Getting Green from Going Green
07/29/2008 12:00 am EST
Investment in [alternative-energy] technology during the first half of 2008 has been above the levels seen during the first half of 2007. Investment between now and 2030 is expected to reach $450 billion a year by 2012, rising to more than $600 billion a year from 2020.
The problem is not a lack of investment-indeed, investment flows have continued to grow-but rather the broadening of the sector and the diversification of green investment options, which now run the full gamut, from primary energy production in the form of electricity and transportation fuels to demand-side management solutions for the end user, including smart grid technologies.
Despite the limelight shone on solar, wind has [gotten] and continues to attract the most investment-$50.2 billion in 2007. Solar's limelight isn't entirely undeserved; $28.6 billion of new investment flowed into that sector in 2007. Investment in solar has grown at a 254% clip since 2004.
Not surprisingly, most of that money traded hands in Europe, with the US in second place. But China, India, and Brazil are attracting a growing amount of capital as their share of asset investment has doubled since 2004.
A large portion of green investment ($84.5 billion) in 2007 went toward building new sustainable energy assets. This is a result not only of factory and capacity expansions, but also of massive installations of solar systems and wind farms. Wind, solar, and biofuels accounted for about 85% of new investment in 2007.
Public markets are dominated by wind and solar alone, to the tune of 81%. This is obviously where our money should be as well. A good place to start is probably with Iberdrola Renovables (MCE: IBR.MC), whose $7.2 billion IPO last December accounted for over half the money raised in 2007 via initial public offerings.
That's an installation play, and a good one. For a turbine play, try the company with which Iberdrola recently inked the biggest wind transaction ever, Gamesa (MCE: GAM.MC). (Both trade in Madrid, but not on US exchanges-Editor.)
Of course a wind ETF like First Trust Global Wind Energy (NYSE: FAN), or PowerShares Global Wind Energy (Nasdaq: PWND), [which both have big exposure to international stocks,] could do the trick.
On the solar side of things, production is still very much key. You should be looking for midsized companies with extensive growth and expansion plans that have a steady supply of raw materials. Solarfun (NASDAQ: SOLF), headquartered in China, is one such company. Installers of both traditional solar and concentrating solar will also begin to receive increased attention.