Investing in Renewable Energy Sources - dummies

Investing in Renewable Energy Sources

Currently, renewable sources of energy make up about 8 percent of total energy use in the world. This figure pales compared to the 87 percent share of fossil fuels, but it has the potential to grow as nonrenewable energy sources are depleted. Renewable energy is getting a lot of attention, and there is certainly potential to make some money in this field.

If you’re interested in keeping up-to-date on the latest developments in the renewable energy space, check out the U.S. Department of Energy’s Energy Efficiency and Renewable Energy (EERE) initiative.

Investing in solar energy

Solar power is the process by which energy from the sun is harnessed and channeled into a usable energy form, generally heat or electricity. Solar power can be transformed using two different processes:

  • Solar thermal energy transforms the sun’s energy into heat, which can be used for a number of different purposes, such as interior space heating or water heating. Flat panel solar collectors mounted on homes or buildings are used for solar thermal energy purposes.

  • Solar photovoltaic energy is the method whereby energy from the sun is captured and transformed into electricity.

In 2007, solar power accounted for a little less than 0.10 percent of total energy consumed in the United States. This doesn’t mean, however, that you can’t make any money investing in this sector.

Because of technological advancements, the future looks bright for solar energy. Of the many operations that have entered the field of solar power, two companies stand out:

  • Evergreen Solar (Nasdaq: ESLR): Evergreen Solar has operations in Germany and the United States and is engaged in the production and distribution of photovoltaic cells. It has a patented system that allows for direct transformation from solar to consumable electricity, and it sells its electricity directly to residential, commercial, and industrial consumers.

  • Suntech Power Holdings (NYSE: STP): This company, headquartered in China, is involved in producing photovoltaic cells and panels for electricity generation. It’s attractive because it has a foothold in China, which could be a huge market for solar power.

Investing in wind energy

Wind energy — generated by huge wind machines (similar to traditional wind mills) that are placed side by side in wind farms — is getting increasing attention from investors, even though it is extremely difficult to invest in wind energy at this stage.

Currently, few publicly traded companies deal specifically in wind power. However, with rising energy prices, wind energy may get more focus. If you are interested in investing in wind power and want to keep on top of any emerging trend, check out the American Wind Energy Association, which keeps a database of private companies involved in wind energy that may go public one day.