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Posted on Sustainabilitank.info on February 26th, 2009
by Pincas Jawetz (pj@sustainabilitank.info)

———- Forwarded message ———-
From: Energy and Capital <eac-eletter@angelnexus.com>
Date: Feb 25, 2009
Subject: Cleantech’s Week in the Sun

Cleantech’s Week in the Sun
By Chris Nelder | Wednesday, February 25th, 2009

There has never been a better time to be a cleantech investor.

Witnessing the scale of the effort being mobilized in Washington right
now is nothing short of astonishing to a long-time observer like me.

I have never seen a time that was so favorable for green technology.
As I write, the largest annual conference of cleantech investors and
businesses is going on in San Francisco, at the Cleantech Forum XXI.
With 800 of the world’s leaders in the sector representing over $3
trillion in capital meeting to work on green jobs, renewable energy,
climate change and resource scarcity, visions are being laid out and
deals are being made.

On the other coast, the PowerShift ’09 conference will get under way
on Friday, where 10,000 young people will meet in Washington D.C. to
push for bold action on an energy plan that addresses climate change.
An array of elected officials and activists will appear at the
conference and offer workshops on lobbying and organizing.

On Monday of this week, another major summit meeting was held in D.C.,
as the Center for American Progress Action Fund and Senate Majority
Leader Harry Reid hosted a forum entitled “National Clean Energy
Project: Building the New Economy.” Featuring comments by President
Clinton, Vice President Al Gore, Energy Secretary Steven Chu, Interior
Secretary Ken Salazar, House Speaker Nancy Pelosi, Senator Jeff
Bingaman, Representative Ed Markey, and energy baron T. Boone Pickens,
it made clear that our leaders are deeply committed to a clean energy
future, and that they aren’t letting the opposition slow them down.

Pickens and Gore offered some political anecdotes about how some
people always resist change, but then appreciate it when it comes.
Similarly, at the TED (Technology, Entertainment and Design)
conference earlier this month green auto pioneer Shai Agassi (of
Better Place) derided arguments against getting transportation off oil
as comparable to arguments against “getting off slavery” in 1800s
Britain.

Also on Monday of this week, the Supreme Court dismissed an appeal to
a lower court ruling that the Environmental Protection Agency acted
improperly under the Bush administration in attempting to except
coal-fired power plants from the requirements of the Clean Air Act. In
essence, the dismissal paves the way for the EPA to regulate the
emissions of mercury, lead, arsenic and other pollutants from coal
plants.

For his part, the President made it clear in his address to Congress
on Tuesday night that carbon will soon come with a price, calling for
“market-based carbon” caps and renewable energy.

All of this in just one week. This isn’t just a cleantech wave; it’s a tsunami.

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A former advisor to the White House says it “will replace global
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———————–

Cleantech Investors Eager but Cautious

The investing community is eager to capitalize on the new wave of
political support and stimulus dollars coming to cleantech, but
they’re also cautious about the risks of rounding up capital while
much of the credit market is still only communicating with the outside
world via smoke signals.

At the Cleantech Forum XXI, Chuck McDermott of RockPort Capital
quipped “Washington has made the pitch, now you have to figure out the
catch.” Dispersing hundreds of billions of dollars quickly will be a
challenge for the federal government, and rounding up matching capital
from the private sector may remain a challenge for investors and
businesses.

Energy Secretary Steven Chu is working hard on his end of the deal.
One week ago, he announced a reorganization to streamline the
government’s process for dispersing and guaranteeing loans for energy
and climate change projects. The reforms will simplify the application
process, speed up review, defer application fees and amortize up-front
costs, and evangelize within the cleantech industry to try to attract
and shepherd projects through the process.

Industry is working hard too. Solar darling First Solar (NASDAQ: FSLR)
reported yesterday that it had finally broken the $1-a-watt barrier
for manufacturing solar panels. At that price, solar can be
competitive with coal-fired grid power, and has been long considered a
critical milestone in making widespread solar economical. The stock
rose 10% on the news.
Damn the Torpedoes!

Despite the enormous enthusiasm for the cleantech sector, the broader
market continues to be extremely volatile, and without a real solution
for the fundamental problems of insolvent banks and illiquid credit
markets, it will likely continue to sell off. With a 12-year-old
support level of the Dow now violated, some technical analysts are
saying “Look out below!”

The volatility in the energy sector has been particularly crazy,
especially with renewable stocks that have been bashed down to pink
sheet prices in the widespread selling of the last eight months. Oil
has been getting hammered too (although as I have written repeatedly,
selling at this point only adds more tension to the price slingshot).

Even the smart grid stocks I mentioned last week were hit hard in the
selloff of the four sessions from last Wednesday to Monday, falling
10-15% as a group. But on Thursday, as the market rallied, they gained
6-14% back.

On the whole, most equities are still trading along with the broader
market, reacting to the latest news on the bank bailouts, monetary
policy and the stimulus package. What the market wants is confidence,
and the trade has been mostly about sentiment straight across the
board, not fundamentals. For long investors, it has been a nauseating
ride.

Does that mean that investing in cleantech, which is still considered
a speculative sector, is dangerous?

If you’re a long-term investor, the answer is no.

I say, “Damn the torpedoes, full speed ahead!” Once we swallow the
bitter pill of nationalizing the banks and taking the hit to the
national balance sheet that apparently everybody but Tim Geithner
understands is necessary to restore confidence in the markets, the
cleantech and renewable energy sectors are going to absolutely
explode.

[Being a stickler for accuracy, I checked and discovered that the
actual quote was probably “Damn the torpedoes! Four bells! Captain
Crayton, go ahead! Joucett, full speed!” uttered by the first admiral
of the US Navy, David Glasgow Farragut at the Battle of Mobile Bay
(Alabama) on August 5, 1864. And the “torpedoes” were tethered mines.
But I digress.]

For example, one of my favorite geothermal plays, U.S. Geothermal Inc.
(AMEX:HTM) was up 40% on the day yesterday to $0.84, and its next
resistance level, set just two weeks ago, is $1.07. Two weeks ago, the
company signed an interconnection agreement with the Idaho Power
Company for its Neal Hot Springs project, where drilling began only
last May. Test results indicate that the first 286 º F source well
could produce five to six megawatts of power. Permits to drill three
more wells have been filed, and the project is moving ahead.

Geothermal energy is still just barely on the radar of most investors,
even though it’s one of the cheapest, at about five cents per kWh
(about half the average price of grid power). It’s also one of the
cleanest, and most abundant. According to the US Department of Energy,
there is enough recoverable geothermal energy under American soil to
meet our annual energy consumption 140,000 times over!

For the last several years, the geothermal industry has been in a
land-grab phase, securing leases for the best geothermal sources. Now
they’re beginning to develop the projects, and soon the cash will
flow. Let these companies prove their profitability for a year or two,
and the venture capital will be waiting in line for a piece of the
action.

The technology we needed for a renewable energy revolution is now
here. We now have solar, wind, and geothermal technology that can go
head-to-head with fossil fuels on price. All we need now is willing
capital, a smarter and beefier grid, and some vehicle-to-grid
technology or other storage systems—all of which we seem certain to
have within just a few years. When that happens, the sector is going
to take off like a rocket, and never look back.

Until next time,

Chris

P.S. Most people know the popular names in solar stocks, but finding
the good plays in wind, geothermal, marine energy, smart grids,
electric cars and the rest of the cleantech sector is much harder.
That’s why we created the Alternative Energy Speculator—to give you a
way to capitalize on the burgeoning opportunity in cleantech. Your
profits are just a click away.

—————————–

Related ArticlesThe Renewables Revolution Will Not Be Televised

Is Obama’s Infrastructure Plan Built to Last?

Obama’s New Course on Energy, Climate

Smart Profits on the Smart Grid

Economic Releases for the week of Monday, February 23rd, 2009:

Feb 24 – Durable Orders
Feb 24 – Consumer Confidence
Feb 25 – Existing Home Sales
Feb 25 – Crude Inventories
Feb 26 – Initial Claims
Feb 26 – New Home Sales
Feb 27 – Chicago PMI
Feb 27 – Michigan Sentiment

Brought to you by Wealth Daily

________________________________

From the Archives… Finding the Right Energy Stock During a Financial Storm
2009-02-23 – Keith Kohl

The Solar Profit Process
2009-02-20 – Nick Hodge

Total CEO Reaffirms Oil Peak
2009-02-20 – Sam Hopkins

Six Smart Grid Plays in the Stimulus Package
2009-02-18 – Chris Nelder

The One Person to Trust with Your Oil Investments
2009-02-16 – Keith Kohl

________________________________

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