Which Companies Wield the Green Power?

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Even setting aside the boost of the recent U.S. initiatives at funding and tax relief on renewable power sources, eco-friendly investors can still expect more upside potential from the green energy stocks that have already risen as a result of the moves of the Obama administration. There’s more room for growth worldwide on renewable energy sources, based on 2012 research data from the International Energy Agency (IEA). This study showed that global renewable electricity generation for the 2011–2017 period is growing by 1,840 terawatt-hours (TWh), nearly 60% over the 1,160 TWh increase seen from 2005 to 2011.

By 2017, it is expected that worldwide power generated from renewable sources will approach 6,400 TWh for an annual growth rate of close to 6%. The IEA also estimated that in 2009, renewables already accounted for nearly 20% of worldwide electricity generation. This share is expected to increase further as renewables have: (i) become more economically attractive with established market networks, (ii) retained government policy support as recently shown by the U.S., and (iii) as important, generated a widening public sympathy.

A peek at Canada

There are many probable additions to an investment portfolio for those who want to be part of (and from an investor’s standpoint, materially benefit from) the snowballing worldwide movement to reduce mankind’s carbon footprint in our planet by using renewable energy sources.

Given that hydropower account for the bulk of total renewable electricity (80% worldwide, per IEA), a spur-of-the-moment choice is Innergex Renewable Energy. This Canadian company generated revenues of $132.4 million during the first nine months of 2012, up 15% from a year earlier. For the same comparative period, earnings rose 14% to $102.1 million.

Innergex has power generating facilities in Quebec, Ontario, British Columbia, and in the state of Idaho. Its renewal energy sources are also diversified, with its capacities drawn from hydroelectric sources, solar photovoltaic farms, and wind energy farms in North America. Besides selling electricity to utilities, Innergex also provides services on the development of sites for renewable energy sources.

Taking a crack at the $67.7-billion market in China

Taking this into account, a business trip to Beijing may be worth considering for Innergex executives these days. China, according to a Bloomberg New Energy Finance research released this January, posted a 20 percent increase in renewable energy investments to $67.7 billion in 2012, in the process overtaking the U.S. as the world’s biggest investor in green power. The same study showed that China, for the fourth year in a row, beat the U.S. as the world’s top market in wind energy, installing 15.9 gigawatts last year. This represents 35% of total world onshore wind capacity installed last year. Wind power now ranks third as China’s largest energy source, with coal and hydropower ahead.

GE has the global reach

Putting China into the equation of a green stock portfolio, General Electric (NYSE: GE) may also come in as a mainstay. As a diversified technology company, it already has manufacturing and assembly facilities for wind turbines in China, as well as in Spain, Germany, Canada, and the U.S. GE’s wind turbine business is complemented by support services ranging from development assistance to maintenance and operation.

For the fourth quarter of 2012, GE posted operating earnings of $4.7 billion, or $0.44 per share, both up 13% from the fourth quarter of 2011. Revenues of the company’s industrial segment advanced 11% to $10.8 billion during the quarter, with China contributing a 19% growth.

Chinese joint venture for Siemens

Siemens (NYSE: SI) is another diversified conglomerate that has a strong stake in renewable energy sources. The company’s energy sector has a wind power unit that contributed a 27% volume-driven revenue growth in the company’s fiscal 2013 first quarter. Siemens’s total revenues for the quarter totaled €18.13 billion, up 2% from €17.85 billion a year earlier, while net income slid 12% to €1.21 billion from €1.38 billion.

Notably, the company has a wind power joint venture in China that completed delivery of an onshore plant in end-2012. Siemens, whose other sectors include industry, healthcare, infrastructure & cities, has also established its first factory in China for the production of wind turbine blades.

A wild card entry

For a pick solely devoted to green power operations, Ormat Technologies, Inc. (NYSE: ORA) also appears a viable pick. This company not only owns and operates geothermal plants and recovered energy-based power facilities in the U.S. It also develops and builds such plants in the U.S. and overseas, as well as manufactures and sells equipment for these facilities. The upside of the geothermal business, however, is limited, with the IEA projecting that even with steady medium-term growth, geothermal plants will account for just 1.4% of total renewable energy generation by 2017.

Go for the long haul

In conclusion, GE and Siemens appear as solid picks for investors who want green power in their portfolios. These companies have well-diversified operations that can cushion the changing fortunes of companies seeking growth opportunities from renewable energy sources. A prudent strategy of buying on weakness and long positioning should be worth a thought, however, as there are sentiments in the market that both GE and Siemens are overvalued at their current prices.


dARTtanyan001 has no position in any stocks mentioned. The Motley Fool owns shares of General Electric Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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