By Jennifer Kho

Ballard Power Systems (BLDP) this week announced it has signed a deal to supply 10,000 fuel cells to wireless telecom base stations in India.

I don’t know whether we are close to the bottom but October has reduced the market value of the sustainable energy sector by about one-third.  

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As we get closer and closer to Election Day, there is no greater fear weighing on the public’s mind than the economy. The next U.S. President will inherit an economy in recession, with mounting national debt and systemic investment issues on Wall Street. The magnitude and scope of this financial crisis has been unprecedented, catching America off guard. Our country cries out for leadership in this time of tumult, and it will take someone with strong leadership abilities to bring America out of our current recession and into a brighter future. Hearing that call, both Presidential candidates are offering solutions on how to get the markets back on track. On some points they agree, and on many more they differ, but here we will explore how to build a portfolio that uses the coming election as a uniter not a divider, bringing together a collection of stocks that we believe will prosper no matter who is elected President of the United States of America.

Both Parties Agree: This Strategy Works

By Jennifer Kho

A blast of solar news is already hitting the wires in advance of the Solar Power International conference in San Diego next week. Organizers expect the event to draw more than 15,000 attendees from at least 70 countries.

By Ucilia Wang

Battered by more financial market fallout, the gloomy week ended with General Electric (GE) on Friday announcing a big profit boost from its energy business in the third quarter.

As panic sellers and shorts drive the market lower, be on the lookout for pricing craziness on deep in the money LEAP calls on stocks that are especially volatile. It may be possible to buy a stock and sell a deep in the money covered call for a very small net debit or even a net credit.

How would this work? Check out ESLR. As I'm writing, it's trading around $3.08 a share. The January '10 2.5 call's bid is $2.10, and the ask is $3.30. Writing a covered call for a net credit (i.e., money being deposited into your account) is unlikely here. However, a small net debit is possible. For example, if I buy 100 shares for $3.08 and sell a covered call for $2.50, the entire transaction will cost me $0.58 a share, or $58 (plus commissions). If ESLR trades for $2.50 or higher at expiration in 2010, the shares will be called and $250 will be deposited into my account. So, max loss here would be $58 plus commissions. Max gain, about two years out, would be $192. That's more than tripling the money I put at risk. I think it's worth it, and have an open limit order for a net debit of $0.6 a share.

It’s been a long time coming. I don’t know who thought it would come this fast…or all at once.

A few weeks ago, uranium prices seemed to have a gained some footing. But uranium prices crashed through the floor and it could be another big step down from here. The energy metal could be headed even lower. This fall could be harder and faster all due to deleveraging.

Nebraska prides itself for being one of the states with the lowest cost of living in the country, having some of the cleanest air and water, and being centrally located. An above average health care system is also in place in Nebraska. A hospital stay costs 30 percent less than the average national cost. Some other interesting facts about Nebraska are:

1. Nebraska has no property tax.
2. Income tax liability is calculated based on sales only.
3. Nebraska is the only state to offer a 100% public power system.
4. Agriculture and manufacturing are Nebraska’s primary source of revenue.
5. Nebraska’s top agricultural commodities are: cattle and calves, corn, and soybeans.
6. The Ogallala Aquifer, one of the major natural underground water available is under Nebraska’s soil.
7. Nebraska is the only state with a unicameral legislature.
8. Nebraska is geographically located in the center of the United States, half way between Boston and San Francisco.
9. The state of Nebraska offers several incentives for businesses relocating to the state. including, investment credits, sales tax refunds, and inventory tax exemptions.
10. Nebraska’s largest export is processed food.

The following companies are headquartered in Nebraska. They have a market cap of over $600 million:

With fossil fuel prices well above historical average, geothermal energy is likely to increase substantially its share of the energy mix, according to Oxford Analytica.

Applied Materials (AMAT) is not only an industry leader in the production of technologies related to capturing solar energy, AMAT is also leading by example in recently converting its corporate headquarters to run on solar power. On September 19^th, Applied Materials in conjunction with SunPower Corp. (SPWR) completed two solar power systems at AMAT’s corporate headquarters in Santa Clara, California. While the project is clearly self-serving to AMAT, the nation’s largest solar powered corporate office could serve as a model for others to follow. Clearly, Applied Materials has become far more than a semiconductor company since entering solar in 2006.

The costs of such a system were not made available, but clearly AMAT took advantage of the federal investment-tax credit aimed at spurring investment in alternative and renewable energies. This tax credit (as political observers know) is set to expire at year’s end, but no matter who gets elected in November, energy will be a major issue. There is a strong possibility that the next administration will enact some form of program to deploy more energy alternatives, in hopes of achieving the oft-mentioned “energy independence”.  Applied Materials would undoubtedly benefit from the extension of such a policy.

Darling International (DAR) is the only nationwide supplier of rendering and grease trap services to restaurants, butchers, grocery stores, and other food service establishments in the United States. Basically, Darling collects waste materials and processes them into products that can be used as inputs to other industries. Finished products include: Meat and bone meal that is used to make pet and animal feed; Tallow and other oils used in the production of feed, soaps, chemicals, and bio-fuels; and hides used to make leather goods.

Darling has two main lines of business. Rendering, which accounted for 72% of 2007 sales, is the business of converting waste products into usable raw materials. Restaurant Services (28%) provides grease trap services (pickup and cleaning), as well as specialized equipment for making the job of cleaning frying equipment much easier. The company runs 39 facilities including 25 rendering plants, 6 grease plants, and a number of smaller specialized sites. Darling consolidated the rendering business in a big way by purchasing National By Products (NBP) in 2007, and has driven impressive operating synergies from the acquisition.

Last night's presidential debate was a closely watched one because it was a townhall style meeting. Candidates had chance talk to voters face to face. It covered many topics including foreign policy, energy policy and the economy. But one thing that appears in most of the topics is renewable energy. I believe no matter who wins election, renewable energy, especially solar energy will be a booming sector, investors may want to invest sooner than later. Let us take a look at what happened last night debate.

1. When it comes to energy policy, John McCain continuously supports nuclear, plus solar and wind energy. While Obama prefers solar and wind over other forms of renewables. Obama said the only solution to energy crisis is to develop renewable energy like solar and wind, as more drilling simply adds to the US's addiction to crude and increases green house emissions.
2. When it comes to how to deal with Russia, again Obama believes petrol dollars strengthened Russia, and developing renewables will change this scenario, hence put more pressure on Russia.
3. When it comes to Iran, according to Obama, the renewable energy policy can also change the way we deal with Iran. If the US uses solar energy and imports less oil from Iran, Iran will have less dollar to support terrorism.

Based on recent polls, Obama is leading McCain nation wide. The solar and wind energy sectors are most likely to benefit from new president no matter who we pick in November. Investors may want to invest now while the sector is beaten down during this market turmoil. Several names are attractive and these companies have great management teams.

The Solar Investment Tax Credit has been extended, and the market for mortgage debt "rescued," but neither renewable energy nor the rest of the economy are out of the woods.  We'll probably be feeling the effects of the financial imbalances which have built up in our economy for years to come.

While the extension of the tax credit will help renewable energy technologies raise funding, the headwinds from the continued fallout of the structured finance and real estate bubble will be blowing in the other direction.  This will be a problem both for developers of new technologies, and project developers.  On the other hand, changes in the ITC (allowing it to offset the AMT, and removal of the public utility exemption) allow new investors, such as property and casualty insurers, into tax equity investing.  These investors are likely to be more cautious, but they are likely to be there.

Solar stocks traded sharply lower Tuesday morning after Goldman Sachs analyst Michael Molnar declared he has become cautious on the solar group, “as less generous subsidies combined with a wave of supply pose a real risk.”

Molnar asserts in a research note that the risk of oversupply in the solar market “will soon become a reality as considerably less generous demand subsidies take hold just as a wave of supply and tight financing hit the market.” He thinks that “liberal subsidies of the past in markets like Germany and Spain are unlikely to be replicated in the future given fears of their ultimate cost in a bad world economy.”

Did you know that September 29 saw the largest carbon auction the world has ever seen? OK, it was pretty small on an absolute level -- it raised just $39 million, and the price per ton of carbon emitted was very low, at $3.07. But it's a good start, especially because of where the auction took place: right here in the US.

The auction was part of the RGGI initiative, whereby 10 states in the Northeast agreed to cap the carbon emissions from power plants, bringing them down 10% by 2018. It's a fully-fledged cap-and-trade system, and although it has weaknesses -- foremost among them the fear that emissions will simply "leak" over into Pennsylvania, which isn't taking part -- it's already raising money for the states concerned.

A new study by the University of Nebraska shows that current ethanol production technology is 2 to 3 times more efficient than previously thought. Earlier studies focused on older, less efficient technologies and this new study helps allay the fears that corn ethanol production uses more energy than it provides.

Here are some of the initial results from the study:

Ok, finally we have the fire behind the smoke. Tuesday morning a press release about the termination of the CFO at A-Power Energy (APWR) - now the first reaction when I see the CFO leaving is abject fright since it usually means a litany of bad news to come. This might still be the case here, BUT on the surface it appears to be a conflict of interest situation. Here is the official press release

• A-Power Energy Generation Systems, Ltd. (Nasdaq: APWR - News; "A-Power"), announced Tuesday that its Audit Committee has completed an internal review that confirmed assertions made by NASDAQ relating to the omission of certain biographical information of Edward Meng that had not been disclosed in various filings prior to July 2008, and which was corrected in the Company's 20-F filing on July 11, 2008. The assertions were prompted by a NASDAQ notification to the company of a letter written to NASDAQ from Mr. Meng's former employer. The letter stated that Mr. Meng had breached that company's Code of Conduct by being employed by that company on a full-time basis while at the same time being employed by A-Power as its part time CFO. After difficult deliberations and multiple consultations with NASDAQ, the Board of Directors of A-Power determined that terminating Mr. Meng's employment was the appropriate response and that it will take effect immediately.
• John Lin, A-Power's Corporate Secretary, Chief Strategy Officer and member of the Board of Directors has been appointed Interim CFO while the search for a successor is underway. After difficult deliberations and multiple consultations with NASDAQ, the Board of Directors of A-Power determined that terminating Mr. Meng's employment was the appropriate response and that it will take effect immediately.
• According to Jinxiang Lu, Chairman and Chief Executive Officer, "Our internal audit determined that while Mr. Meng's other position did not present a competitive concern nor did it have any effect on his performance as our CFO, his complete biographical information should have been disclosed. Although the omissions may have occurred inadvertently, we believe that our decision is the appropriate course of action."
• Mr. Jinxiang Lu further stated, "The Company reached the decision very reluctantly. Edward has been an important, capable and reliable member of our management team. He has played a critical role in the transition of A-Power to a US public company, in the growth of our core distributed generation business, and in the startup of our wind turbine production business. We certainly wish Edward well in his future endeavors. With this notable exception, we have been pleased with his performance, and he will be missed."

The press release is a bit confusing to me, because at the beginning it makes it sound like he was still working for both companies (I assume the other was Terex or Navstar Media), but later it sounds like when he took the APWR job full time he quit the other job, but did not disclose that in the early part of his service to APWR he was working at both companies; and the other company took issue with it. Either way it is a moot point and more importantly does not have much to do with the underlying business at A-Power. It does appear it was also disclosed on July 11th in the annual report, but with the other company raising a fuss, this decision was made. Just curious if it was Terex or Navstar that raised the issue....

Last Friday's extension and expansion of tax credits for solar energy property will for the first time provide substantial tax incentives for the use of storage devices and power conditioning equipment in connection with residential photovoltaic solar systems. While these ancillary systems have always been included in the regulatory definition of qualified electric generation equipment, the old cap of $6,667 on eligible investments was typically exhausted by solar panel purchases, which left no real incentive for ancillary systems. With last Friday's elimination of the cap on qualified solar energy investments, the entire system, including solar panels, storage devices and power conditioning systems, will now be eligible for the 30% Federal tax credit. This is a major change.

I am loath to venture a guess as to the amount of additional revenue that manufacturers of energy storage products will book as a result of this simple change in the tax code. But I am more confident than ever that the first big beneficiaries of future decisions to include storage capacity in residential solar systems will be established lead-acid battery manufacturers like Exide Technologies (XIDE) and Enersys (ENS), emerging advanced lead-acid battery manufacturers like Axion Power International (AXPW.OB) and emerging flow battery manufacturers like ZBB Energy (ZBB).

By Ucilia Wang

Venture capitalists are likely to become even bigger sugar daddies in the solar world as the battered financial markets make it tough for companies to borrow large sums to build factories and power plants.