September 8, 2008  

Wind and solar energy stocks are on the rise on Wall Street. Oil’s dramatic rise in the first half of 2008 was a wake-up call as to the need and the potential of alternative energy sources. Historically the problem with solar and wind as alternative energy sources was that oil was so cheap it was not cost effective to pump lots of money into alternative energy research and production plants. As the world economies grow accustomed to oil’s triple digit prices, the investment in wind and solar energy research and production becomes more practical. And over time, the increasing efficiency of wind turbines and solar panel technologies also makes those technologies more attractive.

For much of the late 1990s and early 2000s, the price of oil was so cheap that alternative energies were not very practical on a large scale basis. Today, solar and wind facilities are popping up all over the world as a way to produce cheap and clean energy for use in thousands of homes, and as a way to reduce our carbon footprint and reduce U.S. dependence on foreign oil.

Government Subsidies Fuel Alternative Energy

The two presidential candidates have placed alternative energy on the top of their list. Whether the goal is to rid the United States of foreign oil or to limit greenhouse gases, it is likely that the next presidents will continue with new subsidies for wind and solar companies.

Straight up, oil, coal and natural gas are all still cheaper alternatives than wind and solar on a large scale basis. So, government subsidies are still required to level the playing field and to encourage the construction of significant wind and solar energy production facilities. Congress has bills in front of it now concerning the renewal of alternative energy subsidies that will continue to encourage the development the development of alternative energy sources including production projects for large solar and wind farms.

The Growth Potential in Wind and Solar Energy

In 2001, renewable energy in the United States represented only about 6% of the total energy supply. Of that, only 1% was produced by solar and another 1% was wind. The remaining 4% was from ethanol and biofuel production. Fossil fuels represented about 77% of the total US energy production and the remaining was nuclear energy production.

As you can see from these figures, the potential for growth in the wind and solar sector is huge. As fossil fuels become depleted or too expensive to refine and use as energy, wind and solar will become an increasingly important energy sources. Wind and solar have a very small carbon footprint which will help in the fight against global warming as well. Fossil fuel reserves will be in decline over the next 100 years and alternatives to oil such as solar and wind stocks should flourish.

Solar & Wind Stocks vs. Oil Price

There is no doubt that as goes oil, so goes the price of solar and wind stocks. When oil goes up, so does the demand for solar and wind stocks. It’s pretty simple really. As oil gets more painful in the pocketbook, we look for alternatives. As our lives get more insecure because of dependence on foreign oil and lack of control on the world oil market and oil prices, the more we seek solutions to make ourselves more energy self-sufficient and our pocketbooks follow.

Ultimately Pure Econimics will Drive Solar and Wind! Timing is the Only Question!

The tree hugger in me says that we should be looking at the big picture and from an idealistic perspective we should be saying to ourselves that “Global Warming is Happening! It is a confirmed reality, and we, as good citizens of the earth, intent on the wellbeing of our children, should choose to participate and sacrifice for its preservation and renewed health. Part of that preservation includes cutting down on the use of fossil fuels, reducing our energy consumption, reducing our carbon footprints, helping to pay through taxes for alternative energy research and development, recycling more, etc.”

Unfortunately, that is romantic and naïve notion. It all comes down to economics. The cost of energy will drive things no matter what the idealists say or do. As long as oil is cheap we will take the easy route. We are human and it is in our nature to take the least painful route. Some may take a personal route to save and conserve, but most will react to their wallets. As oil gets more painful as in $147 per barrel and $4+ dollars at the U.S. pump, suddenly we get more and more interested in alternative energy solutions. Solar and wind look much more attractive than they did just a year ago! But, oil has now dropped from $140+ per barrel and is now below $100 just since oil peaked on July 11th. Guess what, solar and wind stocks have fallen with the fall of oil at least in the larger wind and solar stocks. You think oil is staying below $100 for long? Right, me neither. So now is a great time to get in on some good values in the solar and wind energy market.

We do know, long term, that solar and wind will play an increasingly bigger role in our overall energy production and use. We have to start reducing our dependence on foreign oil or we are vulnerable to forces beyond our control and it becomes a national security problem for the U.S. We know there is a general will of the people to start reducing our carbon emissions as economically feasible, and I think we want our government to be a leader in those efforts. If we put our technological minds to the problems with proper research funding through the government we can once again become world leaders in the next generation of renewable energy technology and production. Imagine if we had the taxpayer’s money back for the war in Iraq and this week’s bailout of our broken financial system, what that money could do to help develop the future’s renewable energy sources? It’s mind boggling really! If we had the sense of urgency to find and build new energy sources that we did in building the first atomic bomb, or going to the moon, we’d realistically leap ahead of the rest of the world in a few short years and be a leader again in reversing global warming and in creating a more secure world for our children.

In the short term, there are lots of solar and wind companies out there that are making money and the market is growing. Lots of opportunities to get in on the ground floor of new solar and wind investing opportunities and, with oil down significantly off it July high, now would be a good time to think about solar and wind investing opportunities.

A few stocks that we have covered in recent months in the Solar or Wind Markets include:

BioSolar, Inc. (OTCBB: BSRC)
XSunX, Inc. (OTCBB: XSNX)
Wind Energy America, Inc. (OTCBB: WNEA)

Other Solar Stocks:

Trina Solar Limited (TSL)
China Sunergy Co. Ltd. (CSUN)
LDK Solar Co.Ltd. (LDK)
Suntech Power Holdings Co. Ltd. (STP)
SunPower Corporation (SPWR)
ReneSola Ltd. (SOL)
Yingli Green Energy Holding Co. Ltd. (YGE)
JA Solar Holdings Co., Ltd. (JASO)
Energy Conversion Devices, Inc. (ENER)
Solarfun Power Holdings Co. Ltd. (SOLF)
Evergreen Solar Inc. (ESLR)
Ascent Solar Technologies Inc. (ASTI)
Canadian Solar Inc. (CSIQ)
First Solar, Inc. (FSLR)
MEMC Electronic Materials Inc. (WFR)
Akeena Solar, Inc. (AKNS)

Other Wind Stocks

Western Wind Energy Corp. (WNDEF)
FPL Group (FPL)
American Superconductor Corp (AMSC)
Hexcel Corp (HXL)
Otter Tail (OTTR)
Brookfield Asset Management (BAM)
Broadwind Energy, Inc. (BWEN.OB)
Clipper Windpower (CRPWF.PK)
Owens Corning (OC)
Trinity Industries Inc. (TRN)
Zoltek Companies (ZOLT)
Clear Skies Solar Inc. (CSKH.OB)
Composite Tech (CPTC.OB)
Alstom (AOMFF.PK),
Americas Wind Energy Corporation (AWNE.OB),
Gamesa Corp. (GCTAF.PK)
Energias de Portugal (EDPFY.PK)
Iberdrola Sa Sponsored ADR (IBDRY.PK)
Kore Holdings (KORH.PK)
McKenzie Bay International Ltd. (MKBY.PK)