Post-election "green" investing outlook

Tuesday saw the end of some market uncertainty with the defeat of California’s Prop 23. Enactment of this proposition would have been a real blow to alternative energy and alternative fuel companies in the U.S. Solar company shares, which gain most of the mainstream media attention, were hard hit during the past 1 ½ weeks but saw an across the board bounce today.

One of the few solar stocks not sharing in today’s gains was First Solar(FSLR), which saw a $13.00 one-day drop last Thursday and further loss on Friday. Most of these stocks will take a few weeks to regain their late October price levels, if not longer. With demand and production continuing to grow, many solar stocks seem destined for new 52-week highs before the end of the year.

Much uncertainty remains among green investors after the election. The Republican party is well known for its support of big oil and coal. They are equally well known for their lack of support for energy efficiency/saving measures and alternative energy sources. Look for federal support programs for everything except ethanol to be slashed, particularly funds coming from the Department of Energy. At least the military branches do not need direct congressional approval to continue spending on alternative energy.

If Republicans were really as patriotic as they like to claim they would be using the U.S. military alternative energy initiatives as an example for the entire country to follow. Our biggest national security issue is more likely energy-dependence on other(often unfriendly) countries than terrorism. And we don’t and never will be able to produce enough oil domestically to meet our current demand.

Obstructing legislation to reduce domestic oil demand, such as higher mpg standards, higher lighting efficiency standards, higher energy efficiency for household appliances, etc…, does nothing but extend and exacerbate an already bad situation. Blocking federal and state incentives for alternative energy installations only lets China and the European nations widen their lead over the U.S. in implementation of these technologies. When the real petroleum crunch does come, those countries with the greatest percentages of solar, wind, geothermal and nuclear energy production will have huge strategic advantages.

America needs to grow food, not fuel

The reason ethanol receives so much support in the U.S. is its reliance upon Big Agriculture. No biomass-based petroleum substitute can be produced in the quantities needed without massive amounts of fertilizer, pesticides, genetically-modified seed stocks and millions of miles put on petroleum-powered tractors, harvesters and trucks. We need an innovative alternative to the internal combustion engine, not a biological substitute for petroleum fuels.

When did the U.S. become afraid of innovation? When did maintaining the existing business status quo become more important than being the world’s technology leader? When did saving a few dollars or a few jobs today start to overshadow the very future of the country? Our political leaders from both parties are bickering about ideological irrelevancies while our credibility with the rest of the world evaporates. When did being a Republican or a Democrat become more important than being an American?

Alternative energies are here to stay. Private industry leaders and the military see the writing on the wall and are taking the initiative to break away from petroleum dependence. But the process would be much faster and more integrated if there were national leadership rather than just national lip-service. For investors, alternative energy and smart-grid companies remain the wave of the future no matter what happens in Washington.

The current state of the "green" stock market

Solar, wind and wave power are the future of energy

The upcoming elections, recent earnings reports, continued economic unrest and Prop23 in California have not been kind to my “green” stock portfolio. The past two weeks have seen pullbacks in several sectors even though the DOW and NASDAQ continue to see very slight gains on most days. I do not see a Republican majority in congress and/or the Senate doing “green” share prices much good but am not yet convinced that will happen.

Solar shares have taken a big hit across the board. A few seemed to be shaking it off and recovering last week but have since stalled again. I am predicting at least three to four weeks to start approaching the October 15 levels again. A Republican majority and passage of Prop 23 could make that a much longer road.

Mining stocks, and rare earth/lithium miners in particular, are also down and consolidating. These stocks should bounce back quickly as Chinese export concerns remain high along with high demand. If the overall market starts to falter, silver and gold miners should benefit most.

Water treatment and infrastructure shares barely stumbled and are already nearly recovered. The major players, such as Calgon Carbon(CCC), Veolia Environment(VE), Consolidated Water(CWCO) and Watts Water Technologies(WTS) should do well. Consolidated has had a bad year but seems to have turned around. Calgon and Watts are performing strongly.

Battery technology companies remain steady performers and could start to surge at any time. Demand will grow with increasing market penetration by electric vehicles and commercial solar/wind power installations. New research breakthroughs could put a company into leadership position quickly.

Most of the maritime shipping companies, particularly those based in Greece, saw a slight pullback last week. Continuing weakness of orders, rising fuel costs and Greek economic uncertainty remain issues for these stocks. Nevertheless, goods still need to be moved, international trade continues and I remain bullish on maritime shipping as the cheapest way of getting large amounts of product from here to there.

Wind power company shares are mostly flat. Even with increased demand, especially overseas, this is not likely to change anytime soon. Wind is just not glamorous enough for most investors and does not have as much perceived potential for use on individual homes or commercial buildings.

Green investing now

Solar power, wind power, wave power and advanced battery technology for electric vehicles are all the future of green investing. All of these industries are dependent on rare earth elements.

The past few weeks have seen a lot of consolidation going on in the green investing market. Solar, wind, batteries and rare earths/lithium have all stalled or pulled back. It seems the companies enjoying the fastest share price growth since July have been the hardest hit in the second half of October. This is all expected to be temporary as demand for all products continues to grow, though parts of the wind power industry seem to be faltering.

I do not follow wind as avidly as most green sectors because share performance has been lackluster for years. A-Power Energy Systems(APWR) shares are at early May levels and have not varied more than +/-$1 per share since that time. Vestas Wind Systems(VWDRY), once the darling of green energy companies, has been on a long, multi-year decline and recently hit a new 52-week low with no recovery in sight. China Wind Systems(CWS) has been essentially flat since late January and also shows no signs of imminent improvement. There are plenty of new wind farms being built and on order but that activity is not transferring to share price.

The solar power sector has been a great performer since early June, with a few companies outpacing the pack. JA Solar(JASO), Trina solar(TSL), Renesola(SOL), SolarFun Power Holdings(SOLF) and GT Solar(SOLR) have all set new 52-week highs in the past month. Most of the rest of the sector have seen increasing share prices since mid-summer. The past two weeks saw a significant pull-back that I do not expect to last past the upcoming election next week.

Rare earth element and lithium producers have been steady performers. Trading volume and volatility have increased in lockstep with anxiety over China’s rare earth exporting policy. My favorite companies in this sector are Great Western Minerals Group(GWMGF), Avalon Rare Metals(AVARF), Hudson Resources(HUDRF) and Western Lithium USA(WLCDF). All have been slowly but surely increasing share price except WLCDF, which has been more erratic. These are all very solid and well established companies with a guaranteed and growing market for their product. I remain strongly bullish across the board.

Battery technology is rapidly improving and battery demand is growing even more rapidly. More and more of our “can’t live without” gadgets require batteries and electric vehicles will be taking a prominent place within the transportation industry during the next decade. My top picks in this sector are Advanced Battery Technologies(ABAT), Valence Technology(VNLC), A123 Systems(AONE), Power One(PWER), Ener1(HEV) and Hong King Highpower Technology(HPJ). These companies are all carving out their own piece of the battery market pie and will all be major players for years to come. Expect share prices to follow the integration of electric vehicles. Batteries will also play a large role in the integration of large-scale solar and wind installation with the commercial electric grid.

While most green stocks seem stalled right now, and solar shares have really tumbled, I am not discouraged. These are relatively young growth industries and there are plenty of growing pains left on the way to maturity. Growth is the key word. There is huge world-wide demand for the products produced by all of the companies named above and that demand is going to increase, not go away.

Time is on the side of green. As petroleum prices increase, alternatives will become increasingly cheaper. As infrastructure is upgraded to accommodate the new green technologies, their rate of adoption and integration will increase proportionally. Anyone who still thinks that solar and wind power and electric vehicles are passing fads is just not willing to face reality. It will take time to fully phase out petroleum and coal from transportation and power production but the writing is clearly on the wall and investors getting on the boat early will get the best seats and the most benefits.

New battery research yielding results

This is the time for battery companies to take the lead. Many of the emerging “green” industries are dependent on electrical power storage for success. Electric vehicles and intermittent renewable energy sources such as wind and solar need batteries or other types of power storage. Current battery technology has problems for which new research is developing solutions.

Lithium ion is the present battery technology of choice for its dense energy storage but heat produced during both charging and discharging cycles is a serious problem. Just remember stories of laptop computers and cell phones catching fire and notice how warm your digital camera battery is immediately after recharging. A few solutions aimed at this problem are beginning to appear.

Quallion, based in California, has developed a partial cure for heat build-up in Li-ion batteries for use in heavy-duty trucks to reduce time spent with the engine idling. Their design uses arrays of interconnected, smaller batteries that produce less heat individually and are easier to keep cool en-masse. The arrays are connected to allow continued performance even if individual cells fail. The Li-ion battery arrays weigh much less than a similar amount of storage using conventional lead-acid batteries. Using battery power for interior lights and cooling/heating while parked would significantly reduce the amounts of greenhouse gasses produced by the idling diesel engines of these over-the-road trucks.
Another coming change applies new research to the anode(negative side) of Li-ion batteries. Graphite is the present material of choice but has a limited capacity to hold lithium. The amount of lithium determines the amount of energy that can be stored in a given battery. Silicon can hold nearly ten times as much lithium as graphite but develops cracks after several charge/discharge cycles because of the expansion/contraction caused by the heat produced. Putting micron-sized pores in the silicon surface give enough room for expansion/contraction without cracking. This breakthrough will allow batteries of the same size and weight to hold many times the amount of power now possible. Much smaller batteries for large-scale uses, such as electric vehicles and buffers between solar/wind installations and the commercial power grid should soon be on the way.

Cathode(positive side) research is also bearing fruit. BASF is experimenting with a Nickel-Cobalt-Manganese(NCM) cathode material that could have wide applications. They claim up to 60% more energy storage capacity for same-sized batteries. This amount of increased storage could mean up to 50% more distance per charge for an electric vehicle. For consumer electronics it would mean greatly extended use time for laptop computers, cell phones, etc…


One of the older and better-established battery technologies might also make a comeback thanks to new research. Sodium-Nickel-Chloride(Na-beta) batteries have been around for a long time but like other types of rechargeables produce heat when recharged. It seems changing the shape of the battery from the traditional long cylinder to a flat pancake produces much less heat. An added bonus is the ability to deliver up to 30% more power. The materials that go into Na-beta batteries are cheaper and more easily available than those required for Li-ion batteries.

Another older battery technology is also being revived. GP Batteries received this year’s Battery Manufacturer of the Year-Alternative Chemistries award. They developed a new Nickel-Metal Hydride battery for use in electric vehicles.

Continued research and creative thinking is all of the above areas are needed. Battery storage plays an important role in the continued integration of greener/renewable energy sources into everyday life. Grid interface is a major problem for more widespread use of intermittent power generation like wind and solar. Better battery storage solutions are one way to move forward.

While battery company stocks have been lagging behind other “green” sectors, this situation will not last forever. Batteries have too large a role to play in the success of alternative energy production. The companies that best take advantage of new research will come out ahead in market share and stock share price. I watch several of the largest and most innovative battery companies closely and think they may soon follow the solar PV industry along the path of increasing share prices.

A new way to harvest solar energy

A new and much more efficient way to convert solar energy into electricity has been discovered. The process is called Photon Enhanced Thermionic Emission(PETE). PETE could double or even triple the current efficiency of photovoltaic conversion by also taking advantage of the heat that usually goes to waste. Another plus is that PETE becomes more efficient at high temperatures while current photovoltaic technology becomes less efficient at increasing temperatures.

PETE is achieved by coating the photovoltaic semiconductor material with a thin layer of cesium. Research continues on which semiconductor materials work best for this process. PETE seems to work well at temperatures as high as 800C. The added efficiency over current photovoltaic materials could finally make solar price-competitive with oil. The new process uses already-existing and easily available materials and has been tested in southern California's Mojave Desert.

The research is being done by a joint venture of Stanford and SLAC National Accelerator Laboratory. The work is funded by the Defense Advanced Research Projects Agency and the Department of Energy. The original paper was published in Nature Materials after a success
ful demonstration of PETE.

photo courtesy of: freephoto.com

Another part of the wave of the future is here

One of the oldest public swimming pools in the country has been transformed into one of the greenest and healthiest places to swim indoors on the planet. “The Plunge”, also known as the Richmond Municipal Natatorium, has been brought back from the dead after being closed for nearly a decade because of lack of public funds for maintenance and necessary upgrades. The historic 1925 pool reopened on August 14, 2010 in Point Richmond, California.

The refurbished 324,000 gallon pool now features chlorine-free saline water sanitized with ultraviolet light, solar heating, solar electric power, highly efficient pumps and 300 operable windows for natural ventilation. The $7.5-million makeover was paid for with a combination of voter-approved funds and private donations. A portion of the grounds are now dedicated to a community food garden.

This type of project is the wave of the future. Governments and other public-service entities need to take the lead on the issues of energy efficiency, alternative energy use and public health. If government sets the example, these types of projects will seep into the mainstream and become the norm much more quickly.

Up to this point, most projects of this sort have been undertaken by private-sector companies. The companies are not spending this money just as a public service or for good PR. They are doing it because they can see the writing on the wall and know it makes good long-term financial sense. Government on all levels needs to adopt such a long-term outlook and jump on the bandwagon sooner rather than later.

For photos and more information, click these links: http://solar.calfinder.com/blog/news/richmond-plunge-green-pool/ and http://www.metaefficient.com/architecture-and-building/efficient-public-swimming-pool.html.