Alternative Energy Investing Has A ‘Missing Link’

In Great Britain, more than 60 gigawatts (GW) of power, a quarter ofthat from renewable sources, reportedly is waiting to be connected tothe nation’s power grid. In California, electric utilities say theyhave little hope of meeting the state’s mandate of achieving 20% oftheir generation from green sources by 2010 largely because of delaysin getting transmission lines licensed and built. Meanwhile in Brazil,work is underway on what will be the world’s longest power line, whichis being built with high-voltage, direct-current (HVDC) technologybecause it is ideally suited for hooking up renewable energy sourceslocated in remote regions of the country. Notice a trend here?

The “missing link” in many a nation’s scheme to go green is gridconnectivity. Globally, hundreds of thousands of miles of new powerlines are going to have to be built over the next five or so years tohook up the tens of thousands of carbon-controlling solar, wind,geothermal, tidal and other green electricity generation projects thatgovernments everywhere are mandating must be built. (If, as expected,there’s a global cap-and-trade exchange in a few years, the number ofneeded miles of new grid will be even greater.)

It’s actually easier to invest in the “grid connectivity” sub-sectorof alternative energy than it is in more prominent sub-sectors likesolar and wind. Solar investors must worry about some super-duper newtechnology being developed that makes their guy’s business modelobsolete. They also must worry about price swings in solar’s basiccommodity – silicon. Wind investors, meanwhile, if they are in theU.S., run into the difficulty of buying shares in firms that only tradeabroad.

With grid connectivity, not only are there relatively few leaders, they also trade on North American exchanges.

Last week, EnergyTechStocks wrote that to make money in alternativeenergy, an investor may need a mini-portfolio of Japanese stocks (see To Make $$ in Alternative Energy, US Investors Might Want to Build Their Own Japanese Stock Portfolio)This week the advice here is to also think about building amini-portfolio of “missing link” stocks from among the following giantsin the power transmission business: ABB Ltd. (Symbol ABB); Siemens AG (Symbol SI); General Cable (Symbol BGC); Quanta Services (Symbol PWR); MasTec Inc. (Symbol MTZ), and Valmont Industries (Symbol VMI).

There’s also a personal favorite of EnergyTechStocks’ managing editor, not that he has any money invested in the firm. It’s Composite Technologies(Symbol CPTC.OB). This company has a patented aluminum composite powerline core that can transmit more power than regular copper lines. Yes,it’s more expensive, but with not-in-my-backyard (NIMBY) stillever-present, it would seem likely that governments will place apremium on getting more out of existing transmission rights-of-way.



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