Clean Energy Turning Potential Into Profit

Clean Energy: Turning Potential Into Profit

Mar 04 - Power Engineering

It's not every day that leaders of both major U.S. political parties find common ground on a major issue. Consider these comments from the last two U.S. Presidents:

* Former President Bill Clinton, in a speech at the Kennedy Center in Washington, October 27, 2003: "What will be the big job generator of the next decade? What's our information technology answer to this new decade? My favorite is energy. If I were running for president as a Democrat I would be saying we need to create a new energy economy and we're going to create a million jobs with it. There is by common consent a trillion dollar untapped market for clean energy and energy conservation technologies already developed around the world."

* President George Bush, speaking at a White House Rose Garden ceremony, October 28, 2003: "One action Congress should take immediately is to pass a comprehensive energy bill, which I proposed more than two years ago. Our entire economy depends on steady affordable supplies of energy, encourage conservation, promote efficient technology, modernize our electricity grid and increase energy production here at home."

Alternative energy - including renewable energy, fuel cells, energy efficiency, hybrid-renewable technologies and other related technologies - is a hot topic not just in elite political circles, but in U.S. business circles as well. That's especially true in the finance and investment sector, which is beginning to view alternative energy as the next great global profit center - an industry where potential and profit are merging and bringing legions of investors off the sidelines.

The numbers tell the story. Venture capital investments in "clean" energy have tripled in recent years. Overall venture investments in U.S. renewable energy or clean energy companies totaled $21 billion in 2002, and now account for 2.3% of total VC activity, compared to 0.7% in 1999. According to the Seattle Times, investors socked away $3 trillion into socially responsible funds in 2002, a 400% increase from 1995.

What's more, the potential for growth - the "sweet spot" portfolio experts look for - is huge. On a global basis, over $10 trillion in energy infrastructure investments are earmarked by 2020, the bulk of which will go to countries with substandard energy resources and poor air quality and whose energy grid infrastructure is inadequate. Translation? Accelerated global growth for clean energy and accelerated growth for investors steering portfolio assets toward clean energy.

"For all the hype about the New Economy, a real, sustainable new economy is emerging around alternative energy technologies," says Ron Pernick, co-author of the 2003 report Clean Tech: Profits and Potential by Clean Edge, an Oakland, Calif-based market- intelligence and publishing firm.

Myriad economic, technological, environmental and societal forces have converged to attract investors to clean technologies like bio- based materials, green chemistry, hybrid electric vehicles, hydrogen power, photovoltaics, and small-scale water desalination and away from old fossil fuels like gas and oil. "A small but growing number of forward-thinking investors recognize that several of today's emerging clean-tech companies will be the Microsoft's of the future," Pernick adds. "Many of these technologies have been around for years, but now such problems as global warming and acute energy shortages have created unprecedented demand for clean technologies."

That's what Wall Street likes to see. An industry that can find a market need and fill it. Right now there is no market need greater than the demand for cheap, efficient, environmentally friendly energy. As industry visibility rises due to power outages, energy shortages, and the ongoing troubles in the Middle East, investors are beginning to see that the U.S. is struggling with a burgeoning energy shortage. Short-term supply problems such as those experienced by California in 2001 may become more frequent. The power outages seen in the Eastern U.S. and in Europe in the summer of 2003 could become more the rule than the exception.

This is where clean energy comes into the picture. Although fossil fuels remain an important source of energy, renewable energy and other non-traditional energy sources can serve an increasingly important function in meeting domestic consumption demands, alleviating energy crises and increasing national security by reducing the dependence on imported fossil fuels. Electricity capacity demand is soaring. According to the World Bank, U.S. electricity demand is projected to increase 33% by 2020. Simultaneously, our over-reliance on fossil fuels provides a false sense of security that oil wells will never run dry. The U.S. continues to import about half of its oil supply, yet world oil production is expected to plateau between 2010-2020, and could trigger sharp price increases in just a few years. Fossil fuel supplies are declining globally, and once, consumed, cannot be replenished.

That, perhaps, is the primary reason for the ascent of clean energy. As our high school physics teachers taught us, nature abhors a vacuum. With near-universal agreement that fossil fuels aren't the answer to our energy woes anymore, into the breach steps clean energy.

Imagine that. An energy alternative to fossil fuels that is clean, efficient, plentiful, and renewable - with a price tag that doesn't induce sticker shock on consumers.

All things considered, what if you could invest in an industry that plays as well on Main Street as it does on Wall Street, and brings Republicans and Democrats together?

With clean energy, you can. And maybe you should.

BY STAN ABRAMS, NATHANIEL ENERGY CORPORATION

Author-

Stan Abrams is the Founder and Chief Executive Officer of Nathaniel Energy (www.nathanielenergy.com), an Englewood, Colorado- based renewable energy provider.