Easily the Best Way to Invest in Renewable Energy

Another one bites the dust. You, of course, recognize Solyndra as the de facto catchword for taxpayers' funding of ill-conceived, ill-managed, or competitively underpowered green energy companies. In Solyndra's case, the company managed to fritter away $535 million of U.S. Energy Department (i.e., taxpayers') funding.

By now you may also have heard that Massachusetts-based A123 Systems (NAS: AONE) , formerly a leader in lithium-ion battery technology and the recipient of $249 million in DOE funding, appears also to have gone dead. The company, which had an 11-year run, declared bankruptcy last week.

Never the energy twain shall meet?
It's generally assumed that we have two distinct types of energy companies extant: greedy, malevolent, polluting, and tax-dodging fossil fuels companies on the one hand, and struggling, but promising, green companies that merit taxpayer largesse, on the other. That, at least, was the implied message from our president's State of the Union message earlier this year. In that speech, President Obama maintained, "It's time to end taxpayer giveaways to an industry that rarely has been more profitable and double-down on a clean energy industry that never has been more promising. Pass clean energy tax credits. Create these jobs."


Unfortunately, however, even many the savviest of investors don't realize that perhaps our nation's most successful green energy company just happens to also be a member in good standing of the Big Oil contingent. I'm referring to Chevron (NYS: CVX) , the second-largest of the U.S.-based integrated oil companies. Indeed, as you'll discover from this recent piece aired by CNBC, Chevron truly gives added meaning to the term "integrated."

In a very real sense, Chevron has become what Harvard Business School's longtime marketing professor Theodore Levitt was touting as ideal when he wrote his now classic article, "Marketing Myopia," in the Harvard Business Review more than a half-century ago. It was Leavitt's contention that managements frequently view their companies' missions too narrowly, thereby missing out on participating in new -- but related -- growth areas. For instance, according to Leavitt:

As new forms of transportation -- airplanes, trucks, etc. -- began to haul freight, railroad managements failed to view their companies as broadly based transporters, thereby shutting themselves out of participation in the emerging changes. The Hollywood film studios were established long before the spread of television in the late 1940s and 1950s. But because their managements failed to see their companies as potentially wide-ranging entertainment providers, and accordingly natural participants in the advent of the new medium, the studios barely escaped being totally ravished by the emergence of TV.

Energy in all its forms
Unbeknownst to many, however, Chevron -- and to some extent ExxonMobil (NYS: XOM) and Royal Dutch Shell (NYS: RDS.B) -- is being managed as a thoroughly diversified company, producing both traditional and green energy. In addition to drilling for and producing oil and gas in such global locations as the deepwater U.S. Gulf of Mexico, Australia, Canada, Africa, Poland, and Ukraine, the company has been unusually successful in a number of renewable energy programs -- without expecting or accepting a penny of taxpayer funding.

In the world of solar, for instance, just this month, Chevron announced that in California's Temple City Unified School District, its Chevron Energy Solutions has completed "a transformative solar and energy efficiency program expected to reduce energy costs at seven school sites and save the District more than $3.8 million." And last month the same Chevron unit announced that it had completed a project in Concord, California whereby "upgrades to street and park lighting, retrofitting the boiler and pump at the community pool, and replacing outdated air conditioners at City facilities" will save Concord taxpayers approximately $18 million.

But the company doesn't stop there. In addition to its solar advancements, Chevron is the world's largest producer of environmentally advantageous geothermal energy. And in Wyoming, the company has converted the site of a former Texaco refinery into the Casper Wind Farm, which produces emissions-free electricity that powers about 4,400 homes.

The Foolish takeaway
In announcing its quarterly results earlier this week, Dow Chemical (NYS: DOW) stated that it was "dialing back" spending and programs in certain areas, "such as alternative energy ... where positive returns are in the far distant future." That's clearly not the case for Chevron, where successes in a host of alternative energy projects are bearing fruit today. I suggest that you add innovative and fully integrated Chevron to your individualized version of My Watchlist.

The article Easily the Best Way to Invest in Renewable Energy originally appeared on Fool.com.

David Lee Smith has no positions in the stocks mentioned above. The Motley Fool owns shares of ExxonMobil. Motley Fool newsletter services recommend Chevron. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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tedishor

Gumby, the only way to break down the equilibrium between oil supply and demand is to create a self-sufficient hydrocarbon supply in the North American territory. OPEC and other large foreign producers would find it much more costly to constrain production in order to maintain prices. But this is only part of the equation; you cannot expect our Administration to go on borrowing or printing trillions of dollars without having our currency lose buying power. Fifty years ago -- here, in California -- a one-pound loaf of white bread cost 18 cents and a gallon of gasoline went for 32 cents. Find me the bread at that price and I'll give you cheap gas.
Please try to ignore for a moment your prejudices against American capitalism and consider the difference: when Chevron invests money in renewable energy we, the tax payers, don't have our money placed at risk by bureaucrats whose experience in business spans the spectrum from zero to negligible. The hundreds of thousands of Chevron shareholders do take a risk, but that is a voluntary risk. It is slightly comic that you ask the reader to "forget Solyandra and 123."(sic) We can be certain that quite a few politicians would want us to forget what happens when financial decisions are based on ideology, rather than on technical and economic considerations. The Government might have a role in technical research but even that was botched up in the late 1970's when the oil companies were invited by the then Administration to make proposals for Government-supported research. This sounded good, until one read the conditions imposed by the bureaucrats: to receive Government money for a technical project, however minimal, an oil company had to reveal to the Government all the confidential information on which it based its technical and economic decisions. Obviously, the oil companies decided to forego the Government largesse and continue capitalist competition. On the other hand ad-hoc companies were formed, ready to feed at the trough: the money was spent, the results were next to nothing.
But, of course, you're correct that fossil fuels are an exhaustible resource -- even though the alarm that we were running out of oil had been sounded many times with ever more hydrocarbons being found. This is what Chevron understood forty years ago when it produced geothermal energy in the Calexico area to be sold to an electric company. Take it from me, geothermal energy is more difficult to use than liquid hydrocarbons. But it was Chevron (as, no doubt, other oil companies) that, half a century ago, understood the importance of reducing the energetic content of oil production and the use of solar power to achieve that end. Sorry, they did not wait for Gumby to show them the way.

October 27 2012 at 7:56 PM Report abuse rate up rate down Reply
Gumby

Big institutions, big pension funds, are betting on hydrocarbons which makes it so difficult to bring oil prices down with aggressive alternate energy that requires investments... With trillons of dollars already parked in hydrocarbon investments , there is a dearth of capital necessary to get solar energy off the ground. As of now, more and more of the big investors are giving up on investments due to stagnant economy of lately thanks to stubbornly high hydrocarbon prices.. We cannot even dream of paying off our debts and reducing deficit spending as long as stubborn high energy costs are still with us.. Solar energy can help stop ever rising hydrocarbon costs by reducing demand through switching.. we will always use hydrocarbons but not on ever increasing amounts forever.. We simply cannot and we know this . We chose to speculate on the supply and demand titillations when it comes to hydrocarbons.. We invest in hydrocarbons with full knowledge that it is a big commodity with limited amounts available for consumption. We no longer care about future economic growth as we gleefully watch debt and deficit growing everyday... thanks to ever high hydrocarbon costs . as if in order to achieve solar energy success, we must undergo major economic collapse and skyrocketing hydrocarbon costs first.. This is what the investors has in mind..

October 27 2012 at 1:21 PM Report abuse rate up rate down Reply
Gumby

David , you clearly do not appreciate supply and demand mechanism. Oil companies dabbling in green energy would never dream of cannibalzing oil sales with green energy. You see, oil prices is high becasue supply and demand is iin roughly equal equilibrum as in 100% supply and 100% demand. What if we reduce demand by 5% with aggressive alternate energy substitutions in any form and shape? This will certainly influence oil prices usually downwardly. Consumers dont really understand or appreciate the basic fundamentals of captialsim.. Captialism itself doesnt only apply to producers but also to consumers who are determined intelligiently enough to reduce demand in efforts to reduce prices. We normally do that with other goods or commodities with substitutions but when it comes to energy we are oddly incapable of doing this. Moreover, when it comes to solar energy , we are totally fixated with conversion of photons to electrons for electricity generation with photovoltaics while ignoring the other method that is... using photons directly for heat generation. Here is an example... home heating which is a large component in everybody's utilty bills.. we ignored this probably we are brainwashed into thinking that smart thermostats is the only and final solution to home heating costs. This is patently false... We can develop solar devices that capture sunlight heat and heat indoor air with it very easily. There is several companies already making and selling them. We can also concentrate sunlight not only for generating electricity but to heat indoors similar to traditional furnaces we have in garages.. We can do that... Those are things the oil companies would never dream of touching at all. They know that already but chose to ignore them. Investors couldnt care any less about the progress in alternate energy themselves.. Investors has to realize that they are consumers , too. Usually, we earn capital gains only to end up paying more for our needs because of corporate greed and ignorance which mean intentional ignorance. This is no way to run our economy, period! We will have deficits as far we can see down the road. Wind energy seems to be maturing in technology for the most part while solar energy is still far from maturity at all. Just forget Solyandra and 123.. We need not to be concerned about how or where to store solar energy after sunset. it is something we can worry about much later... We should be focused on daylight hour generation and work at it until we accomplsih almost 100% of live demand during daylight then we can work on storage which is not really hard to do. We can create man made reservoirs to pump water back and forth like PGE already has one example as I know of... Water gravity is a very easy thing to do when it comes to electricity storage.. It is a no brainer.. Suppose solar energy gets big in the Southwest, chances are that we will see many man made reservoirs popping up around gigawatt solar farms but this is..

October 27 2012 at 1:07 PM Report abuse rate up rate down Reply