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Too many green investors – and the U.S.-based fund managers that cater to them – are about to miss out on green energy’s long term trillion-dollar payoff because they insist on investing in companies that generate 50% or more of revenue directly from sales of green products like wind turbines and solar panels.

Nobody would mistake German engineering giant Siemens AG (SI), Swiss engineering behemoth ABB Ltd. (NYSE:ABB), or Deutsche Bank AG (NYSE:DB) as green energy companies. Indeed, Siemens and ABB are detested by many environmentalists because they construct fossil-fuel and nuclear power plants.

But these and other non-green corporations also are at the heart of massive new green energy projects like Desertec, which calls for tapping the North African desert’s sweltering sun to produce enough carbon-free solar electric power to satisfy 15% of Europe’s electrical demand in 2050.

Desertec is a consortium of a dozen or so European companies, several of which trade in the U.S. Last week the group signed a memorandum of understanding “to analyze and develop the technical, economic, political, social and ecological framework for carbon-free power generation in the deserts of North Africa.” There are similar Desertec plans being developed in other desert areas of the world, including the U.S. Southwest.

Despite its pie-in-the-sky sounding goal of transforming part of the Sahara into a solar power oasis, generating electricity that will get transmitted under the Mediterranean in high-voltage, direct-current cables, Desertec shapes up as one of the most potentially lucrative long-term energy plays in the world.

Indeed, Desertec isn’t just an estimated half-trillion-dollar energy play. It’s also a water and agriculture play, as well as an emerging markets play. Consider: there should be enough solar power that doesn’t go to Europe to run gigantic desalination plants that transform parts of the Sahara into fertile food-producing regions. Desertec thus could revolutionize the African continent and create powerful new emerging economies.

Other companies likely to benefit from Desertec are, for the most part, no greener than Siemens and ABB. They include the German utility E.ON AG (OTCQX:EONGY) and German diversified energy firm RWE AG (OTCPK:RWEOY). They join greener potential beneficiaries including the Abengoa Solar unit of Abengoa SA (OTCPK:ABGOY).

Moral of the story: To make green, an investor can’t be too green with his green investments.

Disclosure: No Positions

Source: Desertec Solar Project: Investors Can't Afford to Be Too Green if They Want to Make Money