Alternate Energy: A multi year mega growth opportunity

Copenhagen talks may not have yielded any significant consensus, so far, amongst global leaders on the steps to be taken to reduce the pace of global warming, however nobody can disagree with the danger that this phenomenon presents to our future directions. In fact it is quite clear that if not this summit then in all probabilities the next one at Mexico should result in a broad agreement and road map for reducing emissions around the world.

Although this will result in major changes in various industries but energy sector is likely to be impacted considerably. World over, demand for clean energy is likely to multiply and nearly all governments and various multilateral organizations will give ample incentives and fiscal benefits to promote eco friendly power generation and systems that support them.

From the stock market perspective this presents a wonderful opportunity for long term investors to create wealth by buying into shares of companies engaged in generation of wind, ethanol or solar power or manufacturing components and equipments used for generating renewable power.

Praj Industries, PAE, Moser Baer, Suzlon, Indo Wind Energy, Shree Renuka Sugars, Bajaj Hindustan are some such stock ideas. Since this is a new development where technology changes are going to be rampant the risk component will necessarily be very high. Hence only genuine long term investors should invest a part of their portfolio in some of the abovementioned stocks. Also it will be a good idea to diversify across various companies and various segments as it is impossible at this stage to identify which segment – wind, bio-fuel, solar, nuclear or some other new technology will emerge as the best alternate to conventional  methods of power generation.