Green Energy Infrastructure

We’ve covered plenty of green energy stocks since this site’s inception.

From biofuels to solar to wind and wave, I’ve chronicled investment opportunities in nearly all sectors of green and clean energy.

But there is another aspect of cleantech capable of providing you with nice returns, provided you make smart investments.

I’m referring to green energy infrastructure stocks.

Green Energy Infrastructure: Why?

Many technologies and companies can be lumped into this huge sector, so I want to take just a second to outline what I include in my definition of green infrastructure companies. Here’s a short list:

• smart grid companies
• electric transmission companies
• renewable energy storage companies and
• companies that build renewable energy projects (wind and solar parks)

To be honest, there are hundreds of companies that could take shade under this umbrella, but I’m only going to focus on the ones I think are capable of providing substantial returns in the medium- to long-term.

Before I get into the actual companies, let me first provide some background.

I’ve said numerous times that we’re facing a severe oil supply shortfall in the next few years. I still believe that is true.

But we’re also facing some serious electricity supply problems.

According to an electricity demand study by the Energy Information Administration (EIA), electricity demand is expected to increase 29% in the next 22 years, “from 3,659 billion kilowatt- hours in 2006 to 4,705 billion in 2030, at an average rate of 1.1 percent per year.”

If you’ve been paying attention at all, then you know large cities already struggle to meet electricity demand on hot days, when millions of air conditioners are on full blast.

In fact, Con Edison reported several days this year in which demand was higher than supply.

We know these conditions as blackouts and brownouts. And this is at a time when we supposedly have more than ample coal and natural gas reserves and capacity to adequately meet are demands.

I think that’s a load of crap.

Going forward, especially during an Obama presidency, it is going to be increasingly hard to permit and build a coal-fired power plant. The cost of emissions will simply be too high to make them profitable. And I love it.

Same goes for natural gas. I think we’ll still see it incrementally increase its share of the overall energy mix, but it will be done in conjunction with renewables. So we’ll have something like a wind park with a natural gas back up.

But to meet the nearly 30% expected rise in electricity demand in the next 22 years, we’re going to have to turn to renewable in a big way.

We already have the technology to produce the energy.

What I want to invest in now is technologies that get that power to the grid, monitor its use in real time, and help consumers make smart energy decisions through the use of interactive smart grid technologies.

Green Energy Infrastructure: How?

Well, let’s begin with the companies putting steel in the ground for renewable energy projects like wind farms and solar parks.

The list here would include:

• FPL Group (NYSE: FPL)
• Integrys Energy Group (NYSE: TEG)
• Brookfield Asset Management (NYSE: BAM) and
• Foster Wheeler Ltd. (NASDAQ: FWLT)

Let me pause here to say that these are not pure green plays, but rather play a supporting role in the deployment of green energy.

On the transmission side, I’m looking at juggernauts like:

• Jacobs Engineering (NYSE: JEC)
• The Shaw Group (NYSE: SGR)
• ABB Ltd. (NYSE: ABB) and
• Fluor (NYSE: FLR)

Those two sectors are the more solid of the four I presented earlier. Each of those named companies carry less risk than new or young renewable energy companies, as they have a storied past in the broader energy and infrastructure sectors.

Now is great time to jump in, since their share prices have been beaten down so badly. And, because those companies are involved in so many aspects of infrastructure and construction, your risk will be minimized.

The two more speculative angles of green energy infrastructure are smart grid and energy storage.

Here’s my shortlist of smart grid plays:

• Comverge (NASDAQ: COMV)
• Echelon (NASDAQ: ELON)
• EnerNOC (NASDAQ: ENER) and
• SatCon (NASDAQ: SATC)

And energy storage companies:

• Beacon Power (NASDAQ: BCON)
• American Superconductor (NASDAQ: AMSC)

That’s how I see the green energy infrastructure market shaping up for now.

I currently find all the reference companies worthy of investment, though I’d play closer attention to the larger companies to minimize risk and avoid volatility.

Keep and eye out for detailed articles on each of the subsectors mentioned in this article in the future.

To green energy and green profits,

Chris
www.CleanEnergySector.com