Alt Energy and Trading Green

by: Charles Morand June 28, 2008    

Charles Morand

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I received, about a month ago, a complimentary copy of Profiting From Clean Energy, a recent book on investing in alternative energy by investment analyst Richard W Asplund. I will do a short review of the book here, as it may be of interest to some of our readers.

General Impressions

Profiting From Clean Energy covers 13 sub-sectors of the clean energy space: solar (PV and thermal); wind; fuel cells; geothermal; cleaner utilities; power efficiency; smart meters; power storage and backup; clean transportation; ethanol and biofuels; trading in biofuel feedstocks; coal; and carbon trading. The book also discusses macro-drivers for alternative energy (e.g. concerns about climate change, energy security, government incentive programs, etc.) and provides growth forecasts. Profiting From Clean Energy opens with a review of the various forms of investments one can make in alternative energy (e.g. individual stocks, mutual funds, etc).

The author takes a largely top-down approach to his analysis. He begins at the economy or even the global level, and works his way down to industry dynamics, how the technology works and who the key players are. For each sub-sector, the book provides a comprehensive list of stocks with some basic analysis. Technology discussions are at a level where individuals without engineering training can easily follow, while still providing enough depth to be well-informed when doing further research on a stock or sector.

The core audience for this book is, in my view, investors with limited knowledge of alt energy but who want to get started and need an effective way to learn a lot rapidly. That's not to say more knowledgeable folks won't get any value out of this book. For my part, I learned a fair bit in the geothermal, energy efficiency and net metering sections, as they were sectors I had not, until recently, examined very closely. But I believe this book can provide the most value if you have limited knowledge of clean energy as an industry but have a strong interest in investing in it, and are not sure where to start.

At a broad level, Profiting From Clean Energy is therefore a good resource to get you thinking about what to look for when seeking out investment opportunities in clean energy. The book does not, however, provide tools for fundamental stock analysis. Whereas certain investment books outline detailed models for analysis based on fundamentals and financials, Profiting From Clean Energy is very much about the macro-picture and does not delve deeply into technical financial concepts.

The Good

  • A very good general overview of the key dynamics driving each sector and clean energy in general. Can therefore provide a good base for stock-specific analysis when assessing a company's competitive positioning.
  • A comprehensive list of stocks broken down by sector, along with a wealth of external resources to help push one's research beyond the book. The accompanying website, http://www.profitingfromcleanenergy.com/ (currently under development), will soon provide a list of 50 stocks with profiles, and already has features such as a news service and a free newsletter.
  • Easy to read and not overly detailed or technical, yet provides a good level of depth.


The Less Good

  • Reading a book about investing in internet technology written in 1997 today would likely not be immensely useful. Similarly, because alt energy is going through a phase of rapid evolution and profound changes, this book is not timeless. Read it now and it can provide a lot of value; wait two years and things will have changed too drastically in certain sectors like solar and clean transportation (unless of course multiple editions are planned).
  • In the clean transportation section, I would have liked to see a discussion of rail transportation and opportunities associated with it.
  • A close follower of the alt energy space will likely not come across a great deal of new information in the book, although the website is a useful resource. I don't, however, believe that this is unique to Profiting From Clean Energy, but is rather a consequence of the choice an author makes about going for breadth (covering multiple sectors) instead depth (covering only one).

Disclosure: Neither AltEnergyStocks.com nor I is receiving any compensation for doing this other than a free book. Should you want your book reviewed here, feel free to contact us and make a request.

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This article has 23 comments:

  •  
    Jun 28 03:20 AM
    I'm under the impression that investing in clean energy ventures will be one of the higher-profit investments over the next year. This book looks like an excellent resource in learning the ins and outs of the most common energy solutions, and will definitely be on my watch list.
    Reply | Link to Comment
  •  
    Jun 28 10:25 AM
    Investing in clean energy for the long haul is where it's at. Traders will be disappointed!
    Reply | Link to Comment
  •  
    Jun 28 10:32 AM
    Get the government out of green and much of the green to made from it will disappear. Since CO2 has increased for 10 years WITHOUT global warming, carbon traders will likely look like fools or opportunists a few years from now.
    Reply | Link to Comment
  •  
    Jun 28 11:42 AM
    You make good points.

    Unfortunately, our government is not about to get out of green, any more than it's going to end it's boycott of our domestic energy reserves. It will continue this "dynamic duo" effect it's having on the energy marketplace.

    Our government has been picking the winners and losers in our economy for many years now. Unhappily, this trend is only accelerating as time goes on. Going forward, it's a vital investment consideration.
    Reply | Link to Comment
  •  
    Jun 28 01:19 PM
    A worthless book.
    Reply | Link to Comment
  •  
    Jun 28 01:38 PM
    Green will really be a money maker if Obama wins this fall.
    Reply | Link to Comment
  •  
    Jun 28 03:43 PM
    Thanks for the review!
    Reply | Link to Comment
  •  
    Jun 28 05:19 PM
    This will be bigger than the internet!
    Reply | Link to Comment
  •  
    Jun 28 05:24 PM
    Was McCain for or against the Kyoto Protocol?
    Reply | Link to Comment
  •  
    Jun 28 05:26 PM
    Let me het this straight - this book was written in 1997? Did I read that right? Some of the green companies were just born?
    Reply | Link to Comment
  •  
    Jun 28 05:53 PM
    The publication date is March 3, 2008, published by Wiley. I would assume writing was completed in 2007, assuming normal publication delays.
    Reply | Link to Comment
  •  
    Jun 28 06:07 PM
    There is no such thing as green energy. Any kind of energy production creates some effects on environment. Wind is probably the cleanest, if you discount noise, thousands of birds killed every year and the fact that towers occupy a lot of land. Geotermal would be dead, at least open cycle, if you treat dump water the same way as industrial dump water. Solar might be a huge contributor to global warming, because solar panel converts 90% of solar energy into heat and only 10% into electricity. And it's doing it right now, not in the future, like CO2 (possibly).

    As for "clean" energy economics, there is none. Alternative energy can't exist without government subsidies. Means taxpayers foot the bill. Means you'll never get good profits. Some luck is possible, like First Solar (for now), but that's it.
    Reply | Link to Comment
  •  
    Jun 28 11:20 PM
    Like any idea in infancy, creating new green sources of energy and improving the ones that exist will take a certain amount of sacrifice. It is not only inevitable that new technology will be created, to either improve current ideas or discover new ones, it is necessary for the progression of humanity. No matter how much oil we find it will eventually run out and the sooner we cut ties with it the better. Think about it this way, if we invest our time and money now on energy sources that could one day have costs that are relatively insignificant, then we will have one less item on the income statement diminishing profits.
    Reply | Link to Comment
  •  
    Jun 28 11:21 PM
    solar converts 90% of solar energy into heat? It is there to start with, have some sense please!!! It's better than digging up stored energy throughout the millions of years, and start releasing them. What an imbecile..truly
    Reply | Link to Comment
  •  
    Jun 28 11:58 PM
    @dling: Solar panels have efficiency of 10%, you can read it everywhere. That means that of energy received, 10% is converted to electricity, and 90% goes to universal energy sink, heat (and if you don't understand it, please read some physics 101). Think of it this way: you put solar panel, which absorbs almost 100% of solar light, somewhere, let's say on the desert ground, which usually reflects at least 30% (35% is usual number , and measurements in Sahara show 50%). So, instead of reflecting light back to space, solar panel converts it mostly to heat.
    Reply | Link to Comment
  •  
    Jun 29 02:08 AM
    You Greenies deserve the utmost condemnation. Look what you did to the poor. And to the seniors on fixed incomes because you did not allow us to take the wealth we have out of OUR land. Fossil fuels do not cause global warming.
    What about the moral environment. NBC is Green and pollutes our land with it's veiwing trash. Our moral climate continues to descend and the greenies help it.
    We have a right to take the wealth out of our land. This is leading to enormous additions of government control.
    Reply | Link to Comment
  •  
    Jun 29 02:38 AM
    I'm sorry, what did that last comment have to do with investing? The capitalist interest in green energies has nothing to do with being good or helping the Earth. That's a nice thing to pat yourself on the back for, but no one makes money doing that.

    Green energy investment comes from the belief that if the science can catch up, you can take an abundant, almost unlimited resource (like sunlight) and sell the energy back at an unbelievably high profit because your COGS will be substantially less than a commodity based energy source.

    I think the solar panel discussion is funny only because it rests on the assumption that no matter what we do, the technology can only be THIS efficient.

    And while it may be true that green energy can only be funded through government subsidies, it may very well be true that private investors simply will not shoulder the risk involve in capitalization of a new technology of that magnitude. This is not a defect of the concept or a problem with the profit potential, rather it is simply something more fundamental like a Sharpe ratio decision.
    Reply | Link to Comment
  •  
    Jun 29 01:51 PM
    Is the government or the private sector better at making investment decisions? I would say the private sector though we have not really had one since 1913 when the government backed banking cartel was formed in the US.

    If there is insufficient private capital available (unlikely, but possible) is it perhaps because government consumes 1/2 of GDP?

    There is also the socialist calculation problem that Mises and Hayek address.

    Please spare us your subsidies. Government is too blunt and dangerous to be used except for the most obvious cases.
    Reply | Link to Comment
  •  
    Jun 29 09:50 PM
    Interesting review and interesting book, but I won't be buying or reading this one. Investing in green energy is an absolute craps shoot. As the author noted It is nearly impossible to determine where this market is going to go. Thus, most of the investors who buy these companies will lose their money. I plan on staying far away from these "tech" companies.

    As a citizen and person of this world, I really appreciate all these investors putting up the capital to fund these companies. If this becomes a "hot" sector (more so than it obviously is) than a lot of great alternatives to traditional energy will arise.
    Reply | Link to Comment
  •  
    Jun 29 10:11 PM
    Thank you, Still Laughing. For a moment there I was losing my faith in the human race--although I suspect that some of the posters here with anti-green biases are actually aliens who need to breathe pollution to thrive on our planet.
    Reply | Link to Comment
  •  
    Jun 29 11:52 PM
    nice review and I will pick this book up
    Reply | Link to Comment
  •  
    Jun 29 11:57 PM
    The "clean tech revolution" is another book in the same vein -- AMZN has BOTH for < $50. nice grab while the sale lasts. .
    Reply | Link to Comment
  •  
    Jul 08 05:31 PM
    The energy revolution will promote a global expansion and result in an economic boom that will make the internet look like a penny toss.
    Reply | Link to Comment
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