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Some Homework References for Investment in Green Energy

The government’s stimulus plan has a huge investment in green energy. The standard argument against green energy is that green energy requires subsidies to be competitive with coal and oil. The recent bankruptcy of numerous ethanol plants with the drop in oil prices is a case in point. The counter argument is that the secondary costs related to foreign oil dependency and burning of coal are never counted into the equation when comparing with green energy. Here an expensive war in Iraq is cited as well as the societal costs of pollution. As the country seems to be heading in a green direction we thought we would provide a couple of green references for the long term investor’s consideration.

New Rules May Make Traditional Fuels More Expensive and Green Energy More Competitive

According to press reports the EPA is drafting new rules that make it more costly to build fossil fuel power plants and large, fuel inefficient cars. One is reminded that the Europeans have taxed gasoline heavily for years in order to subsidize mass transit. It would appear that the new administration is taking the issue of a conversion of the country to more green energy very seriously.

A Green Energy Homework Reference

As with all long term investing it is important to do your homework. Here we reference three web sites with green energy information. In Western Minnesota, the University of Minnesota, Morris campus derives half of its electricity and much of its winter heating from green energy sources. A single wind turbine is expected to be paid for in about ten years with the subsequent profits to be sent on scholarships. This green energy project is doing so well that two more turbines are in the planning stage.

Wind Turbine

The wind turbine at the Morris campus of the University of Minnesota generates 5.6 million kilowatt-hours of power each year providing half of the electricity needs for campus buildings. The turbine stands 230 feet high with three blades each 135 feet long on a ridge where average yearly wind speed is 16 miles an hour at 230 feet. According to campus sources the cost savings of total turbine cost, versus local electric costs, will allow for repayment of bonds issued for this project in about ten more years (fifteen total since the start of power generation in 2005). After that the “savings” each year will go toward scholarships. For more green information about their wind turbine visit the Minnesota, Morris green energy website which is morris.umn.edu/green campus.

Biomass Energy Production

The West Central Research and Outreach Center (WCRC) is a part of the University of Minnesota system. This facility runs a “biomass’ facility where the fibrous parts of corn are burned without greenhouse gas production. The facility produces up to 80% of heating and cooling requirements for the University of Minnesota, Morris campus.

The biomass plant is largely a research facility but WCRC (wcroc.cfans.umn.edu/) and Biomass Magazine (biomassmagazine.com/) are excellent basic references for this green energy source.

From the investor’s viewpoint a project has to make money year in and year out in order to be viable. We offer the wind turbine as an example of a project that appears to be paying for itself year in and year out. According to campus sources the “profits” will go to scholarships in a decade but there are anticipated to be profits.

The biomass project appears to rely upon agricultural by-products. As such it will work, as it does, in an agricultural setting. The biomass project, for the investor, primarily has research value. However, if the Obama administration puts money into low cost loans, government guaranteed bonds, etc. more green energy projects such the WCRC biomass project could become profitable for the public sector.

We suggest that when you see the government pumping money into green energy you will see companies racing to put up “green” projects. The websites cited here will be good independent reference points when you are checking the numbers.





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