Thus it should be evident that the water utilities focused on supply and maintenance of fresh water have a lot of growth potential. On the other hand, the sector is usually highly regulated which means the companies running the infrastructure are rarely attractive for investors. Because of this, green investors will probably find companies developing water technology more interesting than the companies involved in the maintenance and management of water resources.

Even now in countries like China, India and Brazil, water shortages are a severe problem. In the next decades, the pollution and population growth will probably make the fresh and drinkable water even scarcier than it is today. It has been estimated that the number of water-scarce and water-stressed countries will rise significantly in the next ten to thirty years. Because of this there will be constant need for new technologies for purifying water.

At the same time the big companies and institutional investors are acutely aware of the risk connected to the availability of water and the sustainability of the corporate technologies using fresh water.

• In a recent survey, 59 % of the largest global companies report exposure to water-related risks.
• Drought-related losses in Texas and neighbouring states total $10 billion.
• According to the Chines goverment, 52 % of the country’s industrial output comes from regions facing water scarcity.

This situation provides an investor with interesting long-term perspectives as there are several interesting water purification companies in emerging markets. The passive green investors should probably have a look at some of the interesting water ETFs quoted in New York. The more speculative green investors can, of course, take a look at individual companies active in the sector.

Alternative energy ETFs are a good example for this. Usually they track rather narrow indices consisting of only a few dozen companies. As the number of the underlying securities is rather low compared with for example S&P 500, the volatility is bound to be higher than the volatility of a broad index.

Furthermore, the returns of securities included in a sector index are usually highly correlated with each other. Because of this the alternative energy ETFs do not provide the portfolio with as much diversification as ETFs based on a broad index would do.

Of course, alternative energy indices and ETFs help the investor to significantly reduce the risk a specific company adds to the investment portfolio. Thus they help to diversify the company specific risk. They do not, however, provide any hedge against policy changes or against the impact of changes in e.g. energy price that tend to have an effect on the whole sector.

Most investors who buy an alternative energy ETF tend to be bullish on the sector. If the market behaves counter to the expectations the losses can be very steep.

On the other hand, you might use alternative energy ETFs or other sector ETFs just in order to diversify your portfolio. Any specific sector might not have that high correlation with the general development of stock markets. Thus a small investment in a volatile but potentially lucrative market sector might in fact reduce the total volatility of your portfolio.

During the last year, my green ETF investments have not been very successfull. On the other hand, very few of my investments can show a positive growth for this year. At the same time, I’m sure the present bear market will not continue for years and will provide investors with good chances to buy stocks and green ETFs at discount.

One of the green ETFs I decided to sell a few months ago was Guggenheim Solar ETF (NYSE:TAN). The decision was not based on any fundamental change in my opinion regarding the long term potential of the sector which I still believe in — the decision was based on possibility to deduc the losses from taxes I have to pay. Moreover, I plan to add the either the very same ETF or another green energy ETF to my portfolio later this year.

At the moment, several small solar panel manufacturers in the USA are in difficulties. According to Tom Lydon, “the solar sector is turning into a cutthroat industry” because of the high production that has flooded the solar panel market lately. In addition to US manufacturers, foreign companies have been very active in the solar business.

For some investors, this might be a good reason to turn away from solar and other green energy ETFs. For others, like me, the higher competition simply means that the surviving companies will be fit and profitable in the future. And that will ensure there still is long-time growth potential in the solar sector.

by Photos8.com

Some of the most interesting green bets in Africa are those connected with the Desertec plan.  According to the plans, it could be possible to import as much as 15 % of the electricity required in Europe from the Saharan power plants by 2050.

Desertec is centered on plans to build huge solar power plants for producing electricity in the Saharan desert. The plants would be concentrated solar power plants (CSP) instead of the photovoltaic technology. CSP plants use hundreds of mirrors for concentrating the sun’s heat. The heat is then used to heat water to drive a turbine in the same way as traditional thermal power plants.

At the moment, I see three problems in investing in Desertec. First of all, most of the companies involved in the project are major European players in energy, finance and technology which have a very diversified project portfolio.

Because of this, an investment in companies like Deutsche Bank, Munich Re and Siemens can only marginally be considered as green investments. Moreover, I would like to invest in African companies — not in European companies inbesting in Africa. On the other hand, the investments in these companies would not be as volatile as North African stocks would be.

Another problem is caused by the very long time span of the project: it will take decades before the solar plants produce electricity to be imported in Europe. An investment horizon of several decades is probably too long for most  of the investors, even for those who consider themselves  green investors.

It seems that even the insiders have lost some of their faith in FSLR as Michael J. Ahearn has sold a substantial amount of FSLR shares. During the last week of February, he sold FSLR shares for about $162,8M. Mr. Ahearn is FSLR’s former CEO and current chairman.

On the other hand T.L. Kallenbach (EVP, Marketing & Prod. Mgmt.) has bought FSLR shares for $103K and the new CEO Robert J. Gillette has added FSLR shares for $1.05M in his portfolio.

Yesterday, FSLR was quoted at $133.12. During the last year, the stock price has fluctuated between $85.28 and $283.45.

Read more in First Solar, SCE sign PPA for 550 MW solar projects (Cleantech Group).

For example, IBM sees big opportunities in the water management. At the moment, the government stimulus programs in water sector in both USA and China is making the sector even more interesting for the global leader in technology.

According to IBM, leaks in water infrastructure account for up to 60 percent of water supplied. This costs worldwide $14 billion every year. (Source: Reuters)

This wind energy company’s stocks might be a good choice for green investors who understand the huge potential for renewable energy sector in China. The wind energy has huge potential for China and the market grows constantly.

Read more about the company in China Wind Power Starts Trading (SustainableBusiness) and China Wind Power starts trading on TSXV (Cleantech Group).

During the last trading days, the First Solar (NASDAQ:FSLR) has continued to fall after the company announced it would offer rebates to defend its position in the German market against sharp price cuts from competitors. The company’s stock has dropped 14 percent since that announcement. Yesterday the stock was quoted at $147.98. Read more in First Solar down on competition, exec share sales (Reuters).

GT Solar Inc. (NASDAQ:SOLR) reported its profit jumped 51% on surging margins and higher revenue. As the stock market analysts had expected more, the shares dropped 4.1% to $5.67 in after-hours trading.

Photo: Fernando Tomás

For the Q2, the company reported earnings of $7.8 million (5 cents a share). Revenue increased 26% to $71.8 million. Read more in GT Solar 1Q Profit Grows 51% On Higher Margins; Sales Miss (The Wall Street Journal).

Less than two weeks ago, we reported on Bosch acquiring ersol, a German PV company. The German Robert Bosch GmbH is continuing the aquisition of solar technology companies with Aleo Solar AG (ETR:AS1). Read more in Bosch looks to take 39.4 pct stake in Aleo Solar (Businessweek).