There are very few sectors of the economy that investors can get excited about these days. But at least the alternative energy industry can point to the backing of Barack Obama as something in its favor. The president has pledged $150 billion over the next 10 years to promote renewable energy sources, improve energy efficiency, weatherize homes and generally create a “clean energy future.”
For investors that amounts to a shot in the arm for domestic alternative energy companies, who’ve spent years watching large foreign companies grabbing market share in the U.S. As David Schoenwald, fund manager of the New Alternatives Fund, points out, “the largest owners of renewable energy projects in the U.S are foreign companies.”
Schoenwald has some experience in this sector. Since 1982 he and his father, Maurice Schoenwald have managed the New Alternatives Fund as it has grown from the minimum SEC required $100,000 to start a fund, to about $159 million in assets today. While they began conservatively, investing in domestic companies, over time they found more and more attractive investments overseas. Of the 48 companies in the fund as of the end of December, 31 of them were based in other countries.
Many of those companies benefited from efforts by their governments to develop the energy sectors they inhabit. Vestas Wind Systems, for example, installed its first wind turbine in 1979 and still only had 60 employees in 1987. But the Danish government invested in wind power and today Vestas is a global leader in wind power systems with more than 20,000 employees. Other industry giants are based in Spain, France and Portugal.
Certainly there are many U.S. companies active in the alt energy field. But it says something that in our own backyard the largest players are from other countries. Schoenwald shys away from picking favorites. But he calls First Solar, Inc., a manufacturer of solar modules based in Tempe, Arizona, “an interesting company” that has created an inexpensive means to create solar panels.
Will First Solar or any U.S. companies emerge as global giants? Perhaps. But with the federal government making alternative energy a priority, the prospects for the sector as a whole have become much brighter.