Here's a more effective solution: Invest money in green power corporations. That way rather than just paying more for your green power to cover the extra costs, you become a stockholder, investing in additional research into making the power a true competitor for polluting sources.

Otherwise I don't have any objection to such a fund, I just think that the number of people who'll invest in it are minimal.

If you are suggesting that purchasing stock in green power corporations is a substitute for direct investment in green power infrastructure, you have fallen into the same trap as the green investing community as a whole. This premise is wrong for two fundamental reasons.

First, purchasing stock in a green power company on the stock market does almost nothing to improve the environment. The money invested goes to another investor, not the company. A good analogy would be to propose that betting on a horse improves its chances of winning the race. The other side of this is that purchasing stock in un-green corporations, such as Exxon, does nothing to hurt the environment. From the standpoint of shareholder activism, purchasing un-green corporation is even preferable because there is more room for improvement.

Even stock purchased directly from the company does not guarantee increased green energy production in the way that direct investment does. You can either build infrastructure or give your money to someone else and hope they end up using it to build infrastructure, and not on corporate mismanagement, misguided research or projects that you would prefer not to fund. The green power corporation may do a great job, but it is naive and unnecessary to assume it will. If Exxon wants to get into the clean power business, direct investors can work with them and not worry about Exxon’s other activities. The same can not be said for stockholders.

Second, profits from direct investment are based on the output of the infrastructure created by the investment. Stock profits are usually gained through the buy low, sell high strategy, resulting in a speculation-fueled cycle of overvaluation and collapse, especially when a stock, sector or market becomes popular. Profits from direct investing are not effected by these factors. They are simply the inverse of the pay back periods of the projects being funded. A well managed fund would maintain a sufficiently diversified portfolio of the most profitable clean energy and conservation projects and avoid funding individual projects beyond the point of diminishing returns. Such a fund can earn profits well in excess of the stock market’s historical returns, with much less risk.

I am not sure I fully understand the concept. I agree that this is a place for private capital, but it sounds like venture capital or R&D of a corporation is the most logical place to develop new areas of clean energy and developing better ways of generating energy. The only way there will be dollar profits for direct investors in projects is if the ideas are commercially viable and generate cost effective solutions to the users of the energy. I know from experience that raising capital for an individual project is notoriously difficult; the current state of affairs has large pools of investment capital waiting to be deployed to provate equity / VC firms that are willing to undertake the risk of developing these technologies. Please elaborate with and example of what you mean...it is a compelling idea and one that if it can be done is quite useful. The reliance by the US on oil for transportation fuels makes us reliant on other countries (causing national security issue) regardless of ANWR opening and regions other than Gulf of Mexico for drilling; and burning of the fuel is obviously detrimental to the environment.

Fundamentally you need to answer the question: where else is there a readily (that is relative!) available source of concentrated, stored energy available to be converted into mechanical energy? We have found this answer in hydrocarbons, solar energy and in the atom, etc. Where else is the most promising venue of energy conversion, with the most efficiency and likelihood of success? When you can answer that question, there is potential to solve the environmental / security issue and do it profitably.

and by the way I tend to agree with the comment above that this is not a place where investing in public equities makes sense nor can it be effective; there is no stock market premium for speculative engineering R&D and even at firms that have resources to invest in engineering R&D like a GE, the stock typically only changes hands between third party investors.

I am fairly certain that some forms of clean energy production and energy conservation can already be profitable at current electricity rates, especially on the user side of the power grid. Some factors that contribute to the current lack of investment in these areas are : 1) Investors are fixated on comparing clean energy technology to coal or natural gas, rather than focusing on the risks and returns of such projects and comparing them to other investments such as the stock market. 2) The most cost effective way to decrease demand for imported and carbon positive energy is energy conservation. However, such projects are affected by diminishing return on investment, and the best energy saving opportunities are probably under the control of entities that lack either the vision or the funds to act on them. 3) There is no mechanism for moving money from investors, especially small investors, into clean energy and energy conservation projects. Such a mechanism exists for the stock market in the form of mutual funds. The lack of such a mechanism for clean energy and energy conservation projects means that minimum investments tend to be high, and diversification difficult. It also means that investors must do all of their own research with little or no professional help, in contrast to the work mutual fund companies do for their clients.

While the advancement of clean energy technology is important for getting the United States off imported and carbon positive energy, it is also important to have the right financial structure, both to accelerate the application of any future technological advances and to insure that all existing technology is exploited to its full potential.

Your points seem valid and well thought out. So the premise is that there are enough dollars out there to invest in these types of projects. WHat is your view about where the dollars are - individuals, high net worth individuals, etc?

It sounds like you might set up a fund, for example say $1Billion (dream big), and people can buy shares for $1,000 each of the fund. Then you invest the funds into a slew of projects somehow. Maybe it starts to look like investing $10 million in 100 ideas/technologies or small companies that already have technologies on process?

The problem with matching investors to the investment of this type is the "lock-up" fact: you'd need to keep investor dollars in through thick and thin and any return of capital might be years away - therefore peple might need to think of their investment as a contribution with upside potential. I hope that is clear. Just my thoughts...I think I get the problem and pursuing a solution has merit. By the way, what do you think the profile of an investment would be?

There is plenty of money available for investment in the Energy Project Fund if competitive returns on investment are attained for the level of risk inherent to each type of clean energy or energy conservation project. Potential targets include the stock market, especially “green” mutual funds, charitable donations and consumer spending. There is a potential problem with liquidity, but it can be overcome by balancing new contributions with departing investors, as well as requiring the owners of the site on which the project is installed to purchase the project over time, and allowing third parties to buy existing projects if they wish. Because profits come in the form of dividends, they will be unaffected by any liquidity problems.

Besides the fund raising side of the business, the fund will require a steady stream of good projects in which to invest. This is needed to absorb new contributions to the fund, to allow the fund to be selective about which projects will be invested in, and to allow a possible splitting of the fund into specialty funds at some time in the future. The projects should be focused on the application of proven energy conservation and clean energy technologies, with research and development left to other financing methods. The result will be a diversified portfolio of projects with predictable returns and low risk. The returns will depend on the projects available for investment. Such projects may be large or small, but no one project should exceed 10% of the fund. They can be in any area of energy conservation or clean energy production. To maximize the fund’s performance, projects should be chosen for high return on investment.

Clean energy projects may be solicited through the utilities or the vendors that would be installing the project. They could take the form of joint ownership with the site owner, leasing the equipment to the site owner, or leasing the use of the site from the site owner. Leases would be paid as a percentage of revenue generated by the project. However, it is important to stay as close as possible to the ideal that investors should receive all of their portion of the proceeds generated by the project. Energy conservation projects could be similar to the Energy Savings Performance Contracts (ESPC) already used by the government to improve the energy performance of their facilities, with the Energy Service Company acting as a subcontractor for the fund.

I will be happy to hear from anyone who is considering, implementing or would like help implementing this idea or any similar plan.

Thought this might be of interest: http://cleantech.com/

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