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Investing in Renewable Energy

Written By Nick Hodge

Posted October 15, 2008

These days everyone has a solution to the financial turmoil now plaguing nearly every country on the map.

And while I don’t have the time or the patience to describe all of them to you in one short article, I do want to cover one that is not only gaining traction, but that also falls directly into my area of expertise.

Last week, amid stock market gyration, presidential posturing, and proliferate panicking, the news service Reuters ran this overlooked gem of a story: U.S. Focus on Climate Could Ease Financial Crisis.

Of course, that was music to my ears.

Let’s explore that story to see if we can tease out any investment ideas.

Renewable Energy: Financial Savior

According to the Reuters article, "If the United States focused on curbing climate change as soon as a new president took office — or sooner — it could help pull the world from the financial brink."

The idea is that through investing in domestic renewable energy sources, the U.S. would create jobs while at the same time making a dent in the billions of dollars we send to hostile countries each year to satiate our oil addiction.

Not only that, but freeing ourselves from dependence on a fuel whose price can only rise — if we didn’t get below $70 last week, we’re not going to — means that Americans could eventually pay less to cart their kids to school and drive to work, not more.

Renewable energy also brings stable, and perhaps lower, energy prices, which would certainly be a welcome addition to any family budget.

Here’s what Cathy Zoi CEO of the Alliance for Climate Protection and a main source for the Reuters article, had to day about the situation:

Skyrocketing energy prices and the financial crisis have been a wake-up call that something’s got to change. My very strong belief is that we need to reorient our investments toward this transition to a clean energy economy, and it will be the engine of growth for getting us out of the doldrums that we’ve gotten in right now.

Doldrums, indeed. The Dow has fallen as much as 20% in the past three weeks.

And, of course, there’s talk that the financial slowdown could slow the pace of the green agenda.

Many Congressmen have indicated that solving the economic crisis could delay efforts to enact some type of global warming legislation, namely the reduction of emissions via a cap-and-trade scheme.

According to AP, "Under such a system, the government would establish a market for carbon dioxide by giving or selling credits to companies with operations that emit greenhouse gases. The companies can then choose whether to invest in technologies to reduce emissions to meet targets or instead buy credits from other companies who have already met them."

What the opponents don’t understand, however, is that this type of system — and investment in renewable energy in general — could actually be an engine for economic growth.

Investing in Renewable Energy: Governator to Green Profits

Stopping in at the solar industry’s premiere event, Solar Power International, the other day, the Governator succinctly expressed how investing in renewable energy is a critical piece of the financial puzzle.

Said Arnold, "We should not give in to those who say environmental goals should take a back seat until the economy improves. That’s short-sighted thinking. Tough economic times mean we need more solar, more green jobs."

In addition to being part of the solution to the financial and energy crises, investing in renewable energy could also be the cure for a sagging portfolio.

Uncle Sam thinks so too.

By virtue of the $700 billion crutch passed by Congress, homeowners and utilities are now entitled to a 30% discount on new solar installations in the form of an investment tax credit — for the next eight years.

There were many other tax goodies included in that piece of legislation for a variety of renewable energy technologies.

The banks aren’t the only ones taking a bite of the government cheese!

As a result of the government’s action, there’s all but a guaranteed market for new renewable energy projects, especially solar and wind.

Project financiers are now willing to initiate new projects, and the now partly-nationalized banks should serve to start greasing the chain of a rusty credit market.

For stock investors what this means is that it’s time to start picking up shares of glaringly oversold renewable energy stocks.

I’d start with the big boys like SunPower (NASDAQ: SPWR), Suntech (NYSE: STP), and First Solar (NASDAQ: FSLR).

By starting to accumulate shares of these stocks now, when the prices are low, you can ensure extensive profits as the market starts to climb.

Companies like those above are going to be a driving force in the battle to return the economy to health. You should be along for the ride.

Call it like you see it,

nick hodge


PS. Even the oil companies know where to place their bets. And they’re putting billions on renewable energy. I’ve prepared an urgent memo with all the details. Learn all about how Big Oil is going green, and how you can earn profits right alongside them.