Inverters is a good idea, I have no idea who makes those (I suspect some industrial giant like GE).

I haven’t had a chance to fully read into them, so I can’t necessarily make a recommendation, but Innergex (IEF.UN) is a utility income trust with a decent distribution and a fair number of green power projects.

I just did a brief post on First Solar (FSLR) — I do own a small amount. I like the fact that they’re profitable, but they have a number of large risk factors (their main competitive advantage is price, and the cost of the inputs for their competitors has come way down with the recession; they are also dependent on a small number of major customers, who are in turn dependent on government subsidies for their solar installations).

The “chip maker” analogy is perfect. Most of the solar power firms I’ve dealt with were in various stages of reorganization, redirection, or simple chaos, and I really would avoid investing in individual firms that supply PV systems. The components, on the other hand, are a different story. Companies that make photovoltaic cells and inverters could be worth investing in; same goes for companies that make components for wind generators, etc.

That being said it’s not a matter of IF Green Energy will grow its a matter of WHEN it will skyrocket and in WHICH sub sector. At this point I am a skeptic that it will grow any time soon because I thought $150 oil (pre recession with lots of credit and VC laying around) would have been enough to shoot this sector into dot-com territory.

The green sector at the moment has too much uncertainty for my risk tolerance, but if I were wanting to invest with the intention to make money I would start looking at secondary companies that support the Green Energy sector.

I would be curious to see if your research comes up with some examples. Off the top of my head I would think there would be a list of generic solar cell manufacturers, turbine maintenance companies or perhaps hydro/green engineering firms? Find the ‘chip makers’ of the green sector.

Green supporting companies shouldn’t be as volatile as say a small start-up trying to reduce costs to become profitable, because they take the time factor out of investing. They would also allow you to spread the risk across a whole green segment. If you see solar taking off you invest in their suppliers. Same goes for wind, hydro, wave technology, or whatever discovery channel is touting this week. I would wait till the industry is more established till I get in.

I think you need to stick to your investment principle, finding green companies that are money makers over several years. Dodging your key principles puts you at risk of throwing your money away.

My ethical investments are in the form of charities and political contributions – not only do I think they have more power in influencing the world to become a better place – they give a great tax rebate.

Wind is a much more mature and economical technology, and it seems to have a reasonably bright future. Guess who leads North America in terms of the greatest number of wind-turbine installations? Texas! Wind power is cost-competitive now with fossil-fuel-generated power. The main issues are that they are perceived to be an eyesore (nobody wants a wind farm in their backyard, just as nobody wants a nuclear power plant in their back yard) and the problem of bird and bat mortality.

Geothermal heat pumps still rely on fossil fuels (unless your electricity is generated by hydro or other renewable sources), but they’re highly efficient. That’s a good market for new homes, but the expense and hassle involved in installing a geothermal system in an existing home is usually seen as a barrier.

Another few things to consider: super-efficient gas turbines and hydrogen power. About 10 years ago I saw a guy from the US Department of Energy give a talk where he held up a shoe-box-sized gas turbine that could provide all the heat, hot water, and electricity for a four-bedroom home. As oil and gas become more scarce and expensive, these “bridging” technologies that will allow us to use fossil fuels more efficiently while renewable energy technologies are being developed will probably become highly desirable. Hydrogen is another example. There’s been a lot of speculation about a future hydrogen economy; I don’t see any strong momentum building for it, but that could change in the next decade. There are companies today that use hydrogen fuel cells to provide all their electricity — one example I can think of is a credit card processing facility in the Midwest US that generates all of its power with fuel cells because it can’t afford even 10 seconds of down time due to a power interruption. Currently hydrogen is produced from fossil fuels (without burning them), but in future it could be produced by solar-powered or wind-powered energy.