The Green Tech Boom

Bloomberg recently published an article entitled 'VCs Bet on Solar, Biofuel Money-Losers in Green Energy Frenzy'. This article is quite lengthy, but very informative in comparing the current boom in renewable energy to the technology boom of the 1990's and analyzing the future growth of the sector. Topics discussed include global warming, expensive alternative, subsidies, geothermal power, nanotechnology, etc. Here is an excerpt:

The 40-stock WilderHill Clean Energy Index has rocketed since its August 2004 debut, rising 90 percent to a record 251.17 on May 5. Since then, the index has fallen 23 percent to trade at 194.21 on June 28.

As they did in the late 1990s, stock investors are baying after companies that have yet to turn a profit. Pacific Ethanol Inc., based in Fresno, California, for example, lost $611,763 in 2005 on sales of $38 million. Its stock? Up 129 percent in the 12 months ended on June 28.

The frenzy troubles Silicon Valley pioneer Vinod Khosla, who co-founded Sun Microsystems Inc. in 1982 and, then, as a partner at Menlo Park, California-based VC firm Kleiner Perkins Caufield & Byers, helped finance Amazon.com Inc. and Netscape Communications Corp.

``We need to be cautious that this doesn't become like the dot-com bubble,'' says Khosla, 51, a champion of ethanol. ``We don't want to get ahead of ourselves.''

For now, the alternative-energy bulls are charging. They say a collision of powerful forces -- from the soaring price of OPEC crude to the booming economy of China, to growing concern that global warming threatens our planet -- is about to usher in a new era of green power.

Oil prices have tripled during the past three years, and the first energy crunch of the 21st century has begun to rip through the world's fossil fuel-based economy. In the U.S., the largest energy consumer, $70-a-barrel oil has sapped consumers' confidence and raised the threat of stagflation, a toxic combination of accelerating inflation and slackening economic growth last seen in the 1970s.

President George W. Bush has urged the nation to break its ``addiction'' to foreign oil and find new, cheaper sources of power. Bush's ranch in Crawford, Texas, has a geo-thermal system.

Today, the world is straining to feed its seemingly insatiable appetite for energy with oil, natural gas and coal. Tomorrow looks even worse. China, now the No. 2 energy consumer, devours 6.5 million barrels of oil a day. By 2025, it will gulp 14.2 million a day, according to the U.S. Department of Energy. Emerging economies such as India's will swallow still more.