Renewable energy accounts for approximately 16% of total energy consumption. While most of that is provided through biomass and hydroelectricity, there are smaller segments of renewable energy — such as wind, solar and ethanol. These smaller segments of green forms of energy present a considerable amount of opportunity for investors, who could potentially get in early on a power-producing segment that hasn’t fully caught on.
While these stocks pose a lot of potential upside, they are also risky, due to the fact that what they produce isn’t yet used by the mainstream and, therefore, these companies don’t have a reliable stream of revenue. Then again, neither do traditional ways of producing energy, due to the global trend towards environmental friendliness.
Investing in wind
Wind energy is still very much a speculative industry, but several publicly traded companies are making major headway.
A lot of the potential construction that TransAlta Corporation (USA) (NYSE:TAC) is planning is in wind energy. The firm announced its plan to expand merchant capacity in Alberta. The difficulty the company may experience in that expansion is the legislative challenges. That could make it difficult for the company to take advantage of declining construction prices. However, the firm can find shelter in the fact that its gas plants in Alberta are expected to be completed soon, after the firm partnered with Berkshire Hathaway Inc. (NYSE:BRK.A). The company can also realize growth in the western grid of Australia, an area that TransAlta Corporation (USA) (NYSE:TAC) gained capacity in early this year.
Investing in solar power
Solar energy is a very realistic option for producing energy on a massive scale, as has been proven recently by the UK government’s proposal to develop a solar energy epicenter that spans 100 Olympic parks.
The industry’s dark days could be turning around, as the firm managed to increase year-over-year revenue by 28% in the first quarter.