Kerschner: There’s no
proverbial silver bullet, so you don’t want to wait around for the one winner.
This is a total behavioral shift for business. It affects energy,
transportation, new cars, power generation, electric lighting and insulation.
There will be a
lot of little winners. Solar technology works in places
where there is sun, and wind technology in places where there is wind. You want
to diversify. Leonard: A lot of these
industries are small. You have 40 percent per annum growth in the solar
industry, but that’s from a very small base. Because of the size of these
markets, there is a lack of depth of opportunity, and broad swings in
valuation. I look at how regulations are changing things now. Companies in
certain industries cannot deploy old solutions and they need new ones. That’s
bringing new technologies into the field. I like companies that address a
solution for an existing customer base. They’re not doing something new; they’re
displacing. They’re migrating existing revenues from someone else’s old way of
doing things to their new way. For example, the pulp and paper industry is
notoriously wasteful and inefficient. So I’m looking for tiny companies that can
improve that. I don’t invest a lot in fuel cells or other things that are 20
years off. I look for companies with accelerating revenues that can scale
without huge amounts of capital or technology. Weissenstein: There’s always
an issue that’s a starting point. For example, companies want to move into
clean, renewable sources of energy, like wind. GE manages wind turbines, so it’s
part of its income. There are companies in Europe that rely on wind entirely. So
where are they getting the wind turbines? Then there’s the interest in making
buildings more energy efficient. Who will make conversion kits for that? Maybe
air-conditioning companies. You go through the process, discover the source they
will use, the impact it will have, and you keep going down this road, asking
what it means after this and after that.
1. Ride the Pork Barrel:
Look for government regulations and
subsidies that favor a specific sector, particularly if Democrats take the White
House in 2008. But beware when those subsidies propping up an industry
disappear.
2. Invest in Infrastructure:
Successfully delivering these
alternative energies in a cost-efficient and practical way will be key.
Discovering new sources isn’t enough; you have to consider how people will
access them. 3. Think Globally: The
United States isn’t the only player in the game—and most countries have
already set targets for renewable energy regulations. 4. Take the Long View: Invest in opportunities that are steady and stable. Look for
companies, for example, that supply equipment and services to the
alternative energy industry. 5. Diversify Your Exposure: There’s no silver bullet in this race; many solutions and strategies will
prevail in the long run.
Eileen P. Gunn is a freelance writer based in
Brooklyn. Photography by Hugh Kretschmer.
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