Will the energy bill help renewable energy investing?
One of the biggest sticking points as energy bill negotiations take place in back rooms of Congress is electricity from renewable sources. Even as more states jump onto the renewable energy bandwagon, Congress is balking at the notion of requiring utilities to generate electricity from renewable sources (only 15 percent, though) by 2020. The New York Times reports on the benefits of renewable electricity:
Almost two dozen states have already figured out that this is both good for the environment and good for the economy and have enacted renewable energy standards, which will create jobs, stabilize natural gas prices and reduce global warming emissions.
But what does this mean for your portfolio? Some stock analysts are already recommending that you sell Big Oil stocks. Commodities analysts think that crude might be overvalued, and that demands by foreign countries to share more of the oil wealth from developers like Exxon (XOM) and ConocoPhillips (COP), might cut into profit margins.
And don't forget that the clamor for cleaner energy is rising as the dangers and expenses associated with dirty energy climb. Additionally, consider this: Even if big utilities like Southern Company do manage to block an energy bill that mandates upgrades to our outdated power grid, eventually changes will have to be made. So, maybe this year renewable electricity will fail, but it will keep coming back. And each time it does, the calls will be stronger.
This is good news for renewable energy investments. Solar stocks like SunPower (SPWR) and First Solar (FSLR) and renewable energy holdings companies like Aventine (AVR) and renewable energy ETFs like PowerShares WilderHill Clean Energy (PBW) will likely benefit from eventual mandates for renewable electricity. So, while the stock market is still in flux, it might be time to sell your shares in Big Oil companies and invest in renewable energy instead.
Disclosure: I do not own Big Oil stocks. I am interested in renewable energy investing, especially ETFs.