Never bet on a lame horse.
Makes sense, right?
Too bad that’s exactly what’s happening right now — and Uncle Sam is making his bets with your money!
Then again, this has been going on for years…
You’ve heard the sound bites (no matter how skewed they might be) from one side of the aisle accusing the other of blowing $90 billion on green projects, followed by countless rebuttals and name calling.
It’s an endless drab cycle of blame that accomplishes nothing but confusing the masses and stalling productive policymaking from taking place.
Vote-seeking banter aside, today I want to take a closer look at the major hurdles renewables still have to overcome.
Before we get to that, however, I’d like to show you what the U.S. government is gambling on with your hard-earned cash…
They’re betting the house on just one tiny sector: solar energy.
Betting Big on Solar
You may not have caught wind of the GAO’s Congressional report when it was issued in August (don’t beat yourself up if you didn’t read it; not many people did).
In 2010 and 2011 the United States supported 65 renewable energy initiatives totaling 4,996 projects. Of that total, 1,506 — or about 30% — supported solar projects.
Here’s a breakdown of the agencies’ loan guarantee programs:
As you can see, roughly 90% of the obligations came from the Department of Energy, which spent half of its $2.3 billion on solar-based projects:
Do they deserve some credit for the effort?
Sure.
But the better question to ask is: Should they be pouring billions of dollars into these projects?
Solar: Failure or Savior?
Renewable energy — and solar in particular — has some serious hurdles to overcome before it’s able to make a real dent…
Renewables accounted for approximately 9% of U.S. energy consumption last year, yet solar only made up a trivial 1% of the mix.
Of course, that doesn’t even touch the stranglehold oil has over our transportation sector.
Baby steps, baby steps…
With that line of thinking, it would make sense to give the renewables a bit of a boost to help them along.
More importantly, it would add some desperately needed jobs.
In fact, the $34.5 billion in loan programs for renewable energy systems in the U.S. has generated an estimated 60,000 jobs.
Sadly, the devil is in the details here: Only a small number of those jobs are permanent; most are temporary jobs relating to construction.
Still, if the government’s going all in on its energy plan, perhaps it’s not a bad idea to join the good cause and take a few gains in the process…
Green Horses with Broken Legs
We might want to rethink that.
Because while green energy will play a major role after oil, right now those investments come with an extraordinary amount of risk — and not only when it comes to solar, as my colleagues have pointed out in these very pages.
Don’t get me wrong, dear reader; it’s very tempting to take a stake in these beaten-down companies.
And for investors new to the game, picks like First Solar seem to deliver for shareholders…
In the beginning of June, First Solar was trading for less than $12. The profit-taking since that time has been a welcome sight in a volatile market:
But take a look at how this solar “winner” has performed if you’ve had skin in the game since 2008 — along with two more familiar faces to government-backed bets, Beacon Power Corp. and SunPower:
Still confident to invest alongside the U.S. government?
Look, there’s absolutely no doubt that solar investments will pay off eventually…
But today isn’t that day.
And whenever you hear someone bashing Big Oil for being anti-green, you might kindly remind them of the fact that Big Oil is spending billions of dollars each year to develop renewable energy. BP alone has dished out more than $7 billion on green projects over the last several years.
We prefer to stick with the stocks that can easily double in 2013 — stocks whose success won’t come from taxpayer-backed green gut shots.
In fact, three of these investment gems are drilling into the sweet spots of North Dakota’s now-famous Bakken Formation as we speak…
All are still trading for less than $10 a share.
You can read my analysis on these companies in my latest investment report.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.
Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.
