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.

Geothermal energy is "green" and out of the spotlight

“Green” renewable energy is a popular topic in the news and with environmentally-minded stock market investors. Solar and wind production get almost all of the headlines, though, especially from the mainstream media outlets of large-city newspapers and network television. Bio-fuels, liquid fuels that can replace diesel and gasoline, consistently run in third place. Another contender that is even more earth-friendly gets very little media attention and is also very much “under the radar” with investors is geothermal energy.

What media coverage has received concentrated on a selected few areas of the world with obvious surface geysers(have to have those spectacular photos!) such as Iceland and California. This is high-temperature geothermal, using water and/or steam directly out of the ground and operating above 300F. The average person or investor does not even know geothermal is a proven energy source even at much lower temperatures, shallower depths and areas with no near-surface activity at all.

Low-temperature geothermal energy production can provide heating, cooling and hot water for buildings as well as electricity production with no emissions and very little above-ground infrastructure. It is also practical with already existing and proven technology almost anywhere on the planet. Installing a system is more expensive than most solar equivalents but bring the same energy savings, require fewer toxic chemicals and carbon emissions to manufacture the components and less potential future maintenance.

The U.S. military and Department of Energy(DOE) are putting considerable resources into geothermal right now(though still less than solar or wind). The DOE recently announced $20-million of new funding for a variety of geothermal projects ranging from large-scale commercial electricity generation to reclaiming the energy absorbed by oil & gas drilling brines discharged as waste-water to small systems supplying heating and cooling to a few buildings combined with aquaculture operations(one of which is currently operating in New York City). The new funding covers seven geothermal technologies suitable for cities, small towns and remote areas. The National Renewable Energy Laboratory(NREL) is teaming with IKEA stores to bring geothermal energy to new big-box stores. The Environmental Protection Agency(EPA) is investing in geothermal to reclaim some heavily polluted areas and the military is also investing heavily to reduce petroleum dependence at its bases.

One type or another of geothermal energy production is practical nearly anywhere in North America. Norwegian researchers think current oil & gas drilling technology could make geothermal much more easily accessible and the supply is inexhaustible. The United States Geological Survey(USGS) says over 120,000 MW of low-temperature geothermal energy is easily available and Rocky Mountain Power utility company has found about 800 MW of geothermal potential within 100 miles of its transmission lines in California, Utah, Oregon and Idaho. Nevada is becoming a geothermal hot-spot and U.S. Geothermal is now building a 11.5 MW plant in the northwest corner of the state to replace an existing power plant.

Stock share prices for companies in the field of geothermal energy production have been mostly flat for the past year, ignored by investors the same way geothermal has been ignored by the press. My current watch list has only four companies: U.S. Geothermal(HTM), Ormat Technologies(ORA), Nevada Geothermal Power(NGLPF) and Sierra Geothermal Power(SRAGF). ORA and HTM are by far the largest of the geothermal companies in North America. ORA’s shares currently trade around $29.50. The others are all under $1.00 per share, making them quite cheap investments. They are all low volatility stocks. With the spate of recently interest and money from DOE and the military ORA and HTM are both showing some signs of life and increasing share prices. With increased interest in geothermal within Nevada, NGLPF and SRAGF should follow the same path. Larger companies, such as Siemens and General Electric, are also showing signs of more interest in geothermal as a power source.

Is geothermal energy production on the verge of a major move into the mainstream of renewable energy? Are share prices of companies involved with geothermal about to start a long, steep climb to the stratosphere? It is still too early to make that call with any accuracy. The current interest and money in geothermal from federal government agencies bodes well. Private-sector interest and money from the likes of IKEA is also a very promising signal. Watch these stocks closely as things seem about to get quite interesting and may move quickly.

Photo courtesy of FreePhoto.com

"Green" mining investments?

Mining is one segment of my “green” investing strategy with which some might not agree. I would argue that mining is absolutely essential to most “green” technologies, including wind power, solar power, super-conductivity, advanced battery designs, highly efficient LED lighting and smart-grid just for a start. Without the metals and other diverse elements supplied by the mining companies of the world, modern electronics and “green” technologies would not exist. Silver and gold, copper and iron have always been important to the electronics industry. Just as important to modern semiconductors are the “rare earth” elements.

The rare earth elements are not really rare but are quite common and well distributed in the earth’s crust. They are, however, fairly difficult to purify into usable form. The rare earth group consists of 17 elements mostly in the lanthanide series of the periodic table. They most commonly occur in nature as oxides and are often intermixed at the same location. Highly-concentrated deposits suitable for mining operations are well distributed around the planet.

The problem today is China’s domination of rare earth mining and production. China now produces over 97% of commercially used rare earth elements. This situation came about because Chinese production was cheap and rare earth elements were an excellent export commodity. The rise of the native Chinese electronics industry increased domestic demand for rare earths. China is in the process of stopping export of these essential elements.

The need for more locally produced rare earth elements is putting a spotlight on mining and refining companies capable of replacing Chinese supply. There is no shortage of these companies and most of them are quite “cheap”. When the major electronics producers start feeling the pinch of reduced Chinese rare earth export policy these mining companies are in a position to see rapid, long term growth and share-price increases. A few of the companies I watch most closely are Great Western Minerals Group(GWMGF), Avalon Rare Metals(AVARF) and Sociedad Quimica Y Minera(SQM).

Let me reinforce the importance of the rare earth elements to “green” technology. These elements are used in almost all semiconductors including photovoltaic and PETE(photon enhanced thermal emission) cells. Rare earths are absolutely necessary for the strong magnets needed for efficient wind power and hydroelectric generation. Low-temperature superconductors require rare earth elements. LED lighting depends on rare earths. Many lasers, high-refractive-index glass formulations, colors for phosphors and LED’s and glass, fluorescent lamp bulbs, ceramic capacitors and portable x-ray machines all depend on rare earth elements.

My view is rare earth mining and production companies outside of China are a great short- and long-term investment. They should do nothing but continue to increase in value and share price(unless bought by a larger or wealthier competitor). Our part as “green” investors is to push them as hard as we can to make their mining and production operations as “green” as possible. It is also our responsibility to push the EPA and all other responsible government bodies with oversight authority to do their duty and ensure all rules and regulations are followed.

More efficient lighting with LEDs

The future of lighting, all kinds of lighting, is LED’s. Only a major and totally unanticipated discovery would prevent LED’s taking the place of incandescent and fluorescent lighting during the next five years. LED’s will soon dominate the lighting industry because they are much more energy-efficient, they stay cool, they are small and light-weight, and they are more earth-friendly to manufacture and dispose.

Energy-efficiency and operating temperature are closely linked. Incandescent light bulbs waste approximately 90% of the electricity used producing heat instead of light. Fluorescent bulbs waste nearly half of their power as heat. LED’s produce light with more than 90% of their electrical draw. This enormously reduces the amount of energy needed to light an area while also reducing the energy needed the keep that same area cool. The lights themselves are now quite expensive but the energy savings will make up for the price difference. Prices will rapidly decline as demand and production increase(remember how “expensive” compact fluorescent bulbs were when first introduced?).

Longevity is the LED’s forte. Most currently being sold will last at least five years if never turned off. For most businesses, changing dead light bulbs is a daily or weekly(at least monthly) necessity. Switching to LED lights could allow a maintenance department to forget how to change a light bulb. How many saved labor hours, reduced storage space and inventory could this be worth to the average business? How much aggravation and space could be saved in the average home?

These are the reasons for the “LED Section” of my investing watch-list. I now monitor: Cree, Inc.(CREE) of Durham, NC; Veeco Instruments, Inc.(VECO) of New York, NY; Carmanah Tech Corp.(CMHXF) of Victoria, BC, Canada; XODTEC LED, Inc.(XODG) of Taiwan; Obelux of Helsinki, Finland and Bridgelux of Sunnyvale, CA. My not-so-secret wish is that Obelux and Bridgelux go public in the near future. These companies should all have a very bright future in the lighting industry.

Veeco Instruments makes the equipment other companies need to produce LED lights. Cree is one of the oldest and best established LED lighting manufacturers. Carmanah specializes in self-contained solar-powered outdoor LED lighting units. Obelux specializes in aviation and architectural lighting and has just announced a 200,000 candela white LED aviation marker light that is Federal Aviation Administration approved and uses just 350 Watts. Bridgelux is lead by ex-Seagate Technology CEO Bill Watkins and has already applied for over 250 patents covering various aspects of LED light production.

Stock market performance of these companies has been less than stellar so far. This is expected in with just-emerging technologies. As a greater variety of products becomes available, product prices drop and the importance of energy-efficiency increases, share prices of these companies should soar. I continue to wait and watch and monitor new developments within the industry.

Large private-sector companies and governments, led by the military, will undoubtedly be the early-adopters of large-scale LED lighting, followed by smaller companies and then individuals. Starbucks has already committed to making the switch in all of its stores. The U.S. Navy has committed to LED lighting on its combat ships. Many more forward-thinking organizations will soon figure out the many advantages of LED lights even at present prices. By the time they have to change the first dead light, replacement prices will probably have dropped by 60% or more and the initial investment will have been repaid several times over in energy savings.