Why Green Companies are Winning Investments

Rhodora is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Our planet’s natural resources seem inexhaustible, but they are not. Even water, our most abundant resource, composing 75% of the Earth, is being depleted and is now considered the new green. Deep within the earth where fossil fuels are formed for millions of years, the supply is also running low. Replenishing them would take millions of years and millions of fossils, something that we just can’t afford to sit by and wait for. Alternative energy source are the need of the moment and efforts from both the government and the private sector has been expended to find and develop alternatives. One of these alternatives is “renewable energy,” the energy that is derived from natural resources such as the sun, the wind, rain tides, waves, and geothermal heat.

An Idea Whose Time Has Come

SolarCity Corp (NASDAQ: SCTY), the No. 1 solar installer in the U.S., has over 31,600 customers, including homeowners and big organizations like the U.S. government, Wal-Mart, and Intel. For them, going public was a journey fraught with difficulties that paid off with a successful market debut in December 2012 in its initial public offering, with shares of stocks selling at $8 per share. The success of their IPO is seen as a good omen for alternative energy companies, a signal that investors are warming up to the clean energy technology industry. Solar City is a company that is engaged in the design, installation, and sale or lease of solar energy systems to residential and commercial customers. Their innovative business model requires no up-front cost and entails a 20-year contract that involves monthly lease payments. This type of business strategy is one of the factors that help SolarCity remain strong. While other solar companies struggle against competition coming from Chinese-manufactured solar panels, SolarCity and fellow solar installer Real Goods Solar (NASDAQ: RSOL), a leader in turnkey solar energy solutions, had a 2.13% increase in share price to $0.99.

Additionally, SolarCity also sells electricity from renewable solar energy, including servicing their customers in their energy efficiency upgrades and for first-time customers, an evaluation of their home energy needs. Electrical vehicle owners can also avail of their electric vehicle charging services, which are available in convenient locations, such as in Home, Depot, which is serving in 14 states.

Confidence from an Investment Mogul

The solar energy industry is currently being subsidized by governments such as the U.S. and throughout Europe as a show of confidence that the industry has a bright future. Not only are governments the ones convinced that solar energy is the answer to the pressing problem of depleting fossil energy, even investors like Warren Buffett have put their stake on it. Buffett is known for his bets on not so-popular stocks that eventually paying off. The recent sale of SunPowerCorp’s (NASDAQ: SPWR) Antelope Valley Solar Projects to MidAmerican Solar, a company controlled by Warren Buffett’s Berkshire Hathaway, resulted in the 50% spike of SolarPower shares to $8.15.

It is true that over the last few years venture capitalists have invested billions into the solar, smart grid, and other energy technology companies, but because of the global economy not being strong and the slow adoption of this new technology by customers, it didn’t take off as expected. With Warren Buffett joining the fray of confident investors, coupled with the spread of global awareness on the fragility of our fossil energy sources, and with technology assisting in making solar energy available, affordable, and compact like what SolarCity is doing, investing in this environmentally-clean industry is a go. Government regulations on unhealthy carbon emissions will also mean a strong demand for clean energy sources for years and years to come.

The Sun is Always Up

The world of investments has been in a boom for almost 60 years now, and its end is not in sight. With the globalization of world business, new markets worth trillions of dollars are unrelentingly created, spawning new customers that measure in the billions. Solar energy’s future is assured, and the success of high-tech IPO’s such as SolarCity is vital to the entire investment world. Rival companies in the clean energy industry such as Ameresco Inc and NRG Energy Inc welcome such positive news of a successful IPO, as it is going to help educate potential investors and help them see that there can be some big successes in the clean energy industry. 

RhodoraDagatan has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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!

blog comments powered by Disqus