Ira Ehrenpreis is the cleantech partner at VC-investment firm Technology Partners. For the eighth year in a row, Ehrenpreis is serving as the Conference Chairman of the Clean-Tech Investor Summit today and tomorrow in Palm Springs, Ca. He has been investing in cleantech since long before it was called 'cleantech.'

When Ehrenpreis first started investing in cleantech, "cleantech was niche, not mainstream" and represented less than one percent of the venture capital asset class. Today, cleantech is one of the fastest-growing sectors in the venture capital business.

VC investment in U.S. cleantech companies hit $ 4.9 billion in 2011, a drop of 4.5 percent in terms of capital invested compared to 2010, according to an Ernst & Young study based on info from Dow Jones VentureSource. This still represents a 29 percent increase from the $ 3.8 billion raised in 2009. 

"VCs would show the door to an entrepreneur without a long-term business plan," said Ehrenpreis, bemoaning the state of U.S. energy policy and its lack of a long-term plan.

"We're fighting to provide energy for the 1.3 billion people who lack access to electricity," added Ehrenpresis as he spoke about the $ 1 trillion global energy market, adding, "We're fighting for cheap, clean energy for our children without destroying the environment."

Ehrenpreis' main point in his kick-off speech was that "innovation is going to be the catalyst that changes the trajectory of the cleantech sector."

With regards to cleantech deployment, Ehrenpreis said, "While I've never been more bearish on U.S. cleantech, I've never been more bullish about global cleantech." He noted that R&D investment in energy is 0.3 percent of sales compared to software and pharma at more than 10 percent of sales.

Ehrenpreis addressed the misinformation in the media that the story of solar is not the story of Solyndra, but rather the 64 gigawatts of solar deployed cumulatively across the globe and the price of solar falling from $ 25 per watt to $ 1 per watt. He noted that the high-profile failures at Solyndra and Evergreen are just part of the Darwinian struggle in the cleantech business.

He acknowledged that there are challenges but reminded the crowd that the past 8 years have seen the emergence of the smart grid, new materials, new sources of energy, and new electric vehicles.

And Ehrenpreis pointed to the lesson that Steve Jobs could teach the cleantech sector — Jobs' maniacal focus on innovation — whether it be the iPhone or the iPad or the iPod. Ehrenpreis sees the cleantech sector as waiting for a revolutionary like Jobs to change the industry.

Ehrenpreis closed his speech with this thought: "To all the cleantech entrepreneurs around the world, come with us and help change the world of energy — and the world we're leaving to our children and grandchildren."

***

Ehrenpreis is on the boards of Accelergy, CoalTek, Deeya, FloDesign, PowerGenix, Solexel, and Tesla.  He is also an investor in Alta Devices and Abound Solar.

Go Green

Solar Power

Reel Solar (San Jose, California) raised $ 15 million in venture funding according to an SEC form D spotted by Smart Energy News. The stealthy thin-film PV firm's investors include Pangaea Ventures, Nth Power, and Mayfield Fund.  The Pangaea website describes the company as having "had developed a proprietary ultra-low-cost solar manufacturing technology." (Past tense is theirs.) It looks like the firm is working with cadmium telluride (CdTe). The company recently moved into a 57,860-square-foot research and development building in North San Jose, expanding from its previous facility of about 6,000 square feet, according to a report in the San Jose Business Journal.

Azure Power, an independent solar power producer deploying grid-connected, megawatt-scale solar deployments across India, just raised $ 13.6 million from German investor DEG, according to VC Circle.

Skyline Solar (Mountain View, California) collected approximately $ 1 million from Firsthand Technology Value Fund for its low-concentration photovoltaic (CPV) system.

Morgan Solar (Toronto, Ontario) raised $ 9.8 million from Enbridge to close its most recent funding round at $ 29 million. The firm builds high concentration PV systems.

Solaria raised $ 30 million from CMEA, DBL Ventures, et al. Previous investors in the low concentration PV startup include Sigma and Moser Baer.

Enphase (Petaluma, California), the leading microinverter firm, drew down $ 20 million of an $ 80 million convertible debt facility, according to its recently amended S-1. 

VC Investment in Transportation

Better Place (Palo Alto, California) scored $ 200 million from their investors in a Round C (bringing total VC funding to date to $ 750 million) to launch its grand vision of car transportation-as-a-service, along with battery swapping. The company states that the its valuation is "$ 2.25 billion (post money valuation on a fully diluted basis)." New investors in the round include GE and UBS AG, among others. Existing shareholders, including Israel Corp., HSBC Group, Morgan Stanley Investment Management, VantagePoint Capital Partners, Ofer Group and Maniv Energy Capital, also joined the round.

KLD Energy Technologies (Austin, TX) completed a $ 10 million convertible debt offering from an undisclosed source. Total funding since its 2008 founding is $ 26 million for the firm developing an electric motor system for scooters and motorcycles.

RelayRides (San Francisco, California), a peer-to-peer car sharing service, closed a $ 13 million round A from GM Ventures, Google Ventures, August Capital, and Shasta Ventures.

Smart Grid and Energy Efficiency

Power Assure (Santa Clara, California) added a $ 1M investment from Virginia utility Dominion Energy to its recent $ 13.5 million round B financing led by industry powerhouse ABB, along with Draper Fisher Jurvetson, Good Energies, and Judith Point Capital. The firm is piloting the use of data centers for demand response and power load shifting.

GaN Systems, a provider of power conversion semiconductors for cleantech applications received round A funding from Chrysalix Energy Venture Capital and Rockport Capital.

EnTouch Controls (Richardson, TX), a provider of energy management systems for small businesses, raised a $ 2 million round A led by Trailblazer Capital.

Retroficiency (Boston, Mass.) works with real estate data analytics software to better target cost-effective efficiency retrofits. The firm closed a $ 3.3 million round A from Point Judith Capital, along with the acquisition of Clean Energy Solutions (CES) division of NexAmp, a company with software designed to parse power meter and utility data.

Powerhouse Dynamics (Newton, Mass.), which builds high-end home energy monitoring systems and is refocusing on helping small commercial buildings manage their electricity, raised $ 3 million in round A funding led by SOSventures. 

Greentech VC Investment in Water, Green Chemicals, etc.

Rivertop Renewables (Missoula, Montana) a maker of renewable bio-based detergent builders and corrosion inhibitors, won $ 1.5 million in bridge financing from Cultivian Ventures. 

Soraa (Fremont, California), backed by Khosla Ventures and NEA, raised $ 88.6 million for lasers, LEDs, and energy-efficient lighting. Soraa is founded by UCSB professor and highly regarded lighting expert Shuji Nakamura.

eRecycling Group (Irving, California) raised $ 35 million in equity financing for resale and recycling of old wireless phones. The firm has received financial backing from SJF Ventures in the past.

Amplio, a water filtration platform, raised $ 21.5 million from Ambienta.

Go Green

It's notable because 1) It's Khosla Ventures, 2) It's a billion dollars, and 3) It's a VC fund closed in a rather hostile VC-fund raising environment. Word on the street is that even established cleantech funds are having some challenges in meeting their fund-raising targets.

Some VC firms are being forced through major changes. As an illustration, put yourself in the shoes of a large investor in now-bankrupt Solyndra trying to make a case why your LPs should continue to invest in your VC firm. One of those VC investors in Solyndra recently told me that their firm was realigning their priorities to be more in line with the goals of their LPs. Which I took to mean that their LPs expect CMEA to actually generate returns.

Dan Primack of Term Sheet fame notes that, the Khosla fund "[W]as oversubscribed, with over 90 percent of commitments coming from existing LPs. Considering that former cornerstone backer CalPERS decided not to re-up, that means a lot of increased commitments," and that, "Almost all of Khosla's LPs are institutional investors. One notable exception is John Doerr, who has personally invested in both Funds III and IV."

At least two Khosla-backed greentech firms have been acquired: Areva bought solar thermal developer Ausra in 2010 and Regal Beloit bought motor and control firm Ramu earlier this year.  Three biofuel firms in the Khosla Ventures portfolio have gone pubic in the last 12 months: Amyris, Kior, and Gevo. Mascoma, another biofuels firm has filed to go public.

The Khosla portfolio includes some unique battery startups, some unique energy storage firms and 40 more firms searching for a black-swan moment.

Mr. Khosla often has a contrarian take on the greentech market and we've managed to get him on record in his not-so-rare moments of candor. He's also contributed a number of perspective pieces to Greentech Media that are well-worth reading. Here are some of his greatest hits:
 

• Khosla on Energy Storage: A speech in which Khosla effectively alienates most of the energy storage industry. You had to be there.
• Khosla on Innovation: "Only small companies do impressive things."
• Khosla on the Smart Grid: "Automating your meter reader is not the smart grid. The grid really equals smart power electronics. It's not even about the networks. We need a whole new class of devices and systems."
• Khosla on Thin Film Solar
• Khosla's Biofuel Primer
• Khosla on investing in renewables and energy efficiency: “We’re in a crisis, and there is an opportunity to reinvent our energy infrastructure; it would be a folly to waste it.”
   

A quote which Mr. Khosla likes to cite: All progress depends on the unreasonable man. — George Bernard Shaw

The Khosla Ventures cleantech portfolio:

Go Green

That’s the news from Cleantech Group’s third quarter investment briefing Wednesday, which painted a mixed picture for global cleantech investing. The good news lay in the tally of VC activity in the second quarter, which rose to $ 2.23 billion — up 12 percent from the second quarter and 23 percent from last year.

That’s still well below the first quarter 2011 tally of $ 2.72 billion in green VC, but considering the bad news we’ve seen for the sector in the past three months — namely, the bankruptcy of thin-film solar module maker Solyndra, not to mention bankruptcies of Stirling Energy Systems and SpectraWatt — it’s pretty good, said Cleantech Group CEO Sheeraz Haji.

“Despite all the negativity around Solyndra, it appears that people are putting money to work and doing business,” he said. The good news extended to an uptick in early-stage deals, which saw deal count rise to more than 70 for the first time since last year — although the average amount of early-stage deals, at $ 6.1 million,, was down slightly compared to previous quarters.

Where VC saw some signs of life, however, the IPO scene looked increasingly bleak. Cleantech IPOs fell to $ 1.7 billion in the third quarter, down 23 percent compared to the second quarter and far below the record-setting $ 8.1 billion from the fourth quarter of 2010. In fact, the third quarter’s IPO tally represented a two-year low.

Haji pointed to global economic uncertainty and the increasing volatility of public markets over the past three months as driving investors toward safer investments. The performance of the 14 cleantech companies (11 of them in China) that did go public last quarter was dismal, with all but one, U.K.-based Waterlogic International, seeing declines in their share price since their debut.

The upshot, said Haji, is that other cleantech companies planning to go public are going to see a very hard road ahead. “I think the window is closed, except for the companies that are clear leaders in their fields and want to push through some headwinds to go public.” How that might affect the recently announced IPO plans of such green companies as Silver Spring Networks, Fulcrum Bioenergy, and Elevance Renewable Sciences will be one of the most closely watched questions of the coming months.

Here are some breakouts from the report:

- Cleantech Group named “energy storage” the top-grossing cleantech sector in terms of money raised, with $ 514 million raised, beating out solar’s second-place showing of $ 350 million. Some big winners included battery makers Boston-Power with $ 125 million, Nexeon with $ 65 million, Aquion Energy with $ 30 million, Leyden Energy with $ 20 million and EnerVault with $ 8.5 million.

 But there’s a catch — Cleantech included fuel cell companies in its energy storage category, which included such major third-quarter investments as the $ 150 million for Bloom Energy and $ 73.5 million for ClearEdge Power. Backing out those two fuel cell rounds would reduce the storage tally to $ 290 million, less than solar. Haji conceded that including fuel cells in the energy storage category was problematic, and that Cleantech might not continue to do so in the future.

- The solar sector’s $ 350 million in VC included some big investments in solar panel and cell makers, including thin-film startups like HelioVolt, despite the backlash surrounding the Solyndra debacle. But there was also an increased focus on “downstream” solar companies, such as inverter and materials makers, installers, and solar financing and software startups such as Clean Power Finance.

- The United States continued to lead in greentech VC investing, with $ 1.66 billion in deals, followed by the U.K. with 1$ 84 million, India with $ 165 million, and China with $ 138 million. But Continental Europe saw third-quarter green VC investment decline in the third quarter, no doubt tied to the dire financial and economic crisis gripping Europe.

- Corporate merger and acquisition activity in the cleantech sector fell to $ 11.81 billion in the third quarter, down from $ 13 billion in the previous quarter. The frenzied gobbling-up of smart grid, solar and energy efficiency companies we’ve seen so far this year appears to be fading a bit. Still, Haji noted that M&A was still “very strong” for 2011 compared to last year.

Go Green

This year a number of biofuels firms have made it through the IPO window including Codexis (Nasdaq: CDXS), Amyris (Nasdaq:AMRS), Gevo (Nasdaq:GEVO), Kior (Nasdaq:KIOR)), and Solazyme (Nasdaq:SZYM).

Like every greentech IPO that's priced in recent history, Mascoma has low revenues, large losses, and in Mascoma's case — an unhealthy amount of revenue from government grants. The company has raised about $ 135 million in venture capital and debt.

So while we're looking at Mascoma I took the opportunity to compile a list of those 11 greentech firms with S-1s currently filed. Three of the firms have investment from Kleiner Perkins.

Here's the list:

It will be revealing to see the solar and smart grid entries price their offering — that will provide a real indication of investor appetities in these sectors and serve to encourage or discourage the next startups in line to file.

Go Green

OK, folks, go on home. Stop all this saving-the-world, green-energy stuff. It just isn't working. Thiel has spoken.

Thiel is a billionaire libertarian hedge fund manager and venture capitalist who founded PayPal and was an early investor in Facebook and LinkedIn, amongst other software, social network, and data analytics companies. He endorsed Ron Paul for president in 2007 and Meg Whitman for California governor in 2010. Thiel has begun a "20 Under 20” grant program for young entrepreneurs through his Thiel Fellowship program. 

Thiel said at the TechCrunch event, “Cleantech is an increasingly large disaster that people in Silicon Valley aren’t even talking about any more,” adding, "The failure in energy and transportation points to a larger failure in clean energy — we aren’t moving any faster, literally, than we were when modern airplanes first came out," as quoted in Venture Beat.

Greentech Media is talking about it. And so are plenty of Silicon Valley venture capitalists. And Thiel, evidently, hasn't driven a Tesla.

So, he isn't a fan of cleantech — or at least the way cleantech investments have progressed.

Judging by these quotes in a Cato Institute essay, other things that Thiel doesn't like include poor people and women.

• “I no longer believe that freedom and democracy are compatible.”
• “Since 1920, the vast increase in welfare beneficiaries and the extension of the franchise to women [voting-ed.] — two constituencies that are notoriously tough for libertarians — have rendered the notion of ‘capitalist democracy’ into an oxymoron.”

The first words of his Cato essay are, "I remain committed to the faith of my teenage years." Which sounds about right.

There's no disputing Thiel's immense software, internet, and financial insight and success.

But calling cleantech "a disaster" when three cleantech IPOs have already launched this year and six more are on deck seems willfully ignorant. Daniel Yates, the CEO of Opower, notes, "Cleantech hasn't been a failure. It's VC investment in cleantech that has been troubled."

I would suggest that it is the height of arrogance to apply the lessons learned in Thiel's sectors of expertise to green technology and renewable energy. Facebook, LinkedIn, and PayPal hardly had a 100-year incumbency to displace.

Social networks, with their arguable value, are computing problems. Renewable energy, in most cases, is a materials and mechanical engineering problem. You can't just put 12 software engineers in a room with a foosball table and some ramen and get a better biofuel in 18 months. Solar panels are hugely capex-intensive high-tech commodity products. Smart grid improvements might come in the form of networks and software, but they are massive undertakings — Silver Spring Networks, a smart grid network platform, has taken a decade and hundreds of millions of dollars to get to its current IPO filing stage. In Vinod Khosla's viewpoint, the smart grid is going to be less about software and more about power electronics.

And advances in power electronics scale differently than software and social networks.

It's almost too simple an argument to win, which makes me wonder what Thiel really had in mind.

I'd also take issue with the idea that software, apps, and hackathons are going to have a material impact on energy usage. Sunil Paul, also an IT entrepreneurial success, albeit on a smaller scale than Thiel, has been leading an effort to "demonstrate the impact of applying information technology to resource constraints." Activities like analyzing traffic patterns, developing algorithms for ride sharing, and creating iPhone apps for turning on your appliances remotely may be cute, but they don't make material differences in energy usage. Perhaps there are some impactful water or farming or home monitoring applications yet to come from the dataset jockeying which Paul embraces.

Even the most prominent of the analytical software greentech startups, Opower, while experiencing some success in revenue and customer acceptance, makes a rather small impact on reduction in energy usage — somewhere in the two to five percent range. (Daniel Yates, the CEO of Opower, notes that a two percent to five percent reduction is "no small feat.")

Still, If that's the best that the software engineers can do to impact energy usage — I'd suggest we let the hardware engineers get a bigger share of the VC money.

And let the IT investors get out of the way.

Go Green

The following are three reports covering some of the hottest cleantech sectors: wind, solar, and algae biofuels.In each section, you’ll find growth targets for the respective industries, policy guidance, and a few investment recommendations.This report is your gateway to what will be a $45 trillion profit machine by 2050.

Investing in Solar Technology

Solar energy is big business these days. What started as a niche market is quickly transforming into a go green worldwide movement.And just as in other industries, the solar sector is evolving. And the best panels these days are considerably different from the panels being produced even just one year ago.

They use less (if any) silicon, and are more efficient, thinner and, in some cases, even flexible. But it hasn’t always been that way. . .

Investing in Next Generation Solar Technology

The solar industry started with bulky, rigid panels that had to be installed after a building’s construction. These are the photovoltaic systems most people think of whenever solar is mentioned; clunky panels that are clearly visible on a building’s roof.Those first generation solar cells were either monocrystalline or polycrystalline. . . the latter is what we normally see on roofs today.After those cumbersome cells came the second-generation thin-film models. The most successful of this generation has been the cadmium telluride (CdTe) series of cells.

These cells are much thinner, use less material, and are easier to produce — but they’re still rigid.The main company that produces these cells, First Solar (NASDAQ: FSLR), has been the darling of Wall Street for the past two years, soaring from $23.50 in 2006 to as high as $317.00.That’s a gain of about 1,250% for the green investors who got in on this IPO. Of course, this stock has sold off with the broader market during recent economic turmoil.  Take a look:

But First Solar isn’t the only company turning a pretty penny in the solar market. Here is an overview of the industry along with relevant companies.

The Solar Value Chain

At the very beginning of the value chain we have polysilicon producers, of which there are a few big players and a few hope-to-be big players. The product at this level is a commodity, so the low-cost provider wins as long as the product is pure and consistent.

Companies here include the Norwegian REC Silicon, a division of Renewable Energy Corporation (OSL: REC), the German Wacker Chemie (Frankfurt: WCH), and the private Hemlock Semiconductor Corp.Advantages in the poly industry stem from adjustments to levels of purity, using recycled or scrap materials, and vertically integrating (more on that in a bit), to reduce operational costs and improve margins. Remember, poly is a raw material and a commodity, so any saved cost creates a competitive advantage.

There are now several companies in the wafer space, but only a few operate as pure or near-pure plays. MEMC Electronic Materials (NYSE: WFR), whose ticker indicates its business, is a big player here and is also a participant upstream in the poly business. Renesola (NYSE: SOL) is also gaining traction.
These first two links in the solar chain have fallen victim to declining silicon prices, which have gone from over $400 per kilogram to $100 per kilogram in just the past few quarters, with $60 per kilogram likely soon. The sharp decline was induced by a sudden oversupply as companies rushed to build new factories to meet rising demand. Just as a glut of supply came online, the future demand picture was muddied by the global recession. . . and prices plummeted.

You’ll want to wait until demand visibility returns before dabbling in this sector.The cell stage is where we begin to see a great deal of participants. It’s also where we see the most diversity in business models.Some companies, like JA Solar (NASDAQ: JASO), focus exclusively on producing cells. The more common approach is to vertically integrate, which means participating in the upstream and downstream segments of the solar market.

Here we have companies like Solarfun (NASDAQ: SOLF), Yingli (NYSE: YGE), SunPower (NASDAQ: SPWRA), Q-Cells (XETRA: QCE), and a number of other major players. The idea is to control the silicon process from ingot to module, cutting costs by not having to purchase individual materials or parts at the spot price or via contract. It also ensures consistent quality and the protection of intellectual property.

The only problem is, it’s highly capital-intensive to vertically integrate because you have to build factories that produce all the materials involved. The tightening of credit markets has led to companies not being able to secure financing, forcing them to stall or cancel expansion plans.Not being able to expand means not being able to increase capacity, leading to no new sales growth and reduced stock valuations, which we’ve recently seen.

The last step is the production of a solar panel or module by arranging cells together, binding them, and adding the electronic components. This is what companies get most noticed for, like Suntech (NYSE: STP) and First Solar (NASDAQ: FSLR), though the latter doesn’t use silicon at all.But as we’ve seen in the other segments of the solar chain, prices are falling for cells and modules too. This excerpt from a recent Reuters article sums it up:

Analysts at HSBC forecast average selling prices for solar systems will drop by about a fifth in 2009 given oversupply and a tighter credit environment, but prices for cells and modules have so far fallen much faster than those for silicon and wafer. Several industry bellwethers, such as cell producers Q-Cells and Sharp as well as module maker Solon have had to revise outlooks.

In the long term, price reduction is good for the industry because it allows solar to compete with the going rate for retail electricity. But the rapid decline has left most producers holding the bag, sometimes having to sell panels at less than cost or with a negative margin. The industry, however, isn’t going away by any stretch of the imagination. Global installed capacity is still forecast to grow about 33% this year and about 22% in 2010.

Free Stock Pick #1: The Only Solar Stock for the Next Two Years

Buy Yingli Green Energy (NYSE: YGE) under $12.50. This is one of the most undervalued solar stocks on the market. One of the best among all Chinese producers, Yingli is establishing a global footprint as a low-cost solar leader. Getting in now will certainly lead to handsome gains down the line.

Wind Energy Stocks

Investing in Wind Energy: Returns that Will Blow You Away

Most don’t know that the domestic wind energy market is currently being dominated by overseas players.With the exception of General Electric, foreign competitors — mostly European — have taken a strong position as wind market leaders.Because of their early aggression in tackling environmental issues, it’s no secret that European firms have led the way in many renewable technologies. Their cavalierness has led Germany to be the cradle of the solar revolution; the Scots have taken the lead on wave power; a Portuguese/Spanish/Danish tandem leads on wind.Last year, Energias de Portugal, the national utility, bought Horizon Wind Energy from Goldman Sachs for $2.15 billion — the highest price ever paid for a wind-only company.

For its part, Spanish company Acciona acquired rights to about 1,300 MW of wind farms in the Midwest.But the U.S wind market isn’t the only one that’s booming. Europe still has billions to claim as well.In a recent report, the European Wind Energy Association (EWEA) said that wind became the leader in terms of new installed energy capacity.

Through 2020, wind is expected to account for 34% of new generating capacity. It’ll account for 46% from 2020-2030.And the goal of attaining 12-14% of Europe’s power from wind by 2020 is well within reach.By 2020, it’s expected that 180 gigawatts (GW) of electricity will be supplied by the wind. That’s enough for about 107 million European households.

For that to happen, wind-based capacity needs to increase 9.5 GW per year through 2020. That shouldn’t be too hard, considering the EU installed 8.5 gigawatts worth of wind capacity last year.The U.S. wind market and domestic wind energy stocks are ready to boom as well. . .

Domestic Wind Energy

Twenty years from now, wind energy could produce 20% of America’s electricity.

An Energy Department study found that wind energy could generate 20% of U.S. electricity by 2030, as compared to today’s one percent.The good news is found in the following Energy Department report.  The report finds that achieving a 20% wind contribution to U.S. electricity supply would:

• Reduce carbon dioxide emissions from electricity generation by 25 percent in 2030;
• Reduce natural gas use by 11%;
• Reduce water consumption associated with electricity generation by 4 trillion gallons by 2030;
• Increase annual revenues to local communities to more than $1.5 billion by 2030; and
• Support roughly 500,000 jobs in the U.S., with an average of more than 150,000 workers directly employed by the wind industry.

To achieve 20%, wind turbines would have to produce 300,000 megawatts of power, compared to today’s generated 16,000 megawatts.It’s doable.And it should come as no surprise that billionaire investors are lining up for a piece of the coming wind energy boom, including T. Boone Pickens.”When I go into these markets, I expect to make money on them. I don’t expect to lose,” says Pickens.

With plans to spend some $10 billion to build the world’s biggest wind farm, the billionaire has gone green.And it’s a brilliant move, as we deal with incessantly rising oil prices.

The Bottom Line on Wind Energy

Between 2006 and 2008, both Germany and Spain’s wind power capacity experienced impressive growth (about 16% and 44%, respectively).But U.S. capacity catapulted nearly 120% in the same time.

Don’t think for a second that wind energy is about slow down. . .Since 2000, wind power production has increased fivefold. Remember that during that period, oil prices have grown nearly the same amount. Now that peak oil is starting to edge itself under the global spotlight, we can expect to see a massive interest in renewables like wind energy.Reports from the U.S. Department of Energy state that wind energy supplied in just three U.S. states could potentially power the entire nation!

Think about it for a minute. . .

We’re talking about a source of energy that is a renewable, clean, has a low operating cost, and has technology that’s been around for over a century (the first power producing windmill was created back in 1887).But it isn’t just the past growth that we’re impressed with. Over the next two years, the Global Wind Energy Council (GWEC) predicts that the world’s installed wind power capacity will practically double to 158.3 GW.With that kind of growth, the investment opportunities will certainly be lucrative.

Free Stock Pick #2: The Only Wind Stock for the Next Two Years

Buy First Trust Global Wind Energy ETF (NYSE: FAN) under $17.00. Seeing as how most of the wind growth in the next few years will come from foreign companies, the best way to profit is through and exchange traded fund (ETF). This one hold some of the biggest and best performing wind companies in the world. . . and will be a sure bet as this sector comes of age.

Bonus Report on Algae Biofuel

Investing in Algae Biofuel

Hundreds of millions of years ago, the earth was covered with shallow oceans filled with algae and other simple critters.As landmasses shifted and grew, water was displaced, leaving thick masses of algal residue that were eventually buried and compressed.Skip forward a few eons, throw in some heat and pressure, and. . . ta-da! Oil.Then, in 1859, Colonel Drake drilled the first oil well in Titusville, PA, unleashing not only oil. . . but an economic juggernaut that would dictate our way of life for years to come.

The world began to use oil for everything from fuel to waterproofing, and since then has consumed over a trillion barrels. With such furious consumption — and no way to make more — world oil reserves are set to dwindle.Essentially, we’re going to deplete in less than 300 years what took hundreds of millions of years to form. And with the depletion of oil, alternatives are destined to emerge.And, ironically, algae is one of them.

Biofuel Bliss

Research like that being done at the Colorado State University’s (CSU) Engines and Energy Conservation Laboratory and the University of New Hampshire (UNH), suggests that algae could supply enough fuel to meet all of America’s transportation needs in the form of biodiesel.

That’s right . . . all of it!

Whereas with our current biodiesel feedstocks, like soy and palm, there’s no way we could grow enough to supply all of our transportation needs.In fact, it would actually require twice the land area of the U.S. devoted to soybean production to meet current heating and transportation needs.That’s a lot of beans! Algae, on the other hand, could supply all U.S. diesel power using a mere 0.2% of the nation’s land.In fact, enough algae can be grown to replace all transportation fuels in the U.S. on only 15,000 square miles or 9.6 million acres of land.

That’s about the size of Maryland.Granted, that still may sound like a lot. But consider that we now use 938 million acres for farmland in the United States.I’d show you a pie chart of how much land would be required for algae growth, but the slice is so tiny, it wouldn’t even be visible.Of course, the question is how the heck can you make so much biodiesel from such a small amount of algae?

Well, let’s revert back to ninth grade science class for a moment.Biofuels are really a form of solar energy. Because crops convert solar energy into chemical energy in a process called. . . Anyone? Anyone? Photosynthesis!

It’s this chemical energy, in the form of oils, that we need to produce biofuels.According to the UNH report, the more efficient a particular plant is at converting solar energy into chemical energy, the better it is from a biofuels perspective.So in this area, algae’s the clear winner.

In fact, algae does this so well that up to 50% of its body weight can be fat, or the oil needed to make biodiesel.That makes algae the highest-yielding feedstock for biodiesel, producing 24 times more oil per acre, on average, than the next leading feedstock: palm oil at 635 gallons/acre/year. Take a look:

And some companies have far surpassed the 15,000 gallon-per-acre accepted benchmark.

In fact, one company can produce 180,000 gallons of biodiesel every year from just one acre of algae. That comes to about 4,000 barrels, at a cost of $25 per barrel, or $.59 per gallon.To put that in perspective, it takes 3,750 acres of soy to make the same amount of biodiesel at a cost of about $2.50 per gallon for 4,000 barrels.

So, how is this going to be done?

Algae Profits Bloom

It is possible to use human sewage and wastewater from agricultural endeavors to enhance the growth of algae.In fact, when done right, algae can double and even triple overnight with the addition of these fertilizers.Compare that to the five-month growing season for soy or canola! Plus, as algae grows it absorbs Co2 from the air. MIT has even fed emissions from their on-site power plant directly to algae being cultivated for biofuel production.

In addition, fertilizer for other food crops can be produced by using the leftover nutrients that aren’t used to make the biofuel. That’s like having your algae and eating it too. So let’s back up and look at the big picture. . .We have the technology right now to cultivate algae that can be used as fuel, using human and animal waste as fertilizer.

This is waste that would otherwise need to be treated or end up in our nation’s ground water.Not a bad deal at all!

Then, after the necessary oils have been extracted from the algae, we use the byproducts (phosphorus and nitrogen), as fertilizer for the food crops that feed the nation — all while extracting C02 from the air.That’s a beautiful thing.

And that’s why we’re currently looking at a number of companies . . . some public, some soon to go public . . . that we believe will capitalize in a big, big way on algae.Now don’t get me wrong. The last thing we want to do now is jump on every algae-based biodiesel producer that comes along.

Until we see validation on a commercial scale, this is a market that will have to remain under the microscope.