Renewables and Alternative Energy - Energy and Capital

Warren Buffett Renewable Energy Investment

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Brian Hicks

Until recently, he's kept it pretty quiet.

In fact, when he ponied up his first billion for a piece of this action, he barely made a peep.

The only reason I found out about it is because I know some of the players behind the scenes...

These are the money guys that tend to keep a low profile, yet are typically the most important guys involved in these types of deals. And that's the way they like it.

Regardless, for the past 12 years, Warren Buffett has been meticulously building his position in some very select modern energy markets. And in typical Buffett fashion, he's going make billions.

Fortunately, you can get a piece of this action, too.

You just need to do two things:

First, tune out all the hype and B.S. spewing from Washington and the mainstream media about modern energy technologies. They know nothing, and are nothing more than parasites. As investors, they are of zero value to us.

Second, the next time you look at a solar panel, wind farm, or state-of-the-art, super-efficient co-generation plant, remember one thing: These were not built for treehuggers; these were built for very wealthy investors.

Modern energy technologies don't exist to appease environmentalists. They exist to make very rich individuals even richer.

Buffett Loves Renewable Energy... and Natural Gas... and Nuclear... and...

Warren Buffett isn't hanging out in drum circles talking about clean air. But he is making billion-dollar clean energy deals — and he's actually been doing so for more than a decade.

And last week, Buffett upped the ante on clean energy once again by announcing that his MidAmerican Energy Company is officially forming a branch dedicated solely to the development of modern renewable energy.

The new branch will be broken down into four units:

Solar
Wind
Geothermal
Hydro

MidAmerican's already got more than $9 billion in wind and solar alone, and more is expected this year.

The energy giant — which is the largest electricity provider in Iowa, Wyoming, and Utah — is clearly bullish on renewable energy. And management isn't shy about making this new growth strategy known.

In fact, MidAmerican VP Jonathan Weisgall pulled no punches last week when he told reporters this move was simply a vote for renewable energy and not some random bet.

Of course, Buffett's no fool either, and he isn't putting all his eggs in that “clean energy” basket...

While the Oracle of Omaha clearly understands that the long-term outlook on energy will not be dictated solely by fossil fuels, MidAmerican's conventional energy investments will continue to butter most of its bread for years to come.

~~eac_alt_energy~~

Natural Gas, Oil, and Nuclear: Buy What Buffett Buys

MidAmerican already transports 8% of the country's natural gas through its own pipelines, and Burlington Northern Santa Fe (which Buffett owns) moves oil from the Bakken region in North Dakota to refineries.

Interestingly, with the Keystone Pipeline construction delayed (I say “delayed” because only a fool believes this pipeline won't be built), oil producers will now have to rely even more on Burlington.

This is a very bullish case for freight rail this year — and of course for continued production in the Bakken, particularly in the Three Forks region, where we've been telling you to load up for months.

Buffett's also big on nuclear — but not in the way you might think.

You see, back in 2008, MidAmerican tried to do a deal in Idaho, but that fell through before Buffett ponied up any real money. He then looked to get a piece of Constellation's Calvert Cliffs nuclear reactor, but French state-owned utility EDF beat him to the punch.

Then Fukushima happened, which resulted in Buffett losing interest in conventional nuclear power generation, saying: “[conventional nuclear] isn't going to happen because the psychology has changed.”

But here's what a lot of media reports missed: Even after Fukushima, MidAmerican's nuclear energy unit had been sniffing around a different kind of nuclear technology — small modular reactors.

Buffett may be in tune with the kinds of risks folks are willing to take when it comes to power generation, particularly after one of the worst nuclear meltdowns in history, but he also embraces and doesn't run from disruptive technology.

Could these small modular reactors prove to be a disruptive technology that could make Buffett even richer?

Perhaps. But that's not the only disruptive technology in the nuclear space right now.

And I would argue that small modular reactors are nothing compared to a recent breakthrough in nuclear fuel technology that allows for both increased safety and lower operational costs, the latter being a big deal as conventional nuclear simply could not exist today without massive government subsidies.

Of course, thanks to a new development in nuclear fuel technology from our neighbors to the north, these huge nuclear subsidies could be a thing of the past.

And the company behind this development?

Well, let's just say that between its truly disruptive technology and the fact that the president of this company was recently appointed as the head of the World Nuclear Association's Fuel Technology Group, it's probably going to be one of the easiest triple-baggers we'll see in 2012.

My colleague Nick Hodge actually has some video of this company's technology in action. Interestingly, he's the only analyst on the planet who was allowed the necessary access to obtain this footage. Not even the big dogs over at Goldman could get their hands on it.

But that's how it goes when you're willing to get your hands dirty instead of sitting behind an antique desk in some overpriced Wall Street office.

Of course, it won't be much longer before every Wall Street hack is jumping into this stock...

~~nuclear_signup~~

~~jeffs_signoff~~

Energy Investments for 2012

2011 was the last year Hilda spent on this earth.

A mother, grandmother, and great-grandmother, Hilda embodied everything that is right with this country...

The daughter of a German immigrant who made a living as a grave digger, Hilda grew up just outside of Baltimore City.

As a child, she helped her mother grow vegetables, raise chickens, and look after her siblings.

She was born into a family that valued hard work and family obligations. And in her 80 years, I never once heard her talk about “how hard things were” when she was a kid.

No, for Hilda, hard work and family were not seen as burdens — but rather as sources of pride.

And after she became a mother at 19, it was her work ethic and respect for family that enabled her to raise two very successful daughters while her husband, a career Navy man, spent a good number of years overseas protecting our nation — and often on submarines, which meant she had zero contact with him for entire deployments.

I cannot imagine how difficult it must've been for a young 20-something raising two children while her husband was off running top-secret missions in some of the earliest nuclear subs in the U.S. fleet.

But for Hilda, it was never about what she couldn't do; she didn't have that option.

For Hilda, it was about what she had to do — and more importantly, what she wanted to do...

Hilda wanted to provide a good life for her family. She wanted to be of service to her country, and not a burden.

She looked forward to providing support for returning soldiers and the young families of other soldiers that were deployed for months at a time.

All in all, she was a strong woman, a loyal wife and mother, and a source of inspiration for her grandchildren.

Which is why when I would talk to my grandmother Hilda about the work I was doing, I always got great pleasure when she approved.

Defending Progress

I can't say my grandmother knew much about electric cars or solar energy, but she knew the importance of providing for future generations. And after reading my book, Investing in Renewable Energy, she agreed that as a nation, we need to embrace progress and not attack it or trivialize it.

This is a point that I have been making for close to a decade now, as I continue to help investors profit from the transition of our energy economy.

While my primary goal is always to help investors like you create and protect your wealth, over the years I have also become somewhat of a defender of progress.

It is a role that I never expected to take, and quite frankly, it's a role I never expected would be needed. How anyone would ever choose complacency over progress is beyond me...

But when I read articles about “the demise of the electric car” or how solar and wind are “scams,” I become infuriated — for two reasons:

These types of articles are almost always written by people with intentions that are not honorable. Any attempt to slow progress or keep our nation shackled to a broken energy economy that shrinks our wealth and increases our vulnerability to hostile nations or environmental catastrophes is despicable.
These types of articles also tend to dissuade investors from modern energy opportunities. As a result, it can becomes a chore to help people make money — which, when you think about it, is absolutely ridiculous! Especially considering the dozens of profits we've made over the years by investing in the right modern energy stocks.

~~solar_2~~

A Profitable Evolution

Although I have been singing the praises of modern energy for years, I've never once suggested that investors should put all their eggs in this basket.

There is absolutely no doubt that the future of energy will not be dictated by fossil fuels... but that doesn't mean everyone's going to be “going solar” and driving electric cars tomorrow.

The transition of our energy economy will not happen overnight. But it will happen.

In fact, it's happening right now. And we are extremely fortunate to be witnessing the earliest stages of this transition.

Solar and wind power production, on a global scale, continue to grow at a rate that is absolutely mind-blowing.

The rapid deployment of electric cars from now well into the next decade will impress even the most critical of electric car naysayers.

New energy-efficient building technologies that will not only drastically cut energy use, but even serve as power generators, are quickly becoming the new norm.

Over the next eight years, we will see an enormous amount of new grid development and upgrades.

We will witness the continued growth of high speed rail (mostly outside of the United States), mass transit systems, and more walkable communities that will allow us to conserve enormous amounts of energy, and even make the air and water a little cleaner for future generations.

But while all this is going on, we will continue to utilize our fossil fuel resources.

As investors, we need to be conscious of this, and not allow stubbornness to keep us from making money.

Look, I believe that it is in our best national interests to support the development of modern energy and alternative transportation technologies. For the sake of our economy, for the sake of our environment, and for the sake of our national security, this is not something that should be hijacked by dishonorable bureaucrats and media whores.

I also believe that in order to get there, we must not abandon our quest for fossil fuels — but instead support the safer and “cleaner” production of them.

Because the fact is you can't build the future of energy without the old guard.

Fossil fuels and modern energy actually go hand in hand. And they should not be pitted against each other.

You don't have to blindly criticize the future if you profit from oil and gas. And you don't have to blindly criticize the necessity of our fossil fuel resources if you profit from modern energy.

Look, we're all here to make a buck. And the transition of our energy economy is going to allow us to do just that for many years to come.

The added bonus is that if we do it right — and seek progress instead of complacency — we will also do something very, very important...

We will provide a better world for future generations.

A world where our children are not held hostage by foreign oil cartels. A world where the air and water is cleaner. A world that our grandparents can be proud of.

As we head into 2012, my focus will remain unchanged: to be a facilitator, not a detractor, of progress, and help you create and protect your wealth.

~~jeffs_signoff~~

Tesla Electric Car Investing

“I'm spending a fortune on gas,” he told me after throwing back his second glass of some very powerful eggnog.

My cousin, who owns a small HVAC company just outside of Richmond, drives 110 miles round-trip six days a week.

He used to live closer to his office, but he decided to move out to the country in 2006. And while his house and adjoining 12 acres are blanketed with peace and quiet, his daily commute is one that I wouldn't wish on anyone.

And of course, any time gas prices head north, he feels it. But these days, it's a little worse.

His business has been struggling for the past couple of years. He's still profitable, but he's not pulling in the kind of scratch he saw before the recession took hold.

He had to lay off some staff and he's putting in more time at the office.

His dream of early retirement is on hold for now.

So I was surprised when he told me he wanted to get an electric car...

Now is Not the Time

My cousin is a smart guy.

He started his own business when he was 22 years old. He had one used truck, a lot of borrowed equipment, and no desire to work for anyone but himself.

At 25, he landed his first major job for a commercial developer. He reluctantly took on some debt and hired a few people.

By the time he was 28, he had a small fleet of trucks and more than 20 full-time employees.

He's a self-made man who pays for pretty much everything in cash. And he definitely didn't need a loan when he bought his $480,000 home.

So I couldn't understand why he would want to buy an electric car to get to and from work every day.

~~eac_nat_gas~~

He's read all the data, and knows that unless he goes for a high-end Tesla Roadster (which I know he doesn't like because it's too low to the ground for him), there is currently no electric car on the market that can give him an all-electric range of 110 miles.

He could go for a Chevy Volt, which would give him about 35 to 40 miles in all-electric mode before it starts running on gas...

But he wants all-electric. Said he's tired of spending his money on an addiction that makes our nation weak.

In any event, I told him not to buy an electric car right now, because it simply could not provide the all-electric range he requires for his daily commuting.

Now if you're a regular reader of these pages, you know I'm not typically one to dissuade anyone from getting an electric car.

But the bottom line is that right now, if you're not one of the more than 70 percent of the daily commuters that drive less than 40 miles per day...

An electric car is not for you.

(According to the Bureau of Transportation Statistics, more than 70 percent of U.S. commuters drive 40 miles per day or less.)

Of course, next year, that won't be the case.

At $5 a Gallon...

After confronting the reality of today's electric offerings, my cousin agreed that now is not the time for him to get an electric car.

But come next year, he may be first in line for a Tesla (NASDAQ: TSLA) Model S.

Expected to hit the streets in mid-2012, The Tesla Model S can get him from 0 to 60 in 5.6 seconds, reach a top speed of 125 mph, and allow him to travel about 150 miles on a single charge — more than enough for his daily commute.

This car, however, will cost him about $50k.

His current car, a Toyota Avalon, ran him only $31k when he bought it.

That's a $19,000 difference in price. Certainly nothing to brush off.

But consider this...

This year, my cousin will have spent about $3,600 on gas.

If gas prices average out the same price over the next eight years (which you know is nothing more than wishful thinking), he will spend $28,800 on gas.

Including the cost to fill up, his $31,000 Toyota will actually cost him almost $60,000 to drive.

Of course, you still have to fill up an electric car, too — just with domestically-produced electrons instead of 87 octane.

We looked at my cousin's cost per kWh, and figured it would cost him about $10,500 for battery charges over the course of eight years.

That brings the total cost on the Model S to about $60,500 for eight years of operation.

He's definitely not going to save a ton of money buying the Model S, but he's also not swayed. For him, the convenience of “filling up” while he sleeps — and the ability to hedge against oil spikes — is well worth it.

Of course, he's also quite wealthy, so dropping $50k on a car isn't a big deal for him.

But for most folks in this country, $50k is a lot of money. And a lot more than most are willing to spend on a vehicle.

That being said, I did come across a very interesting Deloitte report earlier this year which indicated that at $5.00 a gallon, most Americans would be willing to buy an electric car.

Despite increased oil production in the United States and Canada, by the end of 2012, we will be paying no less than $4.00 a gallon. By 2014, we'll easily be at $5.00.

So will there be even more interest in electric cars at that price?

Certainly the major automakers are betting on it.

Every major automaker today either has an electric car on the road, in production, or in development.

And although Tesla isn't considered a “major” automaker, there have already been 6,500 preorders for the Model S.

One analyst at Pacific Crest Securities noted he expects 13,000 Model S preorders by the end of the first half of 2012.

He also believes the stock could touch $42 a share within the next year.

I don't know if either will happen. But I do know that the Silicon Valley agitator has sold more than 2,000 of its $110,000 Roadster, and it will likely sell out completely next year when it sells the last of a limited 2,500-unit run.

Not bad for a little startup that started selling a six-figure electric car during one of the worst economic meltdowns in history...

Bottom line: Tesla's not really a company I would bet against.

~~jeffs_signoff~~

India Energy Investing

In just a few weeks, India's newest nuclear power plant will become operational.

Built by the Russians, who are eager to make a few bucks off their nuclear know-how, the reactor will help alleviate the massive electricity shortages that have inhibited economic growth.

By next summer, another Russian-made nuclear power plant will also go online in India. (Two more after that were expected, but a deal for 42 Russian fighter jets took priority.)

Some reports blame the anti-nuclear folks for the final nuclear deal going bad. They've been protesting over safety issues throughout the year.

But I don't think that matters...

Just like the last two nuclear deals, the next two will get done.

Because let's face it: India is desperate for power. And not to sound uncaring, but I've never seen much proof that public safety is a big concern for the Indian government.

The bottom line is India expects nuclear to provide 25 percent of its power by 2050.

And it won't just be the Russians making money on this...

3 Nuclear Ambitions

There are hundreds of companies trying to get a piece of India's nuclear action.

But there are three in particular that have been very aggressive over the past year...

Reliance Power (BOM: 532939) boasts the largest power generation portfolio under development in India's private sector, and it's currently reported to be in discussions with GE-Hitachi and Westinghouse, as it looks like the Indian government is going to allow other non-Indian companies to be involved in the country's nuclear power development.
Tata Power (BOM: 500400) – Last year, in anticipation of India's nuclear direction, the company signed an agreement with GE-Hitachi to explore new projects in India.
Alstom (BOM: 532309)(PINKSHEETS:AOMFF) – The company is part of a three-way joint venture involving the Nuclear Power Corporation of India and Bharat Heavy Electricals to make turbines for future nuclear projects. Today, one out of three nuclear plants across the globe runs on Alstom turbines.

All three of these companies are major players with significant influence on a global scale.

Collectively, they provide thousands upon thousands of jobs and generate billions in revenue. And all three are going to make a ton of dough from India's nuclear power development.

But it won't stop there.

~~eac_nuclear1~~

All You Can Eat

While India's nuclear power agenda is aggressive, so is its solar power agenda.

India is actively integrating solar into its mix with the goal of having 20 gigawatts of installed solar capacity by 2020. To give you an idea of how much growth potential this represents, India has about 700 megawatts installed today.

This, my friends, is another huge opportunity for energy investors looking to play India's growth.

Interestingly, the same three companies that are actively working the nuclear angle are also actively working the solar angle.

Alstom, through the purchase of Areva T&D (as part of a consortium with Schneider Electric), is now providing substations for solar power plants in India.

Tata Power just announced it has completed the financing for a new 25 MW solar project in India that already has a power purchase agreement in place.

And just a few weeks ago, the Asian Development Bank handed Reliance Power a $48 million check for a 40 MW solar project in Rajasthan. That project is expected to be completed next year.

While European solar subsidies are being phased out and a glut of solar equipment is not being depleted fast enough to stabilize margins for solar manufacturers, the bears roar on.

Solar stocks nosedived in 2011. And naysayers, deniers, and haters have all piled on, shaking their Solyndra noise makers behind the backdrop of partisan buffoonery.

As this continues, guys like Warren Buffett buy $2 billion solar farms.

Solar installer SolarCity lands a $1 billion solar installation contract with the U.S. Military — which, by the way, was able to land funding through Bank of America and Merrill Lynch.

Moser Baer has raised $1 billion for new solar projects all over the globe, though most of those projects will be found in India.

And why not? That's where the next solar bull market is.

Hell, that's where the next energy bull market is.

It's basically an all-you-can-eat energy buffet. Want some solar? They got it. Want coal? They got it. Want nuclear? They got it. How about biogas? They got it.

Want to make money?

Ride India's energy growth any way you can...

~~jeffs_signoff~~

Warren Buffett's Solar Investment

Warren Buffett's MidAmerican Energy is the largest electricity provider in Iowa, Wyoming, and Utah.

The company sells its electrons to 2.4 million customers.

It transports 8 percent of the country's gas through its own pipelines, while producing and supplying power from a wide range of sources that also include geothermal, hydro, nuclear, and coal...

And last week — for about $2 billion — it added solar to that mix.

Outlook Changed for Solar?

MidAmerican is no stranger to the world of alternative energy.

In fact, the company has $5.4 billion invested or committed to wind power.

By the end of this year, it will have more than 2,900 megawatts of wind generation in operation. That's more than any other regulated electric utility in the country.

But don't be fooled. Buffett's bet on wind doesn't mean the guy's been hugging trees with Al Gore...

The truth is MidAmerican's energy mix is dominated by coal, natural gas, and oil. Only 20 percent of the company's generation comes from alternatives, which currently include wind, hydro, and biomass.

This is about making money — and nothing more.

And that's exactly why Buffett pulled $2 billion out of his winter coat pocket and bought First Solar's (NASDAQ: FSLR) 550 megawatt Topaz solar farm last week.

Although the sector has been absolutely crushed this year, the long-term potential of solar remains solid.

And now that shares of most public solar companies are trading so low — and the smell of consolidation is permeating through the industry — the smart money's sniffing around, looking for bargains.

This is what Buffett found in his latest purchase: a utility-scale solar power project with a long-term power purchase agreement boasting some very attractive rates.

Of course, I would caution that despite the bullish stories that have played out over the media since word of the deal broke, the solar industry still has some climbing to do to get out of the hole it's in today.

Despite good news for First Solar, the fact remains that oversupply issues will likely continue well into 2012.

Probably not until Q3 2012 will we see enough significant demand to really move that backed-up supply.

Point is, the deal is positive for the long-term prospects of solar (Buffett wouldn't be in if that weren't the case), but its effect on the entire space is minimal...

Which begs the question: Is the solar energy space even worth following anymore?

~~solar_2~~

Ignoring Profits is Stupid!

A few months ago, I was talking to an investor who told me he bought shares of GE (NYSE: GE) for about $12 back in 2009.

He sold his shares earlier this year when the stock hit $20. His total gain was roughly 60 percent, which took about two years.

He was actually complaining because he said he didn't like waiting that long to make a profit.

Unreal!

I think many of us have gotten to this place where if we don't see double-digit gains inside of a few weeks' time, we throw our hands up in defeat.

Not only is this mentality irrational, but it also leads to missed opportunities.

Over the past few quarters, we've seen solar stocks fall hard. And I'm not convinced that we're completely bottomed out yet, either.

But I will tell you the last thing you want to do right now is ignore the solar space.

Bottom line is that in 2012, we're going to see a lot of consolidation, a lot of solar companies going belly-up, and a new level of competition that will weed out any remaining stragglers.

The result will be a leaner, more competitive solar marketplace that'll flush out some pretty significant opportunities.

To a new way of life and a new generation of wealth...

Jeff Siegel
Editor, Energy and Capital

Alternative Energy Warnings

This past Thursday, as we sat down to yet another Thanksgiving feast, the obligatory What are you thankful for? question surfaced.

To be honest, I've never been a fan of playing this game.

After all, if you're thankful for something, why do you have to wait until November 24th to talk about it?

Nonetheless, I played along that afternoon and decided I was thankful for all the great thinkers over the years that enabled progress and allowed us to enjoy the many comforts and conveniences we take for granted today.

As well, I'm thankful that many of these great thinkers succeeded in the face of intense criticism and scrutiny.

After all, change is sometimes hard for the masses to accept — even if those changes are in our best interests and can instigate economic growth.

Look at rail travel, for instance. Think about the impact the advent of rail has had on this country...

The transcontinental railroad united the nation and allowed for the increase of commerce between states.

Think about all the freight we ship on our rail system: the coal, the grain, the chemicals, the scrap iron, and the thousands of other things that keep this nation fed, clothed, and operational.

Every dollar invested in freight railroads yields $3 in economic output. For every $1 billion of rail investment, more than 17,000 jobs are created. Freight railroads generate almost $265 billion a year in economic activity.

Railroads are four times more fuel efficient than trucks, and last year, U.S. railroads moved a ton of freight an average of 484 miles per gallon of fuel.

The importance of freight rail to our nation's economic health is undeniable.

So it's a pretty good thing rail travel didn't die on the vine when it was first being created, especially since there were quite a few folks who disparaged it in its earliest stages of development.

In fact, it was Dr. Dionysus Lardner, the famous professor of natural philosophy and astronomy at University College in London, who once said: “Rail travel at high speed is not possible because passengers, unable to breath, would die of asphyxia.”

That, my friends, is just one example of the ridiculous and irrational things “new” technologies often have to contend with in their early days of development.

Hell, back in 1903, the president of the Michigan Savings Bank told Henry Ford's lawyer, Horace Rackham, that the horse was “here to stay” and the automobile was only a novelty, a fad.

Fortunately, Rackham didn't listen. He invested $5,000 in Ford stock, which he later sold for $12.5 million.

~~solar_2~~

A Clean Energy Illusion

As a long-time modern energy advocate and investor, I've heard every excuse in the book as to why things like solar, wind, and electric cars will never pan out.

Even some colleagues whom I find to be quite smart and successful have sunk to a level of irrationality by referring to solar and wind as “scams,” pushing the illusion that cleaner energy alternatives are inefficient and costly.

Of course, I hold no grudges. We all have an axe to grind. I'm just not a big fan of trashing something you don't fully understand in an effort to push something you do.

In other words, while I fully enjoy being a part of (and profiting from) the earliest developments in clean power generation and electrified transportation, you'll never find me cheering pipeline delays or second-guessing the role oil plays in the global economy.

Because as any right-minded objective capitalist will tell you, that pipeline's a done deal.

As well, the further production of domestic oil is lock.

But just as we will produce unconventional liquids in Canada and the United States, we will also continue to integrate more cleaner energy.

Irrelevant Perceptions Won't Help You Profit

While some like to subtly mock wind power by referring to wind turbines as “windmills,” it is very likely that by 2030, 20 percent of our power generation will come from wind.

The 20 percent by 2030 has actually been an industry goal since former president George Bush signed off on a DOE report detailing how the U.S. could achieve that kind of wind penetration, and do so without any major technology breakthroughs.

The cost: about 0.06 cents per kilowatt-hour of total generation by 2030, or roughly $0.50 per month, per household.

But again, that's based on no technology breakthroughs, of which there have been many over the past few years — including a few that have enabled increased efficiencies and lower production costs.

Even Bloomberg's New Energy Finance recently released a report indicating the best wind farms in the world already produce power as economically as coal, gas and nuclear generation, and the average wind farm will be fully competitive by 2016.

Here's what lead analyst Justin Wu had to say:

The public perception of wind power tends to be that it is environmentally-friendly, but expensive and intermittent. That is out-of-date – in the best locations, where generation is already cost-competitive with fossil fuel electricity, and that will be the case for the majority of new onshore turbines installed worldwide by 2016.

Wu also went on to say:

The press is reacting to the recent price drops in solar equipment as though they are the result of temporary oversupply or of a trade war. This masks what is really going on: a long-term, consistent drop in clean energy technology costs, resulting from decades of hard work by tens of thousands of researchers, engineers, technicians and people in operations and procurement. And it is not going to stop: In the next few years the mainstream world is going to wake up to wind cheaper than gas, and rooftop solar power cheaper than daytime electricity. Add in the same sort of deep long-term price drops for power storage, demand management, LED lighting and so on — and we are clearly talking about a whole new game.

A Bigger Piece of the Pie

Look, I get it. Some folks like to mock environmentalists.

They think all that “let's make sure our air and water is clean” rhetoric is just a recipe for economic disaster and socialist agendas... or they just need a villain to help them sell their wares.

Whatever it is, rest assured the integration of clean, modern energy technologies is not being facilitated by Greenpeace or a secret society of tree huggers worshiping at the altar of Al Gore...

It's being facilitated by nothing more than the quest for wealth and security.

The future of energy will not be one completely dictated by fossil fuels. Rather, it will be one that utilizes a variety of resources.

In 20 years, we will still be very much reliant on fossil fuels.

But don't kid yourself.

Because while natural gas will likely be our main source of power generation for decades to come, wind, solar, and geothermal will also be getting a bigger piece of that pie.

And while we'll suck every last ounce of oil from anywhere we can economically produce it, we are actively developing alternative modes of transportation right now that will either require less oil or no oil at all.

From natural gas trucks and buses to more efficient internal combustion engines to electric cars, this is happening right now.

And this is our opportunity to make a choice...

Either embrace it and profit from it, or miscalculate the enormity of the change that is about to take place — much in the way the former Michigan Savings Bank president did when he insisted the automobile was nothing more than a novelty.

When it comes to energy in the 21st century, the only novelty or fad is the outdated and delusional mentality that the world is not transitioning its energy economy to one that will rely less and less on finite resources.

To a new way of life and a new generation of wealth...

Jeff Siegel
Editor, Energy and Capital

P.S. For the sake of clarification, windmills are machines designed to mill grain or pump water. The word windmill is also used to describe a cardio exercise that requires you to swing your arms around in a circular motion. Wind turbines, on the other hand, convert wind energy to mechanical energy that is used to produce power. Just something an energy investor might want to know in case you encounter the incorrect usage of the word “windmill” in any past or future analysis you may read.

Lithium Investment Opportunities

It's long been the ugly stepsister of the alternative energy world.

With its high capital costs, high development risk, and limited public visibility, geothermal can sometimes look like more trouble than it's worth.

Of course, looks can sometimes be deceiving.

Geothermal is actually one of only two forms of renewable energy that can provide base load power generation.

While solar and wind are both intermittent sources, geothermal can run 24 hours a day, seven days a week.

It even has a capacity factor that rivals coal and nuclear.

And, according to researchers at M.I.T., our accessible enhanced geothermal resources are large enough to provide 130,000 times our annual electricity consumption.

But there is a catch...

Building a geothermal power plant is a major chore. It entails enormous risk and enormous amounts of capital. And these things can sometimes take decades to develop.

Even as an alternative energy advocate, I can tell you that there's really only one geothermal company I'm bullish on these days. And that's U.S. Geothermal (AMEX: HTM).

Although, thanks to a surprising new development at a geothermal power plant in California, geothermal may soon get a fresh coat of sparkle and shine.

You see, it turns out geothermal power plants not only deliver base load power, but they could also soon become the premier source for domestic lithium and manganese production.

Cheaper, Faster, and Made in the U.S.A.

In 2010, demand for lithium chemicals was about 102,000 tons. That number is expected to reach 320,000 tons by 2020, mostly due to increased production of electric vehicles.

Yet, only about 5 percent of lithium carbonate is actually produced in the United States. Today Chile and Australia are dominating lithium production.

But that could soon change with the integration of a new technology that can actually extract lithium from the brine that geothermal power plants inject into the ground after steam is produced. And it can do it in a way that would allow domestic geothermal power plants to compete with the lowest cost Chilean producers, which currently produce the stuff for about $1,500 a ton.

The company that developed this new technology is called Simbol Materials, and it's currently operating a pilot plant that can filter 20 gallons per minute.

Simbol Materials' first commercial plant is expected to begin construction next year, boasting a production capacity of 16,000 tons of lithium carbonate per year.

This is high quality stuff, too. We're talking the world's highest-purity lithium carbonate for use in electrolytes for electric vehicle batteries and other energy storage applications.

USGS analysts have suggested battery-grade lithium goes for between $5,000 and $6,000 per ton!

And unlike traditional methods of materials extractions that tend to be highly energy-intensive, require massive amounts of water, and produce mountains of waste, Simbol's technology allows for a process that is virtually waste-free and requires minimal energy.

Of course, the big sell here is the speed at which Simbol can produce lithium. In what typically takes 18 months to extract lithium in evaporation ponds, this company can do in about 90 minutes.

This is huge!

And here's an added bonus: The company can also extract manganese and zinc using the same process at these geothermal power plants.

Of course, not until the new commercial plant is operational will we know just how effective this technology is.

But one thing is certain: If Simbol's process does prove successful, it could completely disrupt the entire lithium market as we now know it.

This is likely the reason Japanese behemoth Itochu Corporation took a 20 percent equity stake in the company last year.

Bottom line: This thing could either be huge or a complete flop.

If it's the former, today's primary lithium producers are going to get a serious run for their money.

~~eac_rare_earth~~

To a new way of life and a new generation of wealth...

Jeff Siegel
Editor, Energy and Capital

Electric Car Investment Opportunities

The towering flames and thick black smoke could be seen from miles away.

The intense heat from the fire melted the asphalt...

Anyone within 100 feet of the blaze ended up covered in second degree burns.

Seventeen fire trucks were called in, joined by an army of hazmat fleets racing to the scene of the inferno.

Oh, the humanity!

This is how most mainstream media dolts would have loved to tell the story about a recent electric car fire. And although it wasn't quite this hyperbolic, there were still few media outlets covering this one that didn't choose to paint a very dishonest image of failure and fear.

These Opportunities Don't Make Headlines

Earlier this year, a Chevy Volt caught fire three weeks after it had been crash-tested by the National Highway Traffic Safety Administration (NHTSA).

Apparently, a side-impact pole test cracked the vehicle's battery pack.

Sitting in a NHTSA storage lot, the car eventually caught fire.

Despite a number of rigorous crash-tests conducted by both GM and the NHTSA, this is the only case of a battery-related fire in a crash or crash-test of vehicles powered by lithium-ion batteries.

But let's face it; that little tidbit doesn't make headlines... nor did the story about the Chevy Volt that was totaled after a collision with a bus — and everyone in the vehicle walked away unharmed.

Take a look...

Of course, none of this matters.

Media outlets need to sell advertising. And nothing sells like a good old-fashioned car fire — unless, of course, it's an electric car fire!

But while partisan slaves and ideological zombies continue to devour the media lies and empty Washington rhetoric, we prepare to take advantage of mass integration of electric cars.

~~eac_rare_earth2~~

Two Ways to Invest

Last week, the International Energy Agency's World Energy Outlook indicated that passenger car fleets are set to double to almost 1.7 billion units, driving oil demand up to almost 100 million barrels per day by 2035.

And so we continue to plan on the rapid depletion of our remaining recoverable oil supplies by investing in two areas.

The first is easy: oil.

More specifically, some of the largest recoverable oil supplies on the planet.

Located in the Dakotas, not only are these operations going to keep our outdated internal combustion engines running for decades to come.

The second way to play this is alternative transportation fuels and technologies.

And there are plenty — including next-generation biofuels, natural gas-powered trucks, high speed rail & mass transit, and of course, electric vehicles.

What They Forgot to Mention

While the most recent electric vehicle headlines have been monopolized by the Chevy Volt fire (something that happened about five months ago),the industry continues to move at light speed.

Here's what the mainstream media has neglected to report:

Developer of electric car networks Better Place, Inc. just closed a $200 million Series C financing, putting the company's new valuation at $2.25 billion.
Nissan now expects cumulative sales of 1.5 million zero-emission vehicles in four years.
Honda will unveil three new electric vehicles at the 2011 Tokyo Motor Show.
Volkswagen has confirmed the 2013 production of the XL1 plug-in hybrid electric. This is the vehicle that boasts 170 miles-per-gallon.
A Citroen electric van has just set a range record of 621 miles on a single charge. This was not in a controlled environment or on some manicured track. The test was conducted on public roads with commercially available batteries (not prototype equipment).
Electrified vehicles are expected to grow at a CAGR of 19.5% between 2011 and 2017.
Nearly 8 million electric vehicle charging locations will be available across the globe in just about five years.
Fifteen electric car models will be available in the United States in just about two years. Today, there are three.

Yes, my friends, that Chevy Volt was on fire. And so is our portfolio, thanks to the rapid development of the electric car market.

~~nuclear_signup~~

To a new way of life and a new generation of wealth...

Jeff Siegel
Editor, Energy and Capital

Alternative Energy Investments

In 2005, a fast-talking Wall Street hack approached me with the “opportunity of a lifetime.”

It was a deal to get an early piece of a carbon trading firm that was going to make millions once they put a price on carbon.

I nodded respectfully, smiled and politely said, “No, thank you.”

Although I've made a fortune in clean energy, I've never been a fan of this whole carbon trading thing.

In fact when I first heard about it, my initial reaction was one of suspicion...

Why do you need to concoct some new market — when there is no way it won't be abused — to reduce carbon emissions?

As far as I'm concerned, this always seemed like a very difficult and somewhat shady solution to an easily rectifiable problem.

Irrational Economic Decisions

Before we go any further, understand that I am not about to jump into some heated climate change debate.

Quite frankly, I could care less if you think it's a real and urgent threat or just some left-wing conspiracy designed to line Al Gore's pockets. This is for you to decide — and it really has no relevance to our bottom line.

I will, however, not hold back when it comes to any questionable mechanism or technology designed to mitigate carbon emissions.

Just as we need to be aware of the opportunities in clean energy and sustainability, we also need to be fully aware of the bad ideas and flat-out scams.

Carbon trading is one such mechanism that I'm convinced will only benefit those who game the system.

Carbon capture and sequestration (CCS) is another questionable opportunity that seems to only be of any real value to the Washington elite.

Look at FutureGen, for instance...

A few years ago, FutureGen — which was Washington's centerpiece for its CCS strategy — was shelved due to the prohibitive cost of implementing the technology.

Although launched during the Bush administration, Dubya put the kibosh on the project after the price tag ballooned to nearly $2 billion... and that was just to build it.

But rest assured, there was plenty of meat left on that bone for a gaggle of pork-hungry bureaucrats in Washington. By August 2010, the Obama administration changed the name of the project to FutureGen 2.0 and then ponied up 1 billion tax dollars in an effort to get this dog to hunt.

But what continues to be paraded around as a solution to climate change is nothing more than just another Washington hustle...

~~solar_2~~

Some folks over at the CATO Institute put it best when they published the following analysis:

FutureGen has involved classic pork barrel politics since the beginning. As the department originally considered various project sites in Illinois and Texas, the state governments in those two states deployed aggressive lobbying to woo federal officials. Upon news of possible cancellation of the Mattoon project in 2008, Senator Dick Durbin of Illinois swung into action using all his tools as the second-ranking senator to continue the funding to his state. He even threatened to block appointments to the Department of Energy unless it reversed its cancellation decision.

Meanwhile, a House committee considered issuing subpoenas to the Department of Energy to get the details of the decision to change course on the project. Illinois Republicans and Democrats alike have sought to use various legislative means to continue funding for the Mattoon facility. In 2009, the Obama administration revived the project.

The FutureGen project illustrates again the near impossibility of making rational economic decisions with large business subsidy projects. Even if a government agency was well-managed and made decisions based on sound cost-benefit analyses, projects become incredibly politicized.

Don't Hold Your Breath

While the pork patrol in Washington continues to deal dollars for the CCS scam, the Institution of Mechanical Engineers (IME) in the UK is now demonstrating a new air capture technology that's designed to absorb carbon emissions.

The systems, which look a bit like giant flyswatters, are a thousand times more effective at absorbing CO2 from the air than trees of similar sizes.

After the CO2 is captured, it can be either stored underground or used in industrial processes.

I read that these things can cost about $20,000 a pop. This doesn't include maintenance and operational costs.

The IME has indicated it would take 100,000 of these artificial trees to offset all the carbon emissions from the UK.

I imagine a $2 billion price tag to offset all of the UK's carbon emissions isn't a bad deal; it certainly accomplishes the emissions reductions goal a lot quicker than phasing out coal-fired power plants and replacing them with cleaner power generation...

But even if the government bites, you and I aren't invited to that party.

Of course, if the global community does decide on a definitive price for carbon, these kinds of geo-engineering projects could definitely get a lot of investor attention.

But I wouldn't hold my breath for that.

International climate talks will continue to drag on, year after year. And they'll never come up with a legally-binding deal to cut emissions. Even if they did, there would be no effective way to enforce it.

Still, there are plenty of investors who continue to believe the world is going to come together and institute some kind of carbon emissions reduction deal that will magically spawn the integration of cleaner energy.

My friends, you don't need to wait around for that fairy tale to come true...

The integration of cleaner energy is already underway. And it doesn't need an international regulatory committee to make it happen.

The Big Picture: A $1.6 Trillion Opportunity

Without any enforceable global regulations, Germany now generates about 21 percent of its power from renewables. By 2020, it'll be 30 percent... and by 2050, 80 percent!

Here in the United States (which, until recently, has actually been a laggard in the integration of alternative energy), 12.25 percent of all our power generation now comes from renewables. By 2025, renewable energy is expected to supply more than 20 percent of all our power generation.

That's the reality.

And I can assure you this increase in alternative energy integration has almost nothing to do with climate change. Truth is, it's little more than the basic fundamentals of supply and demand that are dictating this transition of our energy economy.

Look, China is starved for power and has ponied up billions for wind farms and solar parks. Japan's jumping on the solar bandwagon as it looks for more power to make up for lost nuclear generation. And Germany and Switzerland are essentially killing off their nuclear power infrastructure and replacing it with wind, solar, and new energy efficiency measures.

Bottom line: Cleaner energy is a global movement worth an absolute fortune.

The global market for biofuels, wind energy, and solar is already worth more than $188 billion. By 2020, that number is expected to reach $349.2 billion.

And that doesn't even include smart grid systems (worth an estimated $46 billion by 2020), electric vehicles (worth an estimated $250 billion by 2020), high speed rail (worth an estimated $907 billion by 2020), and geothermal (worth an estimated $35 billion by 2020)...

Combined, you're looking at a total value of roughly $1.58 trillion.

~~solar_signup~~

To a new way of life, and a new generation of wealth...

Jeff Siegel
Editor, Energy and Capital

Wall Street Protesters Embrace Capitalism

I saw a picture of some Wall Street protesters holding a sign that read, “Capitalism Doesn't Work.”

If capitalism didn't work, that sign wouldn't exist!

Where did the materials come from to make that sign? Who paid to produce the ink that was used to print those words? Were they compensated, or is there some altruistic ink company that just donates 100% of its inventory?

Or maybe they just trade hugs for poster paint...

Look, I get it. I understand the anger and frustration. If you're not pissed off, you're not paying attention — and I don't care if you're unemployed and broke or have a great job and pull in six figures a year.

The tragedy that's been unfolding in this nation for decades is coming to a head, and it's primarily this younger generation that's going to pay the price for a long history of fiscal irresponsibility and, let's face it, blatant theft.

How long did we really think we could pilfer Social Security, leaving nothing more than a trail of worthless I.O.U.s?

In any event, no one should be surprised by the uprising.

Fortunately, not every Wall Street protester is an anti-capitalist moron.

Invest, Don't Protest

I've never really been a big fan of these kinds of protests. For the most part, I don't think they work.

These protesters aren't going to put the banks out of business. They're not going to bring down Goldman Sachs or end corporate special interests.

I do think it's encouraging that so many younger people are making their voices heard by exercising their First Amendment rights. But the truth is those voices are falling on deaf ears.

Every day these folks spend shouting on Wall Street is really just another day their future is being dismantled.

And drum circles and chain-smoking won't stop it.

That being said, these recent protests have also smoked out a new generation of investors that embrace the capitalist spirit, but in a way that supports rational, long-term, sustainable economic growth. They call themselves Slow Money Investors, and they're looking to instigate change — not by squatting in makeshift campsites in Zuccotti Park, but by investing in profit-bearing opportunities that contribute to the health and sustainability of the global community.

~~solar_2~~

Long-term Profitability

At the heart of everything, I am both a capitalist and an environmentalist. I make no apologies for either, and believe that the two are not mutually exclusive.

This is why I've spent years investing in and profiting from alternative energy and organic food markets. These are my passions and have been my top-performing investments since 2005.

So when I first came across the Slow Money movement a few years ago, I was intrigued.

Although I'm not 100 percent sold on all of their principles, there's one truism that was expressed by Slow Money Alliance Executive Director Ari Derfel that I believe is important enough to include here:

The vast majority of our investment dollars perpetuate broken economic and ecological systems on this planet. If we're going to change that, we need to invest in things that have inherent value here, close to home. We need to let our money work over time.

I couldn't agree more — particularly the part about investing in things that have inherent value here at home. And that's why I decided to share this with you today.

The markets are crazy; the global economy is completely unstable and fear continues to permeate throughout the world. While there are solid, long-term investments that will pay off better than most (particularly in the fields of oil and gas and alternative energy), we continue to seek additional opportunities in sustainability and long-term profitability.

This is something Slow Money can offer.

Another Farmland Opportunity

One of the goals of the Slow Money movement is to make it possible for all investors — not just accredited investors — to profit from the rebuilding of local and regional economies. The primary focus of Slow Money is on food systems, as they are the basis and foundation of local and regional economies.

I looked through a number of funds that were vouched for on Slow Money's website...

I have to say, this is where I think the movement could lose a bit of steam. While I completely support long-term, sustainable investment opportunities, particularly in the area of local and organic farming, what some of these funds are offering in terms of returns is pretty weak.

You're not going to bring in the masses (the numbers that'll give you real impact) with returns that I could get on a CD or money market.

I don't believe this is a realistic way to encourage robust participation in the Slow Money movement.

I'm not saying they need to pony up fat double-digit returns year after year; but anything shy of what I could get from a solid, dividend-bearing stock is not going to put the asses in the seats.

Now there were some funds available for accredited investors that were a little more realistic. Farmland LP actually has a pretty interesting model, describing itself as the only fund of its kind, providing its investors with the security of owning low-risk farmland while benefiting from the value added by converting to organic farmland. Returns are driven by cash flow from leasing farmland and land appreciation.

All in all, I do believe the Slow Money movement still offers an additional and common sense approach to investing in the 21st century — especially with its focus on food systems.

I'd just like to see decent enough returns to make it more worthwhile to the average Joe who wants to support this kind of investing, but also needs to see an acceptable return on his investment. And from what I can tell right now, that doesn't seem to exist. If I'm wrong, I welcome any emails from folks who can point me in the direction of a solid Slow Money investment for the average retail investor.

Of course as I wrote a few weeks ago, organic farmland remains one of the safest and most profitable investments you can make these days...

And whether it's via the Slow Money route or going out and physically purchasing a few acres for yourself, it's an investment you should be making now.

To a new way of life and a new generation of wealth...

Jeff Siegel
Editor, Energy and Capital

Obama Solyndra Scandal Heats Up

Any time you see the words “internal memo” in a news report, you know it can't be good.

You'd think these guys in Washington would know better by now...

If you're going to do something shady, don't use email as your method of communication. Even drug dealers know better than to use email, land lines, or traceable mobile phones.

Don't get me wrong; I'm not comparing common drug dealers to politicians.

After all, drug dealers know how to support job creation in a real free market.

Laws? What Laws?

So a series of emails that were probably never meant to be shared with the public have shown that an assistant Treasury secretary told the deputy director of the Office of Management and Budget that the Solyndra deal could violate federal law because it put investors' interests ahead of taxpayers' interests.

This isn't new.

You think all those ethanol subsidies didn't put investors' interests ahead of taxpayers' interests?

You think all those agricultural subsidies don't put investors' interests ahead of taxpayers' interests?

You think all those “clean coal” subsidies don't put investors' interests ahead of taxpayers' interests?

Hell, just last month the DOE awarded $14 million to six carbon capture projects — $14 million at a time when they're supposedly getting tough on spending.

Meanwhile, the $4 billion welfare check for the oil & gas industry every year is still getting cut...

Interestingly, while the Obama administration's Solyndra scandal is making the rounds on all the cable news shows, we haven't heard much about another scandal coming out of the White House. And this one is connected to a $13 billion project.

~~solar_2~~

A Very Cozy Relationship

The Keystone XL pipeline that will one day move millions of barrels of oil from Western Canada to the Gulf Coast is going to happen despite valid environmental concerns — some of which revolve around running the pipeline over a major aquifer that supplies drinking and irrigation water to large areas of several different states.

Regardless, the pipeline is pretty much a done deal. Because no matter how you slice it, our very dangerous reliance on foreign oil will always trump the wants and desires of environmentalists.

I don't say this to be antagonistic; it's just the reality that we've created.

That being said, just like every deal that's ever been done between Big Oil and Big Government, some bureaucrat is getting a piece of the action.

Turns out one of TransCanada's high-priced lobbyists was once a staffer on Hillary Clinton's presidential run. And guess who has the final word on whether or not to approve the Keystone XL pipeline?

That's right, Hillary Clinton and the State Department.

But wait, there's more...

Employees from an outside lobbying firm called McKenna Long & Aldridge, which worked for TransCanada, donated more than $41,000 to Clinton's 2008 campaign.

Then there's another lobbyist from the same firm — one that was appointed by President Bill Clinton to serve as Chief of Staff to Gordon Giffin when he was the U.S. ambassador to Canada: Maryscott Greenwood officially lobbied on TransCanada's behalf until 2008 on U.S. pipeline permit policy.

And we can't ignore DLA Piper, whose employees and PACs contributed more than $480,000 to Hillary Clinton's 2008 run. This was the single largest source of funding for a corporate entity to Clinton.

And DLA Piper partner James Blanchard sits on the board of Enbridge, a major tar sands pipeline company. You may recall Enbridge, as this was the company that spilled about 20,000 barrels of tar sands oil into Michigan's Kalamazoo River last year (and as of today, still hasn't submitted cleanup plans for 2012)...

Look, I'm not bringing this up because I have a problem with tar sands operations and continuing our unsustainable reliance on oil.

(Though I do think the nation would be better served by developing cleaner sources of fuel and alternatives to the very outdated internal combustion engine.)

Nonetheless, the world's quest for oil will not be stopped. Those tar sands operations will be developed, and that oil will be moved one way or another.

And the growth in alternative forms of transportation fuels and power generation will also continue, and at a much faster rate than fossil fuels. The basic fundamentals of resource depletion will see to that.

Yet even with our oil reliance as strong as ever — and our development of alternatives an absolute necessity if we have any hope of maintaining our very fortunate way of life in a post-peak world — our lawmakers continue to create this illusion that it is their influence, and not an honest free market, that will dictate progress.

It is this very illusion that allows for some very lucrative relationships.

Scandals Breed Panic, Panic Breeds Profits

Well-publicized or not, cozy relationships between corporate interests and Washington are nothing new.

I don't care if it's GE or Halliburton, TransCanada or Solyndra — if a deal's getting done, it's getting done because palms were greased and favors were exchanged.

And no matter how many “internal memos” are exposed or how many investigations launched, the government will still make bad decisions with your money. The power brokers and gatekeepers will get their winks, nods, and a few wrist-slaps here and there, and the same cycle of backroom deals and bad decisions will continue.

Now was this Solyndra mess a Watergate-sized scandal? Probably not.

Has it helped facilitate a panic-stricken run from solar stocks? You better believe it.

And nothing puts me in a better mood than panic-stricken sellers dumping their insanely cheap shares in my lap...

The solar market is bearing gifts, my friends. They're called buying opportunities.

And while we may not be able to stop the Washington machine from spending our tax dollars like drunken rappers on a music video shoot, we can still grow and protect our wealth.

We have to. It's the only way we'll be able to survive a global economic meltdown in a post-Peak world.

~~solar_signup~~

To a new way of life, and a new generation of wealth...

Jeff Siegel
Editor, Energy and Capital

Agriculture a Safe Investment

The farm hasn't been worked in nearly 30 years.

The remnants of a once-thriving apple orchard make it the perfect set for a horror movie: skeleton trees, blankets of fog in the early morning, and an old farmhouse that leans to the left, creaking every time the wind blows.

It's not easy to get to, either. The half-mile road that snakes along the banks of a wild trout stream is barely discernible after decades of neglect.

And it gets so dark out there, the real estate agent pleaded with us to start heading out after the sun started to dip into the horizon...

We agreed, but scheduled another visit next weekend to further tour the property.

Because this place is, without a doubt, an oasis of safety and prosperity.

About 85 acres in total, the land is fertile, the stream is overflowing with brook trout, it's connected to the grid, and it's one of the few investments I'm willing to pony up for these days.

Down on the Farm

Aside from a few solid oil and gas plays — and of course a handful of insanely cheap alternative energy stocks — there's no doubt that in this schizophrenic market, farmland is a good bet.

Theoretically, it's a nice hedge against inflation. And while it is not liquid, it does lack the volatility that's sending most investors off the deep end these days.

Of course, as my colleague Nick Hodge pointed out last week, not everyone can go out and buy several acres of farmland. But you can still invest in agriculture through trusts, like the Texas Pacific Land Trust (NYSE: TPL) — or you can also pick up an EFT, like Market Vectors Agriculture (NYSE: MOO), which holds some of the more obvious ag plays like Potash Corp (NYSE: POT) and Archer Daniels Midland (NYSE: ADM).

I also know of some folks in New York who pooled their money back in 2009 to create a company that invests in farmland. These are city guys through and through, so they have managers that run the farms.

These guys aren't billionaires; they're not actively turning thousands of acres into industrial operations. But while their condos in New York City and homes in New Jersey continue to lose value, the value of their farms in Pennsylvania and New York have actually increased...

And it's only going to get better.

Meaty Growth

Thanks to a rapidly growing middle class in developing nations, farmland is becoming a lucrative investment.

You see, the ascension of a new middle class has resulted in a growing demand for “richer” diets that require more farmland and more imports.

For example, in India — where a growing population of wealthy Indians is now eating more animal protein — animal feed sales have surged. This is because it can take anywhere between 6 and 16 pounds of grain to get one pound of beef (depending upon production practices).

As India's protein requirements increase, so too will the demand for animal feed, which in many cases of conventional meat production results in an increased demand for corn.

Interestingly, the USDA announced just last week that world stockpiles of corn could plunge to 117.4 million metric tons at the end of the 2011-2012 season. This would be the lowest level in five years.

~~solar_2~~

Organic Growth

While populations in developing economies are now starting to enjoy diets rich in meat protein, consumers in the U.S. continue to pour billions into organics.

Back in 2009, analysts were surprised to find that organic food sales grew by 5.1 percent, compared to 1.6 percent in total food sales. The assumption was that organics were seen as specialty items and wouldn't be able to swim upstream against the backdrop of a recession.

We knew better. We argued that for organic food consumers, organics are not considered luxuries or “specialty items.” And while those who expected the worse for the organic food market and organic food retailer Whole Foods Market (NASDAQ: WFM) in particular, we recommended buying shares of Whole Foods Market.

That was on November 14, 2008, when the stock was trading around $9 a share. Today it trades around $64.00, down a bit from its 52-week high of $73.33 a share.

In 2010, the U.S. organic industry grew at a rate of 7.7 percent, which outpaced the growth of total food sales (hovering around 0.6 percent). Most of this growth came from organic fruits and vegetables, which represented about 40 percent of total organic food value, and about 12 percent of all U.S. fruit and vegetable sales. Organic dairy, valued at about $4 billion, took close to 6 percent of the total U.S. market for dairy products.

Now I know some folks like to mock organics, claiming that they're not any healthier, nor do they taste any better. And that's fine if you want to believe that. But as an investor, you'd be foolish to ignore the growth trend.

The expected CAGR for the U.S. organic food industry from 2011 to 2015 is around 14 percent. And organic farmers will continue to benefit.

The farm I'm looking at hasn't been worked in decades, which means it has been free from the types of pesticides, herbicides, and synthetic fertilizers that are prohibited by the USDA's organic certification program — a definite plus.

One of the farms owned by my New York friends meets all the requirements for USDA organic certification. Of the three farms they own, this one is the most valuable.

Peace of Mind

Of course, one of the great benefits of farmland is peace of mind.

It's easy to sit behind our computers in our climate-controlled offices, buy $3.00 cups of coffee at the corner cafe, and drive off to the supermarket anytime we want a pre-cooked rotisserie chicken...

But these are luxuries afforded to us by cheap energy.

When oil hits $300 and your electricity rates quadruple in the next two to three years, you can kiss those days goodbye. I still don't know how most folks are going to make it. So few can barely get by today.

One thing is certain: You can always provide for you and your family when you have fertile soil, a fresh supply of water, and a little firepower. Throw in some solar panels, a super-efficient wood stove, and maybe a little livestock, and you're good to go.

For me, there are few things more valuable than peace of mind.

To a new way of life, and a new generation of wealth...

Jeff Siegel
Editor, Energy and Capital

U.S. Solar Stocks

“You should come to China, Jeff. We will show you progress.”

This is how my conversation started out with a Chinese energy investor I met last week while on the road.

His name was Feng. He drank Budweiser, followed American baseball (while mocking my beloved Orioles), and has been a loyal Green Chip Stocks reader since 2006.

Feng is a smart guy. A chemist by trade, he loves to talk tech.

But he actually made his fortune in real estate and owns a number of rental properties in Arizona and California. He spends most of his time in Shenzhen, but also has a home in Arizona and a mistress in Thailand.

His English is nearly perfect and he definitely has the gift of gab. I should know... I spent three hours with the guy at an airport bar in Denver.

And after a steady flow of booze and overpriced bar food, he really started going off. Fortunately, with his permission, I was able to record a good portion of his tirade.

China is in control now. We buy you, your technology, your culture. We make it work. Your unions and your politicians attack China for not being fair. What's fair? You can't compete with our drive so you make excuses. We lead the clean energy race because we need power. Lots of it. More than you. So we support our solar companies, help them grow so they can service China and compete globally.

You? Your government raids some stupid little solar company that could never compete with China in the first place. Why? For politics? You waste time talking. We're doing. Your incompetent leadership has crippled your ability to be an economic leader. So China will take over now.

OK, so Feng is kind of a loudmouth.

And while I do agree with his take on our incompetent leadership, his assessment of the U.S. clean energy market isn't completely accurate...

America's Solar Swagger

I've been profiting from solar for close to a decade now.

I know the industry like the back of my hand. And from utility-scale developers to laboratory tech-geeks who make me sign NDAs and go through security checks before visiting their operations, it's not hard for me to get access to the latest developments in this sector.

After all, I was one of the few believers back when no one on Wall Street cared. And that has afforded me a sort of “all-access” pass in the solar space — one I am grateful for.

But I have to tell you that when it comes to solar manufacturing muscle, hardly anyone can touch the Chinese. It may be a bitter pill to swallow for a lot of folks, but it's a reality nonetheless.

That being said, the United States is not a laggard in the solar game.

Despite what Feng may want to believe, the American solar industry boasts a well-deserved swagger.

While it is true that most of the solar modules in this country are imported (about $1.2 billion worth in 2010), the U.S. actually generated $1.9 billion in solar exports last year. Most of this was from capital equipment and polysilicon.

Truth is, when it comes to solar, we're actually a net exporter.

Of course, when it comes to module manufacturing, the Chinese still run the show. And it's for this reason you'll find few analysts backing non-Chinese manufacturers. There's just no wiggle room on price, and aside from a couple of exceptions, no one can compete with China's low-cost production.

This is why Chinese solar companies like Trina Solar (NYSE: TSL), Suntech Power (NYSE: STP), and cell producer JA Solar (NASDAQ: JASO) remain the darlings among analysts.

However, a couple of weeks ago, one U.S. company did send a strong message after it announced a new efficiency for its thin-film solar cell that could allow it to outpace Chinese cost reductions...

And It Came from Arizona

Phoenix-based First Solar (NASDAQ: FSLR) isn't a new name in the world of solar.

In fact, after the company went public a few years back, the stock catapulted from about $30 to more than $300 in less than two years.

Of course, it's nowhere near that today. But it won't be long before this thing starts heading north again...

Because with First Solar's latest efficiency advancement, the company will actually be able to compete against fossil fuels — without government aid. And that's the key.

You see, First Solar recently developed a cell that is expected to yield a 15.3% conversion in mass production. That compares to about 11% today.

The efficiency yield on a typical, non thin-film cell from Chinese competition is about 15%. But those come in at a higher cost per watt.

Trina Solar — one of China's low-cost leaders — produced panels for $1.16 a watt in Q2. First Solar produces its thin-film panels for $0.73 per watt. And the higher efficiencies are expected to drive costs down even further.

These new cheaper, higher efficiency cells will be phased into production in Q4.

Looking for a Bargain?

Despite the bullish news on First Solar's ability to compete against both the Chinese and the heavily-subsidized fossil fuel industries, the stock has been hammered recently.

This is mostly due to the Solyndra mess and the fear that any solar company on the books to get a few bucks from Uncle Sam will have to wait out these dog and pony show investigations.

First Solar currently has a few billion in federal loan guarantees for new utility-scale developments.

Although last week, we did get word that the DoE informed First Solar that it didn't have enough time to process the company's loan guarantee application for its 550-megawatt Topaz solar farm...

But First Solar is actually already in advanced talks regarding the sale and financing of that project utilizing a different structure that is not dependent on a DoE loan guarantee.

Nonetheless, the stock hit new lows last week, offering bargain hunters an opportunity to pick up some cheap shares. This is basically a $125 stock trading at around $70.

Now, I know some folks are buying the lie that, based on the Solyndra debacle and not on the mountains of objective data, there's no future in solar.

But as one analyst pointed out last week, interpreting the end of the U.S. solar industry because of Solyndra is like saying there's no future for the Internet because Netscape went out of business.

Don't let the purveyors of lies and misinformation steer you in the wrong direction on this one...

The future of solar is bright, and the money we're going to continue to make in this sector is very, very real.

In fact, our latest solar play — a small tech firm that's developed a solar-powered window — is one of the few solar stocks that's actually been making us money while the rest of the market crashes and burns.

~~solar-sign-up~~

To a new way of life, and a new generation of wealth...

Jeff Siegel
Editor, Energy and Capital

P.S. These solar companies like First Solar know that with the right help from government subsidies, solar will completely overtake fossil fuels. What proof do they have? These energy figures show just how vital solar is to the future of the U.S.

Cheap Energy Stocks

Mikio Katayama is a very rich man.

And as president of the largest manufacturer of solar panels in Japan, Sharp Corporation (PINK SHEETS: SHCAY), he's about to become even richer.

For this he can thank Japan's new renewable energy law, which establishes a feed-in tariff for solar.

With that new law in place, Japanese domestic shipments of solar panels are now expected to increase by as much as ten times — and in a fairly short amount of time.

Sharp's going to make a boatload. And I'm sure there's going to be a nice little bonus in it for Katayama.

But as I mentioned in an article a few weeks ago, Japan's new love affair with solar will not only benefit domestic suppliers like Sharp and Panasonic Corporation (NYSE: PC), but also Chinese manufacturers that have a cost advantage the Japanese will not be able to resist.

Companies like Suntech Power (NYSE: STP) — which currently has the largest share of Japan's solar market among foreign suppliers — and Trina Solar (NYSE: TSL), which remains the low-cost leader in the space, will likely land some significant deals.

And of course, new solar tech firms here in the U.S. could also soon find their corporate lobbies filled with Japanese delegations armed with the authority to do multi-million-dollar deals...

My favorite solar tech play right now is a producer of solar windows that could drastically cut prohibitive manufacturing costs, something the shallow-pocketed Japanese are looking for right now.

Of course, the new renewable energy law in Japan also includes wind and geothermal. And lately, there's been a lot of buzz about the latter. After all, when you're situated on the Pacific Ring of Fire, geothermal resources aren't hard to come by.

The truth is Japan possesses some of the world's largest reserves of usable geothermal energy. Theoretically, the country could produce about 80,000 megawatts, thereby meeting more than half its electricity needs...

But that's never going to happen.

Where the Smart Money Is

Japan is a resource-poor nation. And it's not swimming in cash. Coal, natural gas, and solar are going to make up for the loss of nuclear over the next couple of decades. The infrastructure already exists, and none of these solutions require capital-heavy exploration projects.

While geothermal is one of only two forms of renewable energy that can provide baseload power (the other being marine energy), and is actually fairly inexpensive to operate once it's up and running, it does require costly exploration and drilling.

Japan doesn't have the cash for that kind of development, and I can't imagine there are too many geothermal developers willing to do all the heavy lifting without the government providing a sizable chunk of the funding...

Also worth mentioning is that most of the sites that would boast the best geothermal potential are found within the country's national parks, which serve the tourism industry. These are regions where construction is prohibited. That's not going to change.

So, while the Japanese certainly have a wealth of geothermal resources under their feet, I wouldn't count on much development in that area.

Most of the solid geothermal investors I know won't even venture outside of the U.S., the Philippines, Indonesia, or a few scattered Central and South American countries. And these days, most of these guys — I'm talking about the folks who made millions in geothermal back around 2006 and 2007 — only seem to be interested in enhanced geothermal systems (EGS).

And that's because the potential production from EGS is as much as...

130,000 Times Our Annual Energy Consumption!

EGS is the holy grail for the geothermal industry.

It's basically “fracking” for geothermal. But because we're simply talking about heat — and not a dedicated spot holding a finite resource — with EGS, geothermal power plants can be set up practically anywhere.

You can't do that with wind or nuclear.

And the best part is with EGS, you can produce electricity cheaper than anything else we use today... and the resource is nearly inexhaustible.

~~solar_2~~

Researchers at MIT were quoted in a 2006 report:

By almost any criteria, the accessible U.S. EGS resource base is enormous — greater than 12 million quads or 130,000 times the current annual consumption of primary energy in the United States.

That's huge! And so is the potential payout for those who get in early.

Right now, there's really only one way to play EGS, and that's with a small geothermal developer in Idaho that's been fed about $100 million from Uncle Sam.

It doesn't take a rocket scientist to know which company the government picked to run this show...

While I'm no fan of the government deciding the winners and losers in the energy game, I sure as hell have no problem using their arrogance to make money.

Bottom line: Washington has already decided which company it likes for EGS. And that's the one we're buying now.

The company is expected to release the first round of results from its EGS project in a matter of months. Once those results hit, we'll be looking to sell into the buying spree.

Here's some background on the company to bring you up to speed.

To a new way of life, and a new generation of wealth...

Jeff Siegel
Editor, Energy and Capital

Electric Vehicle Investment

A few years ago, I attended a fundraising meeting for Fisker Automotive.

This is the company that's just delivered the Fisker Karma, the world's first pluge-in hybrid electric luxury car.

Now although I did not partake in the early raise, I have no doubt those who got in first will walk away with a nice little profit.

And quite frankly, it's an absolutely beautiful car...

In fact, when it comes to luxury cars, I think the Fisker Karma is one of the most impressive pieces of machinery I've seen a very long time.

And of course, I wish nothing but success for the company — after all, Fisker is the reason there are 120 less out-of-work Americans today. Those folks will be staffing an old General Motors plant in Wilmington, Delaware.

All in all, it's a great company with a great product.

But to be honest, I've never been all that interested in high-end luxury electric cars — at least, not from an investment standpoint...

Instead, I'm more interested in the development of electric vehicles for regular middle-class folks.

The fact is, these are tough times. And as we head further into the vortex of Peak Oil, it's not going to get any easier for struggling middle-class families that rely on their gas-guzzling cars to get them to and from work and school every day.

While the Fisker Karma is beyond impressive, I'm looking forward to seeing the regular guy's electric car: a vehicle that can boast the same swagger as the original Ford Model T - affordable to the common middle-class American.

One Metal, Infinite Solutions

The U.S. Army wants it to build drones...

NASA's already used it to mount telescopes...

Computer companies think it's the key to faster processing...

And it's all controlled by a tiny, 20-cent mining and manufacturing firm.

A Model T Moment

Thanks to Ford's innovations (specifically, assembly line production), 15 million Model T's were produced and sold in less than 20 years.

In less than two decades, the Model T replaced the horse.

Of course, when Henry Ford first started laying the groundwork, he heard time and again that the horse could never be replaced by an automobile. In 1903, the president of the Michigan Savings Bank actually told Ford's lawyer the automobile was merely a novelty, a fad.

Today, we are at the cusp of a similar transition, moving from outdated internal combustion technology to hybrid and electric propulsion technologies. And there are plenty of folks today who have about as much wisdom as that old bank president in Michigan more than a century ago...

They're looking for every excuse in the book to criticize the very real disruptive power of electric cars. I suspect folks like these will continue to carry on about it. But that's of no concern to us. Because the bottom line is that no matter how you slice it, the transition to hybrid and electric propulsion is already underway.

It will be a necessity in a post-Peak world, not a cute little side project for tree huggers and wealthy eccentrics.

And there isn't a damn thing the detractors can do to stop it.

The Proverbial Middle Finger

While the first Fisker Karmas arrive for those who got in line early — former Secretary of State Colin Powell and insanely wealthy actor Leonardo DiCaprio, just to name two — the major automakers are grinding away to get their "less flashy" electric offerings out the door as well.

The Chevy Volt and the Nissan LEAF were the first to hit. Both are nearly impossible to get your hands on as there is limited supply to meet demand: Fleet operators got first dibs, and the remaining inventory was delivered to those who put down their deposits nearly two years ago.

Both GM and Nissan are plugging away to get these vehicles into the hands of the innovators and early adopters that will put these vehicles through their paces.

Meanwhile, Mitsubishi's “i” will be available in the U.S. market next year, as will the Ford Focus Electric. Beyond that, there's essentially a conga line of new electric offerings coming out over the next three to five years from every major automaker on the planet...

And every year, they'll become less and less costly to produce — getting us to the point where the average middle-class American can afford to buy one, and then happily give the proverbial middle finger to every hostile oil-producing nation that's got us by the ball bag.

The New Saudi Arabia

A natural event took place that moved apart two major landmasses...

As a result, over 70 billion barrels of King Saud's oil were lost.

Today, this untouched resource is finally being recovered — and you'll never believe who just bought up the single biggest share.

Click here for the details.

Growth is Good!

If you had a chance last week to read my new free monthly letter, Modern Energy Monthly, you saw that the latest data from Pike Research indicates a 19.5% CAGR between 2011 and 2017 for vehicles in the “electrified” vehicle category. That figure compares to 3.7% for the overall vehicle market during the same time period.

And for charging infrastructure, Pike has forecast a total of 7.7 million electric vehicle charging locations across the globe will be operational in just about five years. (That doesn't include electric outlets already in garages, driveways, or near parking spots.)

When we first started covering the electric vehicle market, we focused most of our attention on the high-performance battery companies. And we did quite well by hitting that angle early. We also played a few lithium producers, which made us a nice chunk of change.

But when looking at the electric vehicle market today, we're focusing our attention on the infrastructure — more specifically, charging infrastructure.

A 56% Gain in Less Than Two Months

A few months ago, I wrote about charging infrastructure and touted a company called ECOtality (NASDAQ: ECTY).

At the time, the stock was trading around $3.20 a share. By the end of May, it catapulted to $5.24, flying past our initial price target of $5.00.

Most who played this stock cashed out after it crossed the $5.00 mark for a 56% gain in less than two months. Not too shabby!

Of course, after an 8.5 million share offering at $2.50 and a broader market nosedive, the stock fell hard. Today it trades for just about $2.00 — a nice discount for those looking to play this one again for another quick ride.

The company remains solid (thanks in some part to the sizable stake ABB (NYSE: ABB) took earlier this year) and continues to install a significant portion of all new charging stations across the country. In the second quarter, the company installed 1,892 chargers.

For Q2 2011, the company boasted 40% growth in revenue while booking new deals with car2go (a subsidiary of Daimler North America), American Electric Power (NYSE: AEP), which landed a deal with Wal-Mart/Sam's Club to install ECTY's stations, and Sears Holdings.

And of course, the company is still fulfilling its 11,000 charger order for the DOE-supported EV Project that's deploying infrastructure in 18 major cities...

Bottom Line: ECOtality is the only pure electric vehicle charging play that's generating revenue and actively building out its network.

And at $2.00, it's a bargain.

To a new way of life, and a new generation of wealth...

Jeff Siegel
Editor, Energy and Capital

Nuclear Fuel Profit Opportunities

A few years ago, I listened to legendary architect William McDonough speak at a green building conference.

During his presentation, he shared a story about someone from the Department of Energy asking him what he thought of clean nuclear power. His response:

I love nuclear power. I love clean nuclear power. I am especially fond of fusion. I think we should spend trillions of dollars immediately on fusion capture. And thank God, literally, we already have our reactor, the sun, exactly where we need it 93 million miles away.

That story alone got McDonough a standing ovation from the very large crowd of clean energy purists. It also opened up a great dialogue between nuclear supporters and nuclear opponents, and was probably the first time I had ever seen solar advocates and nuclear power advocates discuss the pros and cons of both energy sources in a rational manner.

It is true that the power of the sun is enormous; it delivers more energy to the earth in one hour than we use in a single year from fossil fuels, nuclear, and all renewable sources combined.

And if you're a regular reader of these pages, you know that on a global scale, we are finally starting to utilize this inexhaustible resource... which is also helping us make an absolute fortune in solar — particularly when it comes to new solar technologies.

King Saud's Oil... Stolen

As much as 70 billion barrels of Saudi Oil have gone missing.

And you'll never imagine who the culprit behind this $7 trillion heist is...

In the next year, a brand-new oil dynasty will emerge in the unlikeliest of places.

Don't miss out. Get the full story — right here, right now.

Thanks, Japan, for Making Me Rich!

As you read last week, the Japanese government is about to pass one of the strongest renewable energy laws the world has ever seen.

And according to Japan's trade minister, Banri Kaieda, the bill that was just passed by the country's lower house of parliament will stimulate the kind of growth in solar that'll amount to six times Japan's solar panel sales in 2010.

Needless to say, we've already staked our claim. In fact, our most recent solar technology play skyrocketed last week after news of the bill's passage hit the news feeds.

That one was up over 40% in less than a week.

Japan's upper house of parliament is now expected to sign off on this new bill in just days. When that happens, I expect to see at least another 40% jump on the stock.

I've already alerted my Green Chip Stocks readers to it.

Also worth noting is that the most likely contender in Japan's next election is Seiji Maehara, who has gone on record saying Japan should phase out nuclear power over the next 20 years (though I'm not actually convinced Japan will be able to completely phase out nuclear over the next two decades).

Bottom line is that Japan is a resource-poor nation. And while the country's solar market will experience the kind of growth most investors see only once or twice in a lifetime, it will also have to keep some of its nuclear power online.

However, it's looking more and more like the only way this will fly with voters is if they can make nuclear safer and cheaper to operate.

And there's only one company that can make that happen...

A Massive Solar Glut Destroyed Solar Stocks in 2011

Well, except for one...

It's a tiny little engineering firm in D.C. that developed a new technology that's
300% more powerful than regular solar panels... can be sprayed onto any surface... and it doesn't even need direct sunlight to work.

— Here's how it works —

Safer, Cheaper Nuclear Power Generation

Boasting the ability to significantly reduce the risk of meltdowns, some nuclear insiders now believe one company could control nearly the entire nuclear fuels industry in just ten years.

And by the way, some of the smartest and richest investors I personally know — I'm talking about guys who boast a net worth in the tens of millions — already own a piece of this company.

They bought it dirt cheap, but you can actually pick some up today for about $0.22.

At twenty-two cents, this is probably the best bargain I've ever seen for a stock of this nature.

Truth is, this thing could easily be a buck by early next year, running to well over $5.00 before some behemoth like GE comes along and writes a fat check for a controlling interest.

~~nuclear_signup~~

To a new way of life and a new generation of wealth...

Jeff Siegel
Editor, Energy and Capital

The Next Solar Bull Market

On a cool, rainy afternoon last Friday, a 6.8 magnitude earthquake jolted northeastern Japan.

A tsunami alert was issued right away for the Fukushima region, a place that needs no introduction these days.

But for the most part, folks paid little mind. After all, these types of things have become quite common.

Although there's no denying that after the Fukushima nuclear disaster, the nation's opinion of nuclear has changed quite dramatically...

Today, roughly 70 percent of Japan supports the complete abandonment of nuclear power generation.

The problem is before the Fukushima disaster, nuclear power accounted for about 31 percent of the country's electricity needs. That's a pretty big gap to fill for a nation with minimal natural gas reserves and a demand for coal that is primarily met by Australian exporters.

So it's no surprise the Japanese government has been toying around with the idea of subsidizing solar and wind as a way to fill some of that gap.

And last Friday, the toying ended. Now it's official...

Japan's Going Solar!

Behind the backdrop of that 6.8 magnitude earthquake, Japan's lower house of parliament gathered on August 19th to pass new legislation that will now heavily subsidize solar.

And when I say heavily, I mean heavily.

For solar, rates will likely command a 45 percent premium over current grid prices. And these rates are expected to last a full 15 years.

The question is, How can this information help you make money?

The Ultimate Safe Haven

Gold has become the world's go-to investment.

But it's often misunderstood...

That's why we partnered with one of the world's foremost gold experts to answer all your questions.

To participate, sign up for the free seminar here.

Sparking a Rush on Solar Stocks

In 2000, Germany restructured its own very generous feed-in tariff for solar.

The result?

From 2000 to 2010, Germany's installed solar photovoltaic capacity experienced a staggering CAGR of 66 percent and basically took the solar industry from niche player to a billion-dollar behemoth that now boasts global revenues in excess of $100 billion.

Germany's feed-in tariff was so significant that not only did it enable the country to get nearly 20 percent of its power from renewables (rising to 35% by 2020 and 80% by 2050), but it also sparked a rush on solar stocks.

From solar module producers to cell manufacturers, the solar industry continues to benefit from massive growth. And it all started with Germany's feed-in tariff.

But here's the thing: Germany was never in the same vulnerable position as Japan is today. Germany wasn't crushed by a giant tsunami that ultimately led to the melting down of some of its nuclear power plants.

Japan's energy crisis is unlike anything we've ever seen, and the Japanese government is faced with two very uncomfortable realities:

The majority of Japanese voters will never support nuclear power generation again; and
Without solar, Japan will become even further reliant upon foreign energy sources.

This is why Japan is about to pony up big-time to get as much solar integrated as fast as possible.

And this is why solar investors are now lining up at the door to get a piece of this action.

King Saud's Oil... Stolen

As much as 70 billion barrels of Saudi Oil have gone missing.

And you'll never imagine who the culprit behind this $7 trillion heist is...

In the next year, a brand-new oil dynasty will emerge in the unlikeliest of places.

Don't miss out. Get the full story — right here, right now.

How to Play Japan's Solar Transition

The immediate beneficiaries of Japan's new solar subsidies will be Mitsubishi Heavy Industries (PINKSHEETS: MHVYF), Panasonic Corporation (NYSE: PC) and Sharp Corporation (PINK SHEETS: SHCAY).

Chinese solar players like JA Solar (NASDAQ: JASO) and Suntech Power (NYSE: STP) will also get some of this action.

But for the big money, we're not necessarily interested in just the “immediate” beneficiaries. No, we're looking at the disruptive players, too. We're interested in the companies that are going to swoop in with new pricing structures and new technologies that will enable Japan to get this done — but at a much cheaper cost than what Germany had to pony up twenty years ago.

From low-cost cell manufacturing out of China to technological breakthroughs like solar plastics and solar windows, Japan is going to embrace any solid technology that will enable large-scale integration without taking on any more large-scale debt.

~~solar_signup~~

To a new way of life, and a new generation of wealth...

Jeff Siegel
Editor, Energy and Capital

Rare Metal Profits

What price must gasoline hit before consumers accept electric cars?

$4.50 a gallon, according to Harvard...

Last week, researchers at the Harvard Kennedy School announced their findings in the report, “Will Electric Cars Transform the U.S. Vehicle Market?”

In addition to the price of gasoline, researchers found that in order for Americans to buy electric cars, those cars must be competitive with conventional vehicles on cost, range, and fueling convenience.

I couldn't agree more.

And the path to competitiveness will all boil down to one thing: batteries.

464% in Less Than One Year

Much of the high price associated with electric cars can be attributed to the high cost of batteries. Batteries are actually the most expensive components of electric cars.

But new battery technology being developed today will offer much cheaper production costs in the very near future.

And advanced battery technologies that will be integrated in less than ten years will also allow for increased range. With that range comes the ability to travel longer distances between charging stations.

All of this stuff is coming, thanks to an enormous amount of research and development being done using various battery chemistries and materials.

Now, we've been writing about the materials angle for years. From lithium to a handful of rare earths, we've jumped on every possible opportunity that's come along.

You may even remember back in 2010, when I first told you about a new rare earth play called Molycorp (NYSE: MCP).

This was before the company had even gone public. And you can see how that one turned out:

Molycorp catapulted more than 464% in less than a year. Not bad.

But that's nothing compared to what I'm going to tell you about today.

Every Time This Ohio Fracking Well Causes An Earthquake...

These 3 stocks rally.

— Click Here —

Billions in Beryllium

To be honest, when I first started sniffing around the electric vehicle sector back in 2005, I didn't know much about the materials angle. In fact, the most I knew of lithium and molybdenum was their associated symbols on the periodic table of elements.

Of course, once I made the profit connection, I didn't waste any time learning about this stuff.

And certainly my crash course in materials has helped me pass along dozens of opportunities to readers. It even helped me learn about other opportunities in rare earths and rare metals that are not associated with electric vehicles, although I must admit it was my colleague Nick Hodge who turned me on to my latest rare metals play...

It's called beryllium, and I'm sure you've read plenty about it from Nick, so I won't rehash the obvious.

What I will tell you is this: Although I'm personally not a fan of adding any more nuclear to our energy mix, I'm not so naïve to ignore the fact that even with Germany and Japan potentially out of the nuclear game, nuclear is not going the way of the typewriter.

In fact because of the Fukushima catastrophe, the nuclear industry is tripping over itself trying to find new technologies that offer “safer” nuclear power production.

Beryllium, my friends, is going to make this happen.

And in about a week or two, Nick's going to share with you some of his intel from a recent meeting he had with a nuclear insider.

I've already seen it. And I can assure you this is going to be one of Energy and Capital's biggest winners ever.

It'll make the 464% gain we saw on Molycorp look like peanuts.

To a new way of life, and a new generation of wealth...

Jeff Siegel
Editor, Energy and Capital

Electric Car Investing

It didn't take more than ten seconds for the beads of sweat to start rolling off my forehead.

It was last Thursday, and with the heat index, a crushing 114 degrees of sticky Baltimore soup blanketed the city.

Had I not scheduled a lunch with a former engineering professor that day, I doubt I would've left the climate-controlled comfort of my home office. But this was not a meeting I had any intention of missing...

You see, as someone who has helped thousands of investors make a ton of dough in alternative energy, I know that the best intel does not come from sitting behind a row of computers all day.

The truth is, every single big score I've ever pulled off for my readers has always come after I've uncovered some new development by interviewing the guys behind the scenes. I'm talking about chemists, engineers, even physicists — not Wall Street mouthpieces.

When I want to know about new solar technologies, I'm not interested in what the investor relations reps have to say; I want access to the labs and the universities. That's where the good stuff is.

So when my former engineering professor told me he was going to be in Baltimore last week to consult on a new electric propulsion project for some German investors, I immediately invited him to lunch.

You see, over the past decade or so, every time I met with this guy, he clued me in on some exciting new technology. And because he's a huge energy geek, it almost always had something to do with new energy technologies.

He was the one who first told me about thin film solar — about three years before thin-film leader First Solar (NASDAQ: FSLR) went public. It was his insight that led me to tell readers about this company after it debuted in 2006 at $24.50...

Two years later, the stock catapulted to $311 a share.

He was also the one who first told me about the connection between microturbines and natural gas development; following our conversation in 2007, I told readers about a little $1.00 microturbine play called Capstone Turbine (NASDAQ: CPST)...

That stock flew past $4.00 a share in the summer of 2008.

The point is when this guy talks, I listen. And last week, I got an earful about the future of electric cars... and some of the technologies that'll be leading the way.

~~SIGNUP_EAC~~

Give the Customer What He Wants

Most electric vehicles on the market today — or coming to market within the next year or two — deliver an all-electric range of at least 100 miles. And this is more than sufficient for daily driving (for more than 70% of the U.S. driving population).

But there are still plenty of folks who are hesitant to buy an electric car because they're worried that at some point, they'll be in a situation where they'll need more than 100 miles — and they won't be able to get it.

This fear creates a serious hurdle for electric car manufacturers.

So what's the solution?

Well, I've always believed that electric vehicles were never really intended (at least early on) to be used for long-distance driving. Daily commutes, yes; long road trips, not so much.

But my professor, who has consulted on dozens of electric vehicle projects for both small startups and major car manufacturers, reminded me of a very basic principle: You have to give the consumer what he wants.

If the consumer wants an electric vehicle without range anxiety, that's what you give him — even if that range anxiety is a bit irrational.

So how do you do that?

You provide two things: a vehicle with a much longer all-electric range and quick-charge stations that are just as easy to find as gas stations.

And this is exactly what the car-buying public will have access to in less than 20 years' time.

Getting to 600 Miles

When it comes to increasing range, it's all about squeezing the most mileage out of your battery as possible. Part of this will be accomplished with new battery technologies.

As he pointed out, you have to remember that when you look at a high-performance electric car battery today, you're looking at something that'll be obsolete in ten years, at least in its current form.

The electric car batteries of the future will come in all kinds of new shapes, sizes, and chemistries. And there will be no dominant chemistry until much further down the road because there's still much progress to be made.

Can you imagine if you were still using the same computer or cell phone you were using 20 years ago? Talk about obsolete!

Lithium will still play an important role in these batteries, but so will zinc and vanadium. And new chemistries that utilize cheaper or better materials will spark the kind of competition the marketplace desperately needs. That kind of competition will drive down prices and increase reliability and efficiency.

Engineers and chemists are actively testing electric car batteries right now that utilize some of these new materials and chemistries. They're getting between 500 and 540 miles per charge — and that's based on electric drive systems and frames that are being used in the marketplace today...

In ten years, there will be some major upgrades here, specifically with regards to weight.

In fact just last week, we got word that the DOE ponied up a $730 million loan to a steel manufacturer in Michigan. This steel manufacturer is building new factories that will produce an advanced high-strength steel that can cut a vehicle's weight by ten percent without sacrificing safety. Using this steel in the construction of conventional internal combustion vehicles would allow for an annual gas savings of 30 million gallons.

But for electric vehicles, this is an even bigger deal, as any decrease in weight offers a substantial increase in range. Although I was told this steel is only part of the weight reductions, we'll soon see.

New lightweight carbon fiber technology will also find its way into the mix as the shell of vehicles. This is the same stuff used by Formula One drivers; it could cut an additional 7 to 10 percent off the total weight of the vehicle.

By getting a 15 to 20 percent total reduction, you allow for a significant boost in range — as much as 50 to 70 miles, according to the earliest estimates. And a new baseline range of 600 miles is expected in less than ten years...

But then what?

Topping Off the Tank

Even with a 600-mile range, without a place to charge, you're still limited to 600 miles.

This is no good if you're on a long road trip or an extended weekend getaway.

We already know of a number of companies developing charging stations: GE (NYSE: GE), Siemens (NYSE: SI), and ECOtality (NASDAQ: ECTY) are the big names today. But we're only now starting to see a worthwhile rollout of these charging units.

I asked my former professor how long-range electric vehicles could gain any traction if it ends up taking 50 years to get enough charging stations set up across the nation. His answer surprised me...

While charging stations and electric vehicles seem to be a chicken-and-egg conundrum, I was informed that for every electric vehicle sold in the United States, by 2015, there will be two public charging stations within a 200-mile radius of each electric vehicle driver's home. And that doesn't include the charging that'll be done in that home.

Also worth noting is that by 2025, about 90 percent of those charging stations will use quick-charging technology that'll give your battery an 80% charge in about 20 minutes. He said it could be even quicker, depending upon how safe and efficient some of these new chemistries will be...

Maxwell Technologies (NASDAQ: MXWL)

While we still have to wait another eight to ten years before much of this stuff comes to fruition, there is one technology that's available today, is being used today, and can offer us an opportunity to make a few bucks — today.

I'm talking about ultracapacitors.

These things continue to gain in popularity thanks to their ability to increase battery life and enhance power density. They are helping to up the fuel economy ante for conventional hybrids.

Although electric vehicle development is well underway, the demand for increased fuel economy cannot wait a decade. That's why every major auto manufacturer on the planet today is pumping out hybrids to meet that demand.

Toyota has claimed its entire fleet of cars will be hybrids by 2020. And its hybrid claim to fame, the Prius, will be a plug-in hybrid electric vehicle starting in 2014.

This is some serious development. And you better believe ultracapacitors are going to play a major role in this development...

So if you're looking for an ultracapacitor play, check out Maxwell Technologies (NASDAQ: MXWL).

The company's ultracapacitors can already be found in hybrid-electric buses, trucks, cars, and electric rail vehicles, and it's becoming a major player in the development of new hybrid and electric vehicle drive trains.

Maxwell releases Q2 earnings this Thursday, so keep an eye out for that. In the meantime, you can read more about the company here.

To a new way of life, and a new generation of wealth...

Jeff Siegel
Editor, Energy and Capital

Clean Coal Investing

No one should be surprised by this one.

Last week, we got word that American Electric Power (NYSE: AEP) would be putting a hold on its plans to commercialize a new carbon capture and storage (CCS) project.

According to CEO Michael Morris, the lack of federal greenhouse gas reduction requirements is to blame:

The commercialization of this technology is vital if owners of coal-fueled generation are to comply with potential future climate regulations without prematurely retiring efficient, cost-effective generating capacity.

But as a regulated utility, it is impossible to gain regulatory approval to recover our share of the costs for validating and deploying the technology without federal requirements to reduce greenhouse gas emissions already in place.

While I don't disagree with Morris, I maintain that the biggest problem with getting CCS off the ground is not a regulatory one...

A $2 Billion Money Pit

The truth is coal-fired power generation only has one advantage: it's insanely cheap.

And quite frankly, it's only cheap because we refuse to account for externalities — and we allow lawmakers to pony up some very generous tax payer support to keep the industry humming along. But hey, I'm not here to regurgitate uncomfortable realities.

Bottom line is the market could care less about this stuff; all the market really knows (or cares about) is this: No form of power generation provides us with more electricity than coal.

As long as it remains cheaper than nuclear, solar and wind, this is not something that will change anytime soon. And it's for this very reason you'll never see any real commercial-scale “clean coal” technology take root.

You see, it wasn't long ago when the government's centerpiece for its “clean coal” strategy, FutureGen, was shelved due to the prohibitive cost of implementing this technology...

FutureGen was intended to be a near zero-emissions coal-fired power plant that used CCS. It never got off the ground because the costs for the planned 275 MW coal-fired power plant had ballooned to nearly $2 billion — and that was just to build it. That price tag didn't include the cost of the actual coal, shipping, or operational costs.

No matter how you looked at it, the thing was a loser from day one.

But that's how it goes with “clean coal” technology; it's insanely expensive, and it actually serves to deplete our remaining coal reserves at a much faster rate.

The Incredible Shrinking Coal Bounty

As my colleague Ian Cooper showed you in a previous post, we may actually be at peak coal production this year.

While most still believe we have a whopping 250-year supply, the most recent USGS data tells us that we actually have fewer than 100 years remaining (based on current rates of consumption and not accounting for increased exports).

In other words, our massive coal supply is shrinking by the day. And with the implementation of CCS technology, we actually expedite the depletion of our coal bounty.

You see, the carbon capture and sequestration process is actually a bit of an energy hog. It consumes a portion of the energy that's actually produced at a coal-fired power plant.

Peak energy expert Richard Heinberg has suggested that if carbon capture and sequestration is implemented, it will increase the amount of coal required in order to produce the same amount of energy we rely on today. Heinberg estimates the “energy penalty” for this technology could be as high as 40 percent.

This is not a winning proposition for coal-fired power plant operators or consumers.

~~SIGNUP_EAC~~

An Uninsurable Risk

And here's one more issue that few — especially CCS advocates — are willing to discuss: Who the hell wants to insure these things?

As the CEO of Kinder Morgan Energy Partners wrote a couple of years ago:

Clean coal is a bunch of hooey until legal liability gets sorted out. When it comes to burying CO2 from coal-fired power plants, Kinder Morgan is not willing to sign up for guaranteeing to the U.S. government or to whomever that it will forever stay in the ground in this salt dome in Louisiana — and it doesn't — just come back and see ole Kinder Morgan and we'll make you good for it.

I guess sometimes you just have to refer to a Texas energy exec to get some straight talk.

Bottom line: Clean coal is a myth, a lie, and a joke with a very bad punch line. The whole damned thing is a scam.

If implemented, it will cost consumers a fortune. That's why it'll never see the light of day, no matter how many coal state senators shake down tax payers to make it happen.

If you're like me and enjoy making a ton of dough in clean energy, stick to actual clean energy. Don't waste your time with “clean coal.” You'll just end up getting burned in the end.

And if you really want to make money in coal, let the suckers chase these CCS pipe dreams while you focus your attention on where the real coal action is — most of which is actually outside U.S. borders.

To a new way of life, and a new generation of wealth...

Jeff Siegel
Editor, Energy and Capital