Smart Grid Investing

With the expected adoption of the “cap and trade bill, many investors are on renewable energies moving train to jump. And why not. With the government on a cap-and-trade program that will drive the cost of electricity charged, there are many new ways to use the flow of investment dollars from public and private sources. They are also looking for investment opportunities on a stock of Smart Grid Company.

This long head pressure in alternative power generation caused investors to a new view of the old system to take power. While there are attempts to move an electricity market system, but most of these efforts failed in their original objectives. Secondly, the power transmission and distribution system are very similar and is a big problem. For example, T. Boone Pickens has announced his plans to build it to contain the world’s largest wind farm in West Texas. Part of the reason is the lack of adequate transmission lines for electricity from wind to run the remote locations in the cities. This is a smart grid investment makes sense for investors.

This old power grid is designed to electricity from plants that are in line generation in the near distribute. Construction of large wind farms in West Texas needs a way to move that power in urban areas that need it. Furthermore, what if the wind is blowing during the hottest days of summer stops happening? Our current grid system is ill-suited to handle the variability of the new power sources. The solution of the transition to new energy sources is only half the battle. After generation of power, you need to distribute it where it is needed at the right time, in the right quantities and at lower cost.

You can make a interesting comparison with the current power supply and network communications. If Alexander Graham Bell, inventor of the telephone were to come back today, he would not recognize the modern communication system with digital-based Internet and wireless networks with their mobile phones, Web 2 0, YouTube and Twitter. On the other hand, if Thomas Edison back, he would more easily recognize our electric transmission and distribution systems to control, because he was one of the earliest architects grid. While it has grown considerably, the basic design remains the same.

The Smart Grid is the conceptual answer to the big changes needed to the current electrical system that a more efficient, adaptable is to adapt, use and suitable for the variability of the sources of power and electricity will help customers more effectively. As the development of the Internet and the dot-com boom and bust, this is a huge opportunity with many unknown risks.

According to Cisco Smart Grid offers great investment opportunities that are larger than the Internet for those willing to take advantage of are. Jeff Immelt, CEO of GE considers the Smart Grid is the largest investment in the first half of 21st be century. President Obama is counting on investment help from the government and businesses in the Smart Grid in the United States, leave it out of its dependence on foreign oil.

According to a 2009 report by the American Society of Civil Engineers, 2 trillion U.S. dollars must be invested by 2030 in our electric infrastructure. The Brattle Group estimates that it takes $ 1. 5000000000000 2010-2030 for the upgrades that pay for the additional infrastructure for tomorrow’s electrical system.

These investments will take place throughout the electrical network in the home, in buildings, universities, neighborhoods in cities and across continents. Already we see some of these enhancements. Some homes have smart meters in length, which consume electricity in detail, providing information about service programs. At some point, homeowners can access this data, so that it can make adjustments in their consumption. The cost of these meters is quite high, and is passed on to consumers. The hope is that once consumers have access to information on their consumption, they will take steps to cut their consumption of electricity billing costs.

This raises the question whether there is a cost-benefit analysis of many of the investments to achieve the goal of a Smart Grid. Many people equate the Smart Grid, the growth of the Internet. Similar to the investments that came with the growth of the Internet, there were some who made the valuable services available. Others never paid off. I suspect we will see many smart-grid investments experience the same fate. For example, as the WSJ, 27 April 2009, the home of smart meters installed reported cost $ 250 to $ 500 per unit. At that price, it is not clear whether the benefits of meters will be provided sufficient to cover its costs.

Investing in parallel on the Internet is an interesting analogy. The big winners were able to attach themselves to the “killer application” that drove business to them. However, there were many losers, which does not meet its promises. Finally, those who installed many of the components and the infrastructure good, even if they are not big winners.

OK, what is the killer application of the Smart Grid? The best definition I found is for a killer application from www. . Netreturn com “A new product or service that believe creates an entirely new category and his first was dominated creates an enormous return on initial investment. Some people say that the smart grid killer application is not the plug in car. ensure that the definition meets very well.

Anyone remember the smart home? You tried to get off the ground for a number of years. This was put forward another idea that some did not receive a lot of success when it was difficult to generate the payment.

There are a number of start-up founded and developed Smart Grid Business products for this market. Smart Grid shares pure plays such as Comverge (COMV)), RuggedCom (RCM. TO) and EnerNOC (ENOC) were all in the second quarter of 2007 of the public. Some very large companies such as GE, Honeywell, Cisco and Google are smart grid offering. Remember, the size of their Smart Grid services will be relatively small when compared to their turnover.

Companies to install, and offer many of the components of a Smart Grid should offer good returns, similar to the company, the picks and shovels to the miners sold. Shares of Smart Grid companies such as ABB Ltd. (ABB), Siemens AG, and GE are likely to benefit as energy companies in building the new infrastructure for the Smart Grid. One way to approach this market through an ETF that holds stocks in a smart grid funds. The Cleantech Index CTIUS, created by the Cleantech Group LLC, is the basis for Exchange Traded Funds (ETFs), the smart grid holding shares in the PowerShares Cleantech Portfolio ETF (AMEX: PZD) and KSM Cleantech ETF Israel. The Index includes large companies such as ABB and Siemens as well as smaller companies such as Vestas Wind Systems (VWS. CO), Itron (ITRI), Trimble Navigation (TRMB) and RuggedCom (RCM. TO). These ETFs hold stocks of companies that focus on clean technologies, not only smart grid companies.

Investment in Smart Grid stocks offer exceptional opportunities. There is also a substantial loss for those who enter not careful. While it is tempting to focus on what the killer application for the Smart Grid, a more conservative strategy, its use will be able to show to the company, the true cost-benefit from their products or services and focus, a positive cash flow.

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