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3 Reasons To Invest In The Smart Grid
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02:09:52 pm on May 28, 2009

By Nick Hodge of GreenChipStocks.com
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You can often get a pretty good pulse on emerging cleantech themes by reading the pages of the Green Chip Review.

Going over my articles from the past two months, I noticed a clear trend: water and smart grid are the themes of the day.

And it’s not hard to see why.

The American Southwest and Southeast are three years into the worst drought in decades. As river flows dwindle and reservoirs dry-up, mass media is beginning to cover a story we’ve been on top of for years.

Expect both those trends to continue: more coverage on and profits from the water sector, and Green Chip‘s continually beating the evening news to the punch.

The other hot theme of late — and the one I’ll expand on today — is the inception of the smart grid.

If you’re not up to speed on smart grid basics, click here. But we’re essentially talking about a complete overhaul of how electricity is delivered and monitored.

The best way to think of it is as an internet for electricity, a system that will let you see electricity use and price data in real time, rather than 30 days later.

Buzz around this sector is booming, and some related stocks have doubled in the past few months. Billions were allocated to the cause in the recent stimulus, but there’s reason for a lot more optimism since then.

Here are three recent cheers for the smart grid.

Smart Grid Cheer #1: DoE Funding

Among the $4.5 billion set aside for smart grid development in the recent American Recovery and Reinvestment Act were grants capped at $20 million apiece.

But deploying the smart grid — and all the efficiency advantages that come with it — is proving to be so critical, and the projects so large, that the DoE recently raised the grant cap to $200 million.

That’s a 900% increase in the cap for DoE smart grid grants so giants like IBM, GE, and even Google can dip into them to execute large projects.

Smart Grid Cheer #2: Google It (or IBM It, or GE It)

Another promising trend in smart grid development is the eagerness of the big boys to participate.

Google (NASDAQ: GOOG) has already spent millions funding smart grid start-ups like Silver Spring Networks and providing software for smart grid projects in partnership with GE (NYSE: GE).

The search giant is also forging ahead with its own smart grid project using its PowerMeter software. They’ve partnered with eight major utilities in the U.S., Canada, and India (more to come) that will install smart meters at their customers’ homes and business. Those customers will then be able to monitor their energy use and costs in real time on a customized Google page using customized Google software.

Itron (NASDAQ: ITRI) is the first announced smart meter partner in that foray. That stock got a nice bump when the news came out last week.

IBM (NYSE: IBM) has "committed $2 billion to fund start-ups and utilities working on smart-grid and green technology projects." And that’s on top of the multi-million dollar smart grid projects they’re directly involved in via component manufacturing — not to mention their recent PR blitz about it all.

GE is in. You’ve seen the scarecrow commercials, right?

And Cisco’s (NASDAQ: CSCO) in, too. The tech giant is trying to take a lead in networking standards for the smart grid because it sees a smart grid market worth $100 billion in the near future.

Smart grid validation couldn’t be any more apparent.

Smart Grid Cheer #3: Making It Law

The House Energy and Commerce Committee passed a much-awaited energy and climate bill last week, paving the way for the committee to pass a full vote later this year.

In addition to requiring a 15% renewable target, that bill also requires a 5% energy efficiency gain by 2020.

If states can’t meet the 15%/5% by 2020, they can opt for a 12% renewables mix with an 8% efficiency gain.

Either way, energy efficiency is now law. By default, so is the establishment of the smart grid.

In addition to being a $100 billion market, Cisco also thinks the smart grid will be "100 or 1,000 times larger than the Internet."

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Ormat (ORA) Opportunity: Indonesia’s Geothermal Boom
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03:51:39 pm on May 14, 2009

By Sam Hopkins of GreenChipStocks.com
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It’s a geological bonanza for clean energy investors, yet no one’s talking about it.

With its population spread out over more than 17,000 islands, many Indonesians live in cities, yet some are in areas so remote that electricity access is almost zero.
Indonesia is also the only OPEC member in Southeast Asia, but in recent years it’s actually become a net importer of oil. (Production is down from aging oil fields, consumption is up, and the government in Jakarta feels the fire of an energy crisis bubbling beneath the surface.)

But trouble isn’t the only thing simmering under this archipelago nation. That’s because geothermal energy is about to break out from an under exploited state to become a primary resource for Indonesia’s energy needs.

Geothermal Energy in Indonesia

Indonesia’s largest listed oil and gas company, PT Medco, is about to break ground on a 330 MW geothermal plant in Northern Sumatra. That project will cost about $800 million to be split with Ormat Technologies (NYSE:ORA) and Japan’s Itochu. For Ormat, geothermal is a normal day’s work. For Medco, this marks a major reality check for its regional energy ambitions.

I first found out about PT Medco because of its exploration projects in faraway Libya. Medco is all over the Indian Ocean and the oil-producing world, inking deals from the main Indonesian island of Sumatra all the way to North Africa.

As Indonesia is the world’s largest Islamic nation by population, and a country with a long history of controlling important trade routes, it only seems natural that Medco has acted as a petroleum-oriented arm of its outgoing home state.

Nevertheless, as Medco generally looks to the Arab Gulf and North African oil producers for its fossil fuel linkups, it may have overlooked a bigger opportunity — that the Pacific Rim region may be a more important group of nations in which Indonesia could play a part.

Now, Medco may be selling its stake in Libya and switching focus to the Indonesian domestic market, even if that means moving away from petroleum.  The Pacific Rim is about to become a major clean energy success story, just as much as the Persian Gulf’s oil traps were for the fossil fuel industry.

Medco is currently engaged in a pricing dispute over the N. Sumatra geothermal project, and the dominant Indonesian utility, Persero, is trying to quash it.
With 27,000 MW in potential geothermal resources, PT PLN (Persero) and the government shouldn’t have to nudge Medco into a deal — it’s a lifeline to future viability for the aging oil and gas firm.

More than anything, though, geothermal energy can combine with greater energy efficiency to bring Indonesia into better balance with its own growth and global energy pricing.   And yet again, our international geothermal standby Ormat is in the best position as a pure play to pounce on Indonesia’s tectonic shift away from oil and towards geothermal power.

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DOE Adds $93 Million For Wind Energy Research/Development
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11:23:00 pm on April 29, 2009

By Jeff Siegel
Wednesday, April 29th, 2009

3 Ways to Play Hottest Green Energy Sectors – Get Your FREE Report

This afternoon, U.S. Energy Secretary, Steven Chu announced plans to pony up $93 million from the American Recovery and Reinvestment Act to support further development of wind energy. He also announced more than $100 million in funding for the National Renewable Energy Laboratory (NREL) and for infrastructure development.

Here’s the breakdown for wind development support…

  • $10 million for the National Wind Technology Center in Colorado

  • $24 million for wind power research and development

  • $14 million for technology development – which will focus primarily on advanced materials for turbine blades and towers.

  • $45 million for wind turbine drive train R&D and testing

Here’s the breakdown for NREL and infrastructure development…

  • $68 million for a research support facility – this will create the nation’s most energy efficient office building at the same cost as low efficiency commercial construction. Ultimately, the goal is to create a design process that can be replicated for future construction projects.

  • $19.2 million for renewable energy and site infrastructure – which will focus primarily on solar, and possibly geothermal.

  • $13.5 million for upgrades to the integrated biorefinery research facility – which will enable the further development of commercial scale cellulosic projects.

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Where To Look For World’s Best Green Energy Investments
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01:28:28 pm on April 24, 2009

By Sam Hopkins
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The global clean energy puzzle has more than one piece. . .

So today, let’s take a look at the pivotal pros and cons of renewable energy investing in different regions of the world.

As we check out the challenges as well as the opportunities in each place, we gain a more integrated view, and our investment choices can be honed.

North America

Pro: Political will is now more heavily in favor of renewable energy development as part of economic recovery than perhaps ever before. As the world’s top energy consumer, any significant movement in American energy attitudes spells massive investment in alternative generation methods and stocks. Mexico, an important non-OPEC oil producer, has seen production at its biggest historical producer, the Cantarell offshore field, decline by over 34% in the past year. Washington’s pivotal role in determining international energy trends can also be overwhelming and distract from ongoing R&D.

Con: Entrenched political interests, especially in agriculture (corn), have largely determined the approach Washington takes to national renewable energy development, even though solutions vary wildly from coast to coast and north to south. The North American Free Trade Agreement could also have the unfortunate effect of making Canadian and Mexican energy consumers subject to Uncle Sam’s whims, despite each country having a different array of needs and resources.

Europe

Pro: The European Union has integrated more and more former Soviet satellite states in recent years, bringing big "dirty" energy consumers into a post-coal movement. Places like the former East German state of Saxony have a low-cost, high-tech industrial base left over from Communist-era production, and energy companies are using that to chip away at high unemployment.

There is now a binding EU "20×20" target, making each of the EU’s 27 countries derive 20% of their energy consumption from renewable fuels by 2020.
As 2020 approaches, cleantech competition across national boundaries will feed into a continental network in which everyone can take advantage and share progress.
Con: The recession will increase resistance to government spending on subsidies for clean energy, especially in the EU’s east. EU-wide targets will be strained and nations with deeper pockets will hesitate to spend on their neighbors’ energy needs when home takes priority.

Asia-Pacific

Pro: China is the world’s most populous country today; India is projected to take that title by 2050. With consumption rising by leaps and bounds, and little infrastructure currently in place throughout many rural areas, both countries can "leapfrog" fossil-fuel power as they develop. China is also moving up the value chain in exports, establishing a slew of international renewable energy listings like Yingli Green Energy (NYSE:YGE) and Solarfun (NASDAQ:SOLF). China’s "Green GDP" initiative focuses on accounting for environmental damage and getting to realistic, clean economic targets that create jobs.

Australia, one of the world’s top net energy exporters, is having to bring in more oil by the year. China is also more competitive now when it comes to coal, Australia’s top energy export. Panax Geothermal (ASX:PAX) just announced it is developing what may be the first grid-connected geothermal demo plant in the country, launching the country’s native "hot rocks" clean energy resource in earnest.

Con: Asia’s energy cycle is still heavily reliant on coal (China is still building two new coal-fired plants a week, according to the journal Science). The region will be weaning itself off the sooty stuff for a long time to come, even as renewable energy usage rates soar.

Middle East

Pro: Israel has the most NASDAQ-listed companies of any country outside the U.S. The Persian Gulf monarchies are flush with oil wealth and finally starting to produce initiatives like Abu Dhabi’s Masdar which acknowledge the fact that fossil fuel’s waning years are upon them.

This April, Arab League Secretary General Amr Moussa endorsed the United Arab Emirates’ bid to permanently house the new International Renewable Energy Agency (IRENA).

Con: Gulf states do a hushed oil trade with Israel, but open technology sharing is out of the question politically, for now. In Jordan and Egypt, which have nowhere near the energy wealth of their cousins the emirs, cooperation with Israel on energy issues is greater. Iran’s growing influence in the region and increasing oil production are also a worry and obstacle to regional clean energy efforts.

Africa
Pro: Some cynically say that Africa is "always the market of the future," since the progress we hope for never seems to arrive. But if China and India’s rural millions can leapfrog city-dwellers and overseas oil addicts with smart-grid projects and local generation schemes, Africa is an energy leapfrog’s dream.
Africa’s variety of climates and terrain mean everything from sugar cane ethanol to geothermal energy can be produced in abundance. Decentralization can also be an asset, as everything from telecommunications to household fuel builds from small nuclei of connection to larger geographic areas.

Con: Africa’s variety of corrupt regimes, border guards, and, yes, pirates, mean a continental clean energy effort is difficult to bring about. The best hope Africa has as a whole is the proposed Mediterranean renewable energy grid called TREC, which would tie North African solar and wind energy to the European grid and bring EU companies like ABB (NYSE:ABB) into more African nations.

Latin America and the Caribbean

Pro: Latin American countries are already pursuing a range of localized options in biofuel (sugar ethanol, palm oil, and jatropha biodiesel). Solar energy can be produced cheaply throughout the region due to high sunshine. . . The Inter-American Development Bank says solar energy below $3 per installed watt brings poorer areas into the market for grid-connected and even off-grid solar. IDB expects an energy demand increase of 75% by 2030, and national leaders know poverty will only intensify if energy cost burdens are not lessened.

Con: Over 2/3 of the world’s ethanol-consuming markets are encircled by protective tariffs. That includes the U.S., which Brazilian sugar ethanol producers would certainly count as a top customer. Venezuela’s Hugo Chavez, and his Bolivarian Alternative movement, is also locked to oil — Chavez’s political capital peaked along with crude’s price per barrel in 2008.

Perhaps the biggest lesson from this global overview of clean energy progress is that politics is paramount. In Brazil, political isolation and a dearth of energy options led to today’s leadership in sugar ethanol. I’ll be down in Rio in just a few days, talking with investors and company heads from all over Latin America. Of course, the political echelon will be represented too, and Brazil’s own national government is out front in leading continental renewable energy progress.

Out of all the regions we’ve looked at today, I’m most bullish on Latin America.

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