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Thread: Investing in renewable energy?

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    Veteran Member miss cleo's Avatar
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    Default Investing in renewable energy?

    I recently received an email about investing in solar energy plants and while i can not afford the deal they are offering, it got me thinking that with the interest in renewable and "green" energy sources such as solar, wind and water turbines, that this could be a profitable place to invest money. I am going to do some research to find out more. Any opinions?

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    Banned Melonie's Avatar
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    Default Re: Investing in renewable energy?

    yes they are a very viable tax shelter due to the 'production tax credits' which accrue to partnership investors in solar, wind etc. Of course the value of those production tax credits depends on the tax bracket of the investor, and the other types of taxable income that those tax credits can be used by the investor to offset. And as you noted, buying in at the partnership level (which is necessary to get the tax credits) typically involves a fairly big ticket investment (let me guess minimum investment $50k or $100k ?).

    As to profitability, as long as US gov't policy subsidizes the power prices that wind and solar energy producers are able to charge / receive, there is little chance of losing money. Politically this receives a lot of positive lip service from Democrats. Pragmatically, state budget deficits in the states that offer the highest solar and wind subsidies may pit the continuation of future subsidies against such other priorities as maintaining public sector employment levels, maintaining social welfare benefits etc.

    However, common stockholders of companies that produce 'components' for solar and wind, i.e. solar cells, wind turbines etc. are an entirely different story. For example, the share price of Evergreen Solar (once the poster child for the industry) is now somewhere near 1/6th of what it was earlier this year. Essentially, such businesses are more dependent on different types of gov't subsidies i.e. grant money for potential buyers, and tax abatements for the manufacturer. Again, the potential sale of 'components' is dependent both on the availability of grant money (or tax credits) for would-be buyers, but also dependent on the ability of would-be buyers to obtain the financing to invest in a new solar or wind project in the first place.

    Where solar in particular is concerned, while much of the early sales volume was related to gov't buildings and other 'showpiece' projects, ongoing sales is heavily dependent on purchases by private businesses and homeowners. If both are strapped for cash, it's much more likely that the amount of discretionary spending they have available will go towards more 'necessary' bills and investments.



    While you didn't mention it, last year's hot investment in the renewable energy area was ethanol / biofuel. However, with the cutback in world oil prices, the vast majority of ethanol / biofuel operations are now 'losing their ass' ... since their production costs haven't declined much but the demand for their product certainly has. The poster child stock in this area is Pacific Ethanol, whose stock price has similarly decliined to something like 1/6th of its value compared to a year ago.



    as to whether these companies are likely to recover, given the fact that their stock prices has been beaten down as far as they have, is (unfortunately) a question best addressed to politicians rather than economic analysts. Arguably, none of these companies has a sustainably profitable business model in the absence of ongoing gov't subsidies.


    Back to your original question ... if you're in a position where your income puts you in a tax bracket where you're paying 30%+ federal income tax (which Obama proposes to increase) and a 6%+ state income tax, and where your conventional investments will be subject to Obama's proposed 20% capital gains tax rate, receiving $5,000 worth of partnership dividends plus $20,000 a year worth of production tax credits from a $100,000 solar or wind farm partnership investment provides one hell of a de-facto after tax rate of return ! But the full value of those production tax credits is contingent on you also 'owing' at least $20,000 a year worth of income and/or capital gains taxes from other types of investments that the production tax credits will cancel out.

    But without the tax shelter angle, IMHO they're just one more fairly risky investment with a comparatively low rate of (dividend) return. In fact, investing in conventional utility companies would provide equal or greater dividends with much less risk.

    ~
    Last edited by Melonie; 12-02-2008 at 01:18 PM.

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    Veteran Member miss cleo's Avatar
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    Default Re: Investing in renewable energy?

    ^^Hey Melonie, thanks for your very knowledgable response. Yes they did want a 50K investment, which i just don't have, i guess i was just hoping i had stumble upon the "next big thing" as far as investing is concerned. Maybe not huh? I'll just hang onto my money for the time being. xx

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    Banned Melonie's Avatar
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    Default Re: Investing in renewable energy?

    ^^^ yup, the minimum investment angle is what prevents 'middle class' people from cashing in on the true appeal of alternative energy investments ... 'guaranteed' high tax-free return on investment for the very rich ! Again not wanting to swing too far toward the political in Dollar Den, but for a fact the production tax credit angle is a 'dirty little secret' that allows the very rich to disregard calls for increasing their top income bracket tax rate !

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    Default Re: Investing in renewable energy?

    I think in the long run (10-20 years), investing in renewable and green energy sources will be profitable with reasonable risk. Finding just the right business could be pretty tricky for shorter term outlooks. So, in the mid-term, investing in the right businesses, maybe thru a fund (low- to mid-cap), will make some sense too for funds that are managed by people knowledgable in the field. Large capitalized businesses will be less risky, but their returns in this field wiull be swamped by their mainstay business. But this is a long term necessity, and something viable/profitable must happen someday.

    Comments welcomed. (I know energy/technology better than I do investing in it.)
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

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    Default Re: Investing in renewable energy?

    How about just investing in a solar panel hot water system for your home?

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    Banned Melonie's Avatar
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    Default Re: Investing in renewable energy?

    How about just investing in a solar panel hot water system for your home?
    The economics aren't there in New York anyhow, despite the NY taxpayer funded subsidies that are available. The reason of course is that the percentage of NY days with full sun is simply too low.

    The alternative energy 'investment' du jour that pays off the best in NY, despite the absence of NY taxpayer funded subsidies, is wood fired 'boilers'... which will provide both domestic hot water and hydronic heating for your home at a fraction of the fuel cost per BTU of oil / natural gas. However, you need to move fast since local governments are quickly implementing 'air pollution' ordinances banning their installation.

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    Default Re: Investing in renewable energy?

    In Aus, if you put solar planels up, and produce your own electricity you can sell back to the grid. So you get a regular income, from a small investment, plus you are self sufficient.

    We are building our own place, which (Due to the environmental conditions here) will use zero govt power, very little water (all rain water which we collect, and then recycle our grey water for watering our small orchard) and grow our own food.

    Not so viable in the city though.
    Theres no sense crying over every mistake,
    you just keep on trying till you run out of cake

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    Default Re: Investing in renewable energy?

    Quote Originally Posted by Melonie View Post
    The economics aren't there in New York anyhow, despite the NY taxpayer funded subsidies that are available. The reason of course is that the percentage of NY days with full sun is simply too low.
    This doesn't seem to be true Mel.

    http://query.nytimes.com/gst/fullpag...56C0A9649C8B63

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    Veteran Member miss cleo's Avatar
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    Default Re: Investing in renewable energy?

    You can only install solar panels if you own your home, not if you rent it.

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    Default Re: Investing in renewable energy?

    This doesn't seem to be true Mel
    You are technically correct for the Con Ed electricity service area around metropolitan New York, since the state has raised the level of taxpayer funded subsidies available and since ConEd electric rates are now the highest in the country !

    But it doesn't come close to working in upstate areas where other electricity providers charge far lower prices.

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    Default Re: Investing in renewable energy?

    Quote Originally Posted by Melonie View Post
    But it doesn't come close to working in upstate areas where other electricity providers charge far lower prices.
    She is right about most of NYS and several other northern states. Also the climate is colder, meaning that losses from the solar collector increase. But it is becoming viable for many other states. But even in NYS if the collector components can be found at very low/surplus prices and it is mostly a DIY project, then the economics could favor it. For NYS wind farms (and possibly geothermal) will begin to be popular when that technology matures, but it likely won't be an individual effort for wind.

    The variability of wind power makes it less useful than is needed unless one is connected to the power grid. This could be moderated by having the wind turbine mechanically link to a pump to raise anti-freeze laced water into a storage tank. Then that potential energy (tank) could then be used to drive a hydro-electric pump machine back into a lower reservior. A lot of extra components and cost (check your surplus supplier), but for a DIY project one could have a lot more reliable source of power. This could allow independence from the power grid if you sized the components correctly and it were sited properly.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: Investing in renewable energy?

    ^^^ the problem is that when you do the math on the amount of water and change in height required, an average house needs an industrial sized water tower to cover one day's energy needs. A commercially sized 2MW wind turbine would need a small lake !

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    Default Re: Investing in renewable energy?

    Quote Originally Posted by miss cleo View Post
    You can only install solar panels if you own your home, not if you rent it.
    Would an investment in real estate...owning your own house or condo be something that would interest you? I would certainly recommend that before an investment in the stock market.

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    Veteran Member miss cleo's Avatar
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    Default Re: Investing in renewable energy?

    ^^ Yes buying an appartment is definatley something i want to do next year im just trying to keep an eye on the market as experts say it still has further to fall.

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    Default Re: Investing in renewable energy?

    Quote Originally Posted by miss cleo View Post
    ^^ Yes buying an appartment is definatley something i want to do next year im just trying to keep an eye on the market as experts say it still has further to fall.
    Excellent! You could just keep your money in a flexible vehicle like a savings account, and add to it if you can. When the market starts moving up you'll be ready to strike your deal. Sounds like you've got yourself a good plan.

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    Default Re: Investing in renewable energy?

    ...or a lot of height (water tower)
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Veteran Member miss cleo's Avatar
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    Default Re: Investing in renewable energy?

    Thanks for your words of encouragement Hockeybobby, the folks here on SW are great.

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    Default Re: Investing in renewable energy?

    some additional news ... 'Green Companies awash in RED Ink !

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    Default Re: Investing in renewable energy?

    The energy bubble was a wakeup call. Since the bubble disapeared for a while it's back the the usual waste. So what else is new with the impatient, short-sighted populace?
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: Investing in renewable energy?

    ^^^ actually, it usually has more to do with impatient short-sighted investors ... who quickly reach the conclusion that the social responsibility of their 'green' investments is not worth the huge monetary losses. It also has to do with gov't commitments to ongoing subsidies (since most 'green' investments are totally dependent on such subsidies for any semblance of profitability) ... gov'ts whose priorities are subject to major change at the next election or the next state budget 'crisis'.

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    Default Re: Investing in renewable energy?

    It's a matter of foresightedness. No one knows when the next energy speculation of such large proportions will occur again nor how long it will last. Or when energy production costs will rise to an equivalent level again. BUT we do know how much our balance of payments is suffering because of our foreign oil consumption. I guess that doesn't worry people anymore. Yet.

    Regarding subsidies, there are large government subsidies for much less important topics. Guess it depends on who thinks it is important. As an example of subsidies, who do you think carries the ultimate insurance for nuclear power plant and fuel transport accidents (lucky so far)?
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: Investing in renewable energy?

    Quote Originally Posted by miss cleo View Post
    I recently received an email about investing in solar energy plants and while i can not afford the deal they are offering, it got me thinking that with the interest in renewable and "green" energy sources such as solar, wind and water turbines, that this could be a profitable place to invest money. I am going to do some research to find out more. Any opinions?
    mel gives biased info. You might want to use a real advisor.

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    Default Re: Investing in renewable energy?

    You need to cost it ALL out, initial costs and labor, recurring maintenance costs, cost of the money to buy that investment, tax credits/deductions, cost of energy you are displacing, and lifetime of the components you use; not to mention the uncertainties in the cost of that displaced energy and tax effects, unanticipated repairs/maintenance, and your cost of money. Dont forget to inflate those costs realistically. (This is what we do for an engineering cost analysis.)
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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