In Great Britain, more than 60 gigawatts (GW) of power, a quarter of that from renewable sources, reportedly is waiting to be connected to the nation's power grid. In California, electric utilities say they have little hope of meeting the state's mandate of achieving 20% of their generation from green sources by 2010 largely because of delays in getting transmission lines licensed and built. Meanwhile in Brazil, work is underway on what will be the world's longest power line, which is being built with high-voltage, direct-current (HVDC) technology because it is ideally suited for hooking up renewable energy sources located in remote regions of the country.
Notice a trend here?
The "missing link" in many a nation's scheme to go green is grid connectivity. Globally, hundreds of thousands of miles of new power lines are going to have to be built over the next five or so years to hook up the tens of thousands of carbon-controlling solar, wind, geothermal, tidal and other green electricity generation projects that governments everywhere are mandating must be built. (If, as expected, there's a global cap-and-trade exchange in a few years, the number of needed miles of new grid will be even greater.)
It's actually easier to invest in the "grid connectivity" sub-sector of alternative energy than it is in more prominent sub-sectors like solar and wind. Solar investors must worry about some super-duper new technology being developed that makes their guy's business model obsolete. They also must worry about price swings in solar's basic commodity – silicon. Wind investors, meanwhile, if they are in the U.S., run into the difficulty of buying shares in firms that only trade abroad.
With grid connectivity, not only are there relatively few leaders, they also trade on North American exchanges.
Last week, EnergyTechStocks wrote that to make money in alternative energy, an investor may need a mini-portfolio of Japanese stocks (see To Make $$ in Alternative Energy, US Investors Might Want to Build Their Own Japanese Stock Portfolio) This week the advice here is to also think about building a mini-portfolio of "missing link" stocks from among the following giants in the power transmission business: ABB Ltd. (ABB); Siemens AG (SI); General Cable (BGC); Quanta Services (PWR); MasTec Inc. (MTZ), and Valmont Industries (VMI).
There's also a personal favorite of EnergyTechStocks' managing editor, not that he has any money invested in the firm. It's Composite Technologies (CPTC.OB). This company has a patented aluminum composite power line core that can transmit more power than regular copper lines. Yes, it's more expensive, but with not-in-my-backyard (NIMBY) still ever-present, it would seem likely that governments will place a premium on getting more out of existing transmission rights-of-way.
