Investing in Alternative Energy

This blog will explore the science, technology and businesses behind the upcoming alternative energy revolution and discuss ways to build wealth by investing in alternative energy.

Wednesday, May 24, 2006

Science: Biodiesel 101

What is biodiesel?
Biodiesel is a diesel-equivalent, processed fuel that come from biological sources, like plants. It can be used directly in vehicles with diesel engines instead of diesel oil. For this reason, biodiesels may be positioned to replace fossil fuels as the world's source of transportation energy.

How is biodiesel made?
Biodiesel is created when a base oil (coming from a biological source, like vegetable or animal fats) is converted (through a process called lipid trans-esterification) into a desired mix of alkyl esters. Any remaining free fatty acids (FFAs) from the base oil can be used to make soap. When the process is over with, the coverted biodiesel has similar combustion properties to petrodiesel, making it available for use in diesel engines.

What are the best biological sources for biodiesel?
A variety of oils can be used, including virgin oil feedstock (such rapeseed and soybean oils), waste vegetable oil (such as the left over frying oils from restaurants), and animal fats including tallow and lard. It should be noted that the vegetable-based oils are much cheaper to produce than animal fats.

What economic benefits does use of biodiesel create?
  • According to a 1998 joint study by the U.S. Dept. of Energy and the U.S. Dept. of Agriculture, production of biodiesel creates about 3.2 units of energy for every 1 unit of energy expended producing it.
  • The sources of biodiesel can be generated domestically, thus reducing the dependence on foreign sources of fossil fuels.
What are the environmental benefits of biodiesel use?
  • Biodiesel reduces emission of carbon monoxide by about 50% and emission of carbon dioxide by 78%.
  • Biodiesel does not contain sulfur, so its use create no new sulfur emissions.
  • Biodiesel is bio-degradable and non-toxic. It has been found to be less toxic than table salt and to degrade more quickly than sugar.
  • Biodiesel prevent the emission of particulants by as much as 65%.
Are there any problems with a societal conversion to biodiesel?
Current worldwide production of the sources of biodiesel is not sufficient to lead to a wholesale replacement of fossil fuels, and there is concern that countries like the U.S. do not have enough arable land to grow enough crops to lead to such a wholesale replacement. Also, most of the engines used in vehicles right now are not diesel engines, so biodiesel won't work for them.

What companies are involved in biodiesel?
  • NRG Energy, Inc. (NYSE: NRG)
  • stay tuned for more!

Monday, May 01, 2006

Considerations in Choosing an Online Brokerage

When choosing an online brokerage to invest in alternative energy stocks, ask yourself the following questions:

Sunday, April 30, 2006

Interesting Facts About Investing in Alternative Energy

  1. Global energy demand is expected to increase 54% over 20 years with new demand in developing nations, particularly China and India is expected to grow 91%;
  2. The Federal budget proposal for 2006 includes $322 million for fuel cell and hydrogen development;
  3. G.E. Capital recently launched a comprehensive global effort to finance clean energy;
  4. Last year, Citigroup launched a worldwide search for alternative energy companies and projects to fund;
  5. Caterpillar, PPL, Alliance, Chevron, Enbridge and many others have fuel cell equipment or power plant designs in various stages of development and financing;
  6. Iceland is a world leader in renewable energy due to its abundant hydro- and geothermal energy sources. Over 99% of the country's electricity is from renewable sources and most of its urban household heating is geothermal;
  7. Hydrogen has been touted as the fuel of the future. It can be used in fuel cells or combusted with very low emissions. Many stationary fuel cells can create the hydrogen fuel they require by reforming natural gas, methane, ethanol and/or biomass. This is very efficient.
What facts have you interested in investing in alternative energy?

Is Investing in Alternative Energy a Good Idea?

Business Week thinks it is:

Renewable energy is booming. The use of solar power has been growing by more than 30% a year and, except for a hiccup in 2004 -- when Congress delayed renewing a tax credit -- so has wind power. Ethanol is heading for record production levels. And there's no end in sight, given high oil and gas prices, an increasing number of government mandates and incentives, and the first real steps toward tackling global warming. Clean Edge Inc., a research and strategy consultant, predicts that the total clean-energy market will grow to $92 billion by 2013, about seven times its current size of $13 billion. "The investment community is starting to see real opportunities," says Ron Pernick, co-founder of Clean Edge.

Wind might produce the biggest winners. A U.S. tax credit of 1.8 cents per kilowatt-hour is in place until 2006, and 19 states now require electricity producers to generate part of their power from green sources. Energy information and services company Platts, like BusinessWeek part of The McGraw-Hill Companies, expects that most of the new sources will be wind. One beneficiary could be Denmark's Vestas Wind Systems, the world's biggest turbine manufacturer, which is listed in Copenhagen and trades over the counter in the U.S. "It is profitable, and there is more certainty and a more favorable political climate surrounding wind than solar or hydrogen," says Henningsen.

A buy-and-hold strategy combined with some selective trading may be the best strategy for cashing in on the alternative-energy boom. "If [FuelCell Energy] goes to $14 or $15, you should take a little profit, then wait until [it] pulls back and buy some more," says [Walter] Nasdeo [managing director of New York-based Ardour Capital Investments LLC]. Eventually, he expects one of the renewable energy stocks to hit it big. In addition to FuelCell Energy, Nasdeo sees potential in Evergreen Solar, which makes solar cells; American Superconductor, which makes highly efficient superconducting wire and power-regulation devices; and two other fuel-cell makers, Hydrogenics and Plug Power.