, the government maintains its target for 66 GW of solar power capacity by 2030 — up from 9 GW today.

Gordon Johnson of Hapoalim Securities thinks the less-than 3 GW per year growth that the 2030 target implies could set solar stock buyers up for a fall, since analysts have based estimates on higher annual increases.

The fact of the matter is that even German companies aren't putting their eggs in one basket these days. If anything, the government has done German solar panel producers the favor of forcing diversification.

The Desertec initiative to get 15% of Europe's electricity from North Africa by 2050 is being led by ten German companies, and in mid-February, Desertec CEO Paul van Son contrasted that undertaking with Germany's rural unrest over solar.

"There's a vast amount of sunshine" in North African countries like Morocco, Tunisia, and Algeria, points out van Son, "and there are vast amounts of space."

Germany is big, but of course it's much more fertile than the Sahara, and no one will tell you it's sunny.

On the other hand, Italy is making long strides toward grid parity between its solar capacity and fossil-fuel plants by virtue of its Mediterranean climate. Look for that country to draw some of the salespeople out of Germany after July.

The point is that international solar power companies — from polysilicon providers up to module makers —all have their heads on a swivel right now. Average sales price (ASP) will be a concern as any national subsidy cut directly affects the money being pumped in from the top.

Long-term solar power bulls are in a good position here, as some stocks and funds like the Claymore/MAC Global Solar Index ETF (NYSE: TAN) appear oversold.

Here we see TAN's performance over the past six months, with a couple of my favorite technical indicators on top:

The Williams Percentage Range indicator gives a heavily oversold reading, and TAN is breaking below its lower Bollinger Band. You can see that the last time W%R was at this level, we didn't see a recovery... but reports about the German FIT were coming in unfiltered flurries at that time.

Now, we have more information, and it's reasonable for investors to look ahead at how companies will adjust to new subsidy conditions, rather than just freaking out and running for the exits.

I'll get back to you with even more complete information next week after the Bundestag session takes the FIT changes from rumor to reality.

Regards,

Sam Hopkins

International Editor

U.S. Nuclear Resurgence Draws France's Areva

One French company is attempting an energy maneuver as tricky as the quad-axel proves for figure skaters...

Areva SA (Euronext Paris: CEI) execs say they plan to take advantage of "enormous" opportunities in a reinvigorated U.S. nuclear power market while expanding their international renewable energy portfolio with hundreds of billions in investment dollars.

Over the next few years, we'll see the pride of France's power industry pivot between nuclear, solar, wind, and other resources to gain market share in the world's biggest energy economy.

Early last week, Atlanta-based electricity Southern Company (NYSE: SO) and partners got $8.33 billion in loan guarantees to develop the first new domestic nuclear capacity in a generation. In total, Obama's 2011 budget puts up $54 billion in financing help for new nuclear power. So when Southern Co. got that vote of confidence from the Department of Energy, Areva got excited.

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Radioactive Energy Makes them Feel Warm and Fuzzy

After the news of Southern's success in breaking the Washington deadlock on nuclear, Areva's U.S. CEO Jacques Besnaiou sounded like he might be ready to sing "Kumbaya" around a glowing hunk of uranium.

"For me, they are not competitors, we are competi-mates," Besnaiou told Bloomberg about other nuclear power plant builders.

That's not exactly true, of course. Otherwise, no one would want to snap up shares of Areva stock, which trades on the Pink Sheets as ARVCY. Areva will be as assertive as it needs to be in order to gain from the reawakening of the long-dormant nuclear plant construction sector in the U.S.

Areva's competitive edge here will stem from the fact that it's already the country's top supplier of nuclear energy products and services, operating from headquarters in Maryland and Virginia.

In the five-year period to 2014, Areva was set to invest $3 billion of its own money in U.S. operations — with or without federal loan guarantees.

As Nick Hodge wrote in Energy and Capital last week when this story broke, the government and the private sector are using pretty simple arithmetic to make their investment decisions:

The United States gets about 20% of its electricity from 104 nuclear reactors. So each one is producing about 0.2% of our needs.

By contrast, we get 49% of our electricity from 614 coal plants - each one generating about 0.08% of our total supply.

Easy math tells us then that nuclear plants produce twice as much power as coal plants. And with the Securities & Exchange Commission (SEC) now requiring companies to disclose their carbon risk (yes, this is a reality), the Environmental Protection Agency declaring carbon dioxide a threat to public health, and an all out ban on new coal plants in California and elsewhere... next-generation nuclear plants are becoming more and more of a no-brainer.

And so is investing in it.

Areva is Ready to Move in Any Direction

Even after hitting a regulatory hitch in its new European Pressurized Reactor line last November (the kind of next-generation nuclear plant Nick referred to above), Areva is drawing interest in that same EPR technology from investors in California's Fresno Nuclear Energy Group. Power developers there in the Golden State's Central Valley want Areva to introduce its advanced systems in California's country-sized market soon, even as Areva plans four new reactors in Italy.

Being an international firm with manufacturing facilities in 43 countries and sales in more than twice that number, Areva operates differently in different places. Most importantly, national attitudes toward the role of nuclear energy vary wildly across the globe. Finland, where the first EPR plant is being constructed, is not far from Lithuania, where the Chernobyl-era Ignalina reactor has been slated for closing for years now.

Cold War nuclear technology is still the dominant mental picture for many Americans, but in Lithuania and France, uranium has kept coal and its low rate of return off the drawing board. France gets over 79% of its electricity from Areva and national utility EDF, and Lithuanians come in second worldwide with 71% of their household juice coming from radioactive elements.

With that entrenched role for nuclear comes greater experience in dealing with waste, a hot issue everywhere. In a global emissions reduction framework, these countries can also reap the benefits of non-polluting water vapor output that nuclear plants produce, instead of the greenhouse gases their fossil fuel counterparts emit.

And there's the real crossover point for Areva: "clean energy." Nuclear power isn't renewable, and many cry that it's not green. But it is an alternative to burning fossil fuels, and we are now moving into third and fourth generation nuclear power technology.

Right now, Areva and EDF are pinning down a new deal on how spent nuclear fuel should be transported and stored. The two are contractual parties in a treatment and recycling partnership; reports carry none of the "not in my backyard" furor we hear in the U.S. press.

Areva U.S. CEO Besnainou may be jumping the gun a bit when he says, "It's no longer a taboo" to build new nuclear plants in the U.S., but the government is getting there for sure.

Yet to emphasize the affinity between their core operations and true, green renewable energy, Areva knows it needs to do more.

That's why the company is investing $500 million in solar, wind, and biomass energy in the U.S.

Areva Renewables

Adage, Areva's joint venture in biomass with Duke Energy, just announced its first 55 MW power plant in Washington state. Timber biomass will be fed into the $250 million facility, and the product will be enough power for 40,000 homes.

As for wind, Areva sold its minority stake in German wind power company RePower to India's Suzlon in 2008 for 350 million euros, but that wasn't the French bow out of the sector. The French firm's Maryland offices got a DOE grant in mid-2009 to study how the U.S. electrical grid should prepare for a surge in wind energy capacity before 2030. So even if it's from the standpoint of grid management, Areva is involved with the American wind power rollout.

Then early this February, Areva bought solar power company Ausra, which is based in Google's hometown of Mountain View, California. Ausra makes solar power products most consumers haven't heard of yet. Ausra's — and now Areva's — main skill is in creating steam with the sun's rays. This is called Concentrating (or concentrated) Solar Power, and it's the core of several utility-scale solar power projects in the works from the U.S. desert Southwest to North Africa.

North Africa is where I have my eye set for later this spring. I'll be in Morocco to check out plans for a trans-Mediterranean renewable energy grid called Desertec. I've been tracking this story for years, and now several German companies as well as Areva and EDF are expressing their desire to make the ambitious project a reality.

And Desertec is not the first pie-in-the-sky desert power idea to have drawn big money in recent years.

If Obama's nuclear money infusion has taught us one thing, it's to expect the unexpected.

Regards,

Sam Hopkins

International Editor

Forget Everything You Know About the Bakken

Most estimates for the sweet light crude reserves in North Dakota's Bakken Oil Pool are in the 4-6 billion barrel range.

But the CEO of the biggest Bakken oil company says there's as much as 24 billion barrels.

That means your Bakken oil stock profits are about to get a LOT bigger.

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Renewable Energy Legislation

Dear Reader,

By now you know that Green Chip International Editor Sam Hopkins likes to go beyond headlines and straight to what's really making clean energy stocks tick. For him, the story isn't always what stock led a day's cleantech trades or which country put up the most wind turbines in a year. Last week, he brought you an exclusive interview with Iceland's energy authority chief.

Today, Sam is drawing attention to some unsung heroes of the worldwide renewable energy rollout: lawyers.

Good investing,

Jeff Siegel

Publisher, Green Chip Stocks

—————

Why Lawyers are Essential to Cleantech Success

Justice may be blind, but lawyers always have to see clearly. And recently, I've met some legal eagles whose sights are fixed squarely on cleantech.

One Israeli-American law firm is focused specifically on assisting companies that can use both Israel and the United States as bases for global success. ZAG/S&W stands for Zisman, Aharoni, Gayer & Ady Kaplan & Co./Sullivan & Worcester LLP, hence the initials. There's no abbreviation in the joint practice's binational operations, though. Water Resource Development and Renewable Energy & Energy Efficiency each have teams of attorneys tasked with finding opportunities here in the U.S. and in the Middle East's leading economy.

Now, to understand the pivotal role that attorneys play in fostering the kinds of Green Chip Stocks that give this publication its name, we need to explore a sort of paradox in the way the clean energy economy is developing...

The global green energy rollout is both high-tech and grimy as heck.

We have NASDAQ-listed power switch companies like Fairchild Semiconductor (NASDAQ: FCS) and blue-collar job machines like Denmark's Vestas Wind Systems (COP: VWS). Intense work is being done right now to connect new renewable power generation to electricity customers and to get next-level fuels into vehicle tanks. Blowtorches are joining pipes and tiny soldering irons are creating data pathways for all of the heavy-duty stuff to run more efficiently.

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For me to really register what's fueling all the anonymous-looking share price charts and market projections I see, I pay periodic visits to fabrication plants and sites where clean energy capacity is being installed.

But there are plenty of people in suits making this all happen, too. Lawyers go through everything with a fine-toothed comb to bring startups to public listings, and there's plenty of elbow grease and heavy lifting on their end.

Heavy Legal Lifting to Bring Cleantech to Market

On Capitol Hill during last fall's ACORE Phase II Renewable Energy Policy Forum, I sat in a room full of well-dressed listeners who were ready to pounce on new legislation as the basis for business. Simply put, everyone was there to find out more about how the U.S. renewable energy market is growing with government help.

I even ran into Matthew Lesko, the guy in the question mark suit who beams on TV about how to get free government money to start a company, go to school, or learn to throw left-handed... He was there for hot tips for readers. And I was there for you readers, who expressed appreciation for a look behind the scenes.

At the Retech conference a couple of weeks back, I took the opportunity to follow up on that policy pow-wow with Jeffrey Karp, a partner in ZAG/S&W's Washington office. He deals with environmental and natural resource issues specifically, steering clients through new and pending legislation like the EPA's finalized Renewable Fuel Standard (RFS2).

Congressman Ed Markey (D-MA) told us at the Phase II Policy Forum that his goal is to create a "Darwinian, paranoia-inducing marketplace" through legislation. For that sort of competitive environment to come to full flower, the participants need to know the rules.

Jeffrey and his partners have to stay on top of cap-and-trade developments, RFS2, and the SEC's recent guidelines on how public companies report the money they spend on climate change risk mitigation.

As these groups of attorneys move, they hack through the legal brush and blaze trails for technology licensing deals, joint ventures, venture capital money, and mergers and acquisitions to pass through.

Take Plasson, Ltd., an Israeli company that makes plastic pipe fittings. Plasson's 1000+ products are used in wastewater processing, mining offtake, and for routing telecommunication cables. Plasson used ZAG/S&W's consulting to snap up a 77% stake in Industrial Pipe Fittings LLC, which is based in Texas.

Or take Madgal, the 30 year-old Israeli company bringing computerized high-end smart faucet designs from the Middle East, where water scarcity is a fact of life and bone of geopolitical contention, to showrooms, bathrooms, and kitchens in the U.S.

Karp's team is making sure that Madgal has its i's dotted and t's crossed so it can get down to business. That means entering into partnerships with local companies to expand Madgal's market reach.

The Sun is Shining on Israeli Cleantech

Many of the companies Jeffrey Karp and his colleagues are involved with are based on kibbutzim. A kibbutz is a type of cooperative settlement unique to Israel, and each one of the nearly 300 of these communities scattered around Israel has a central way of generating money. For some it's dairy (Yotvata); for others it's sandals (Teva/Naot). And now for a growing number, cleantech is the key to prosperity and a high communal standard of living.

Although the kibbutz is essentially a socialistic concept, capitalist tendencies are driving more and more kibbutz-based companies like Madgal to seek out export opportunities.

Others — like Kibbutz Ketura's Arava Power Company — expect to benefit from Israel's own national clean power goals. Located in Israel's arid Negev Desert, very near the border with Jordan, APC has signed up neighboring communities for a photovoltaic network totaling 100 megawatts. I profiled Arava Power back in 2007, long before their recent financing field day.

German engineering conglomerate Siemens has stepped in with $15 million for Arava Power, which amounts to a 40% stake. The Israeli government is encouraging the development of utility-scale solar power at home, though its goal of 10% clean energy in electricity by 2020 falls far short of European and many U.S. state targets.

Even given diminutive national goals, Arava's attorneys obtained the licensing they needed to gain the lead in the domestic market. Feed-in tariffs are coming into play in Israel to stimulate wind energy and small PV power plant development.

And the fact of the matter is that solar is not new to Israel. 95% of the homes in Israel have rooftop solar thermal water heaters, which have been mandatory since 1980. As Eco Energy Ltd. head Dr. Amit Mor told us at Retech, those existing installations are far more basic than what Israeli solar power engineers can do today.

Israel now has a number of technology incubators, where budding biotech firms and clean energy power generators can find initial financing and access to resources, as well as attention from venture capitalists and legal shepherds like ZAG/S&W.

The big dogs — like Ormat Industries, parent of Ormat Technologies (NYSE: ORA) — are developing their own solar arrays to explore utility-scale possibilities to boot.

From idea to market, there are plenty of pitfalls that can be avoided with a good map. Attorneys are the ones doing recon for the Israeli companies on their way toward public listings. Since we're tracking them now, we'll be sure to bring you the latest.

Regards,

Sam Hopkins

China Denmark Renewable Energy

Copenhagen's COP-15 conference in December went down as a dud for many who wanted hard emissions reduction targets to emerge. To COP-15's discontents, the fact that China did not commit to concrete cuts was a failure.

But a couple of months into 2010, none other than COP-15's Danish hosts and the Chinese policymakers who might be pivotal to climate change mitigation are teaming up.

You see, China's promise at COP-15 was to reduce carbon intensity, which refers to the amount of carbon dioxide that is emitted with every unit of economic growth. The goal is to decouple CO2 from GDP in the next few years.

So the Sino-Danish Renewable Energy Development Program, which launched on February 10, will establish a clean energy research center with both countries' top power minds focused on greening China's growth through energy efficiency and new renewable resources.

"The project is set to combine the advantages of the two countries and promote renewable energy development fast and well in China," Danish Minister of Climate Change and Energy Lykke Friis said.

Denmark's government is putting $18.27 million (100 million Danish kroner) into the program, which will be based in Beijing.

The Danish National Energy Administration had already released a wind-focused report in 2009 on ways in which China can harness the breeze to fight climate change, and Danish wind turbine titan Vestas Wind Systems has been active in the Middle Kingdom for years.

As Vestas China President Jens Tommerup told the New York Times, "Nobody has ever seen such fast development in a wind market," as we've seen in China recently.

Denmark's cooperation with China is obviously an industrial move as much as it is an environmentally-conscious one. China is moving up from a 7.5% clean energy contribution to national energy capacity. And though Denmark isn't anywhere near as big as China, the Scandinavian country punches above its weight with technical know-how and market experience.

The Sino-Danish Renewable Energy Development Program will run through 2013, and its effects are sure to be felt in China and Denmark long after the initial term is up.

-Sam Hopkins

Geothermal Energy in Iceland

Over the past few decades, Dr. Gudni Johannesson has seen his little island country make its name as a renewable energy powerhouse.

And last week at the RETECH 2010 Expo in Washington, the head of Iceland's National Energy Authority (Orkustofnun) gave me a lesson in clean power progress.

A Lesson in Clean Power Progress

Iceland's geological location could easily be seen as more menacing than promising. With 130 volcanic mountains, the place is a pressure valve for all the agitation that goes on underneath the earth's surface. That terrestrial restlessness has been turned into geothermal energy that accounted for 62% of Iceland's primary energy use in 2008.

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Glaciers mark the landscape and feed rushing rivers that gave Iceland over 12.4 Gigawatt-hours (GWh) of electricity production that year. Hydropower has served the capital city of Reykjavik since 1921, and hydro still dominates Iceland's electricity production. When you factor in heating, geothermal leads hydro 62% to 20%. Still, that's 82% of the country's power needs being met by clean energy! The rest is imported oil for cars and fishing vessels, which we'll discuss below.

Because of its abundant clean energy resources that Dr. Johannesson's institute, Orkustofnun, has been instrumental in developing, Iceland is a preferred spot for power-intensive industries like aluminum smelting. Smelter operations alone consumed nearly 12 GWh of electricity, which was 4 times the consumption of runner-up public services.

Moving along into the carbon-conscious 21st century, infotech companies have been migrating to the mid-Atlantic nation to take advantage of low temperatures that keep server farms cool and clean energy sources that keep greenhouse gas emissions close to zero.

Since 1940, Iceland has advanced from producing energy by burning peat and coal to an economy where the only non-renewable fuel sector left is imported transportation fuel, as we see in the chart below.

source: Orkustofnun

When you look at that, it's no wonder that this country of 320,000 people has been the home of the United Nations University Geothermal Training Program (www.unugtp.is) since 1979.

Iceland Teaches the World about Energy Quality

Engineers from dozens of countries with geothermal power potential, including Kenya, the Philippines, Poland, and China flock to the UNU-GTP in Reykjavik each year to tap know-how that has moved Iceland from bog energy to zero carbon emissions from electricity in 70 years.

Once there, Dr. Johannesson and other Icelandic experts introduce concepts that point to the maturity of Iceland's clean energy industry.

One of those ideas is "energy quality." As Gudni told me, "One of the major flaws of the energy debate is that we're not looking at the quality of the energy. When you use gas to heat houses instead of running a pump or a car, you're destroying energy quality."

When it comes to geothermal energy production, Geothermal Training Program students learn, as I did, that only about 15% of steam from boiling water can be used for work, in the physical sense. That's what turns the turbines that make geothermal electric plants productive. The other 85% of the heat that comes to use when waste water from the generation process is used as direct warmth for district heating systems.

Understand energy quality, and you reduce energy waste.

Iceland's segmentation of geothermal energy also serves as a prime example of what's called "co-generation."

Cogeneration is basically any case where two desirable products emerge from an energy production process. That could be electricity and fresh water, in the case of some desalination plants now in development; in Iceland's case, steam can be processed to generate electricity and household heat.

Ninety percent of households and buildings in Iceland are served by geothermal district heating systems, which knocks out a big cost and emissions source for the whole country.

Geothermal heating in mid-2009 cost 1 U.S. cent per kilowatt-hour (kWh). And get this — in a world where clean energy's detractors rail against feed-in tariffs and any other form of government subsidy, Iceland's heating oil cost 11 cents/kWh. Nearly half of that cost was subsidized.

With its geothermal heating infrastructure, Iceland has slayed an energy-intensive dragon few countries want to take on. All the 20% by 2020 goals we hear from the European Union and states actually refer to electricity. In many cases, they're being so cautious that they don't even want to bring up the monster task of converting heating, ventilation and air conditioning (HVAC) to clean processes.

Because Iceland started decades ago, the country's top renewable energy resource is now completely self-maintaining in terms of competitiveness. Instead, old hydropower plants and fossil fuel imports are the main source of the government's burden.

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Not Resting on His Geothermal Laurels

Gudni Johannesson is in a position to look back fondly on what he and his colleagues have done to change the face of Iceland. Even with national fiscal problems brought by the credit crisis, Iceland enjoys a high quality of life that is greatly boosted by the absence of smog-belching power plants and heating costs that vary with the whims of faraway despots.

Icelandic financial institutions like Islandsbanki are actually gaining an edge internationally when it comes to clean energy financing. That's because they keep scientists on staff! Decades of experience in utility-scale clean energy at home means Iceland's banks know a good project when they see it, wherever in the world it may be.

Yet there's one thing left that's nagging Gudni — something he resumed our conversation to tell me, even though he had a train to catch so he could get to New York before the snow came in. (He was escaping America's nasty winter to warm up at home in Iceland... How about that?)

You see, oil consumption from nearly every sector of the Icelandic economy has dropped in the past decade — except for automobiles. Cars and trucks now guzzle around 270,000 metric tons of oil, up from 125,000 tonnes in 1982.

That increase is a threat to Iceland's target of greening all its national energy use, both stationary and mobile.

So Iceland is keen on developing electric vehicle infrastructure that can be served by geothermal electricity. You can't fill up your gas tank with steam, but CO2 from geothermal wells can be turned into methanol and then dimethyl ether (a compound related to natural gas), and factory exhaust can be turned into hydrogen for fuel cells.

That's right, geothermal may even put the last piece of Iceland's clean energy puzzle into place in the near future.

I'll keep up with Dr. Johannesson and the rest of the dynamic clean energy engineers out there along the Mid-Atlantic Ridge, tracking their technology to market and bringing you and Green Chip International readers the stocks to profit.

Kveðjur (Regards),

Sam Hopkins