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Chipotle Mexican Grill (CMG) - 678.65 ↑ 0.81

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Whole Foods Market (WFM) - 39.14 -0.05

Yingli Green Energy (YGE) - 3.36 ↑ 0.03

Colorado Boosts Renewable Energy Standards 30%

How to Profit from Colorado's New Renewable Energy Law

By Jeff Siegel   

I've probably been to Colorado about a dozen times in my life.

It's a beautiful state with a rich history, breathtaking natural beauty, and some of the most amazing national parks in the country. And despite the altitude adjustments that occasionally put the kibosh on my morning run, I understand why so many people live there. In fact, one of my best friends from high school now calls Denver home.

Trading his Colorado vacation home for a permanent Colorado residence, he is one of the hundreds of thousands who have migrated to the Centennial state since 2005. And there are many more coming...

In fact, Colorado's population is expected to double to 10 million people over the next 40 years. And with that growth comes a desperate need to increase power production.

Even with new energy efficiency and conservation measures being put in place as we speak, Colorado is still going to need an estimated 2 to 4 gigawatts of additional electricity by 2020 just to keep pace with population growth.

This is likely the primary reason the Colorado State Senate passed a bill last month to increase the state's renewable portfolio standard (RPS) to 30 percent by 2020. Governor Bill Ritter signed that bill into law on March 22, and now the state has one of the strongest portfolio standards in the nation.

Of course, according to the most recent EIA (Energy Information Association) data, Colorado currently generates only about 6 percent of its power from renewable energy resources. So that means the state needs to scale up by 24% in less than 10 years.

As you know, I'm a huge advocate of renewable energy integration. But this will be no small task, and unless the state's policy-makers take a strong leadership role without being swayed by special interests (certainly a tall order), and have a ton of private capital ready to facilitate this growth, I will be surprised to see this actually happen. And I will be more than happy to eat a smorgasbord of crow if I'm wrong.

That being said, even if the state only reaches half of its goal — and is able to get to 15% by 2020 — the aggressive RPS would definitely provide a catalyst for some serious job growth, increased energy security, and of course, investment opportunities for Green Chip investors.

So let's take a quick look at...

Colorado's Renewable Offerings

As you know, renewable energy is not limited to just wind, solar, or geothermal. It represents a combination of various resources that, when working together, can provide a significant contribution to our energy economy.

Colorado is fortunate that it has strong solar, wind, and geothermal resources.

With 300 sunny days a year, Colorado holds the #5 slot as having the greatest solar potential in the country. And using only 2 percent of the best resources for solar power plants, Colorado could generate enough electricity to power 1.7 million homes.

SunPower (NASDAQ: SPWRA) has a stake in Colorado's solar development, with a 19-megawatt power plant that it's currently building with Xcel Energy (NYSE: XEL). That project is being financed by MetLife and John Hancock.

Trina Solar (NYSE: TSL) is also supplying modules for a 2-megawatt project in Fort Collins, and solar installers from all over the state (and nearby states) are lining up for a wealth of new contracts that'll come from this RPS.

Colorado also boasts impressive wind resources; it is now the second-fastest-growing wind energy producer in the US. Only Texas is growing faster when it comes to wind.

The DOE actually released a report last year that analyzed the impacts of the state's first 1,000 megawatts of wind energy. According to the report, 1,000 megawatts of wind power development:

  • Generates enough electricity to power nearly 250,000 homes
  • Generates about 1,700 full-time jobs during construction with a total payroll of more than $70 million
  • Supports about 300 permanent jobs with a total annual payroll of more than $14 million
  • Generates $35 million in annual local economic activities
  • Generates more than $4 million in annual property taxes
  • Generates more than $2.5 million annually in extra income for our farmers and ranchers who lease their land to developers

Today, Colorado ranks 11th in terms of resource potential (out of all 50 states), and 9th in terms of existing capacity.

General Electric (NYSE: GE), Siemens (NYSE: SI) and Mitsubishi supply the majority of the turbines in Colorado, and FPL Energy (NYSE: FPL), NextEra Energy (a subsidiary of FPL) and Babcock & Brown/BP America are the prominent developers, with Xcel Energy being the main power purchaser.

Colorado's geothermal resources are nothing to brush off, either...

According to the Western Governor's Association, Colorado ranks fourth among western states in the number of potential sites for geothermal power generation. This is mostly due to advancements in geothermal technologies — like Enhanced Geothermal Systems (EGS) technology, for instance, which U.S. Geothermal (AMEX: HTM) is now testing along with the DOE in Idaho.

While there is little in the way of geothermal activity right now in Colorado, if EGS proves successful, the Colorado Geological Survey has already identified specific sites that could be developed within the next 7 years.

We'll be sure to keep you updated on Colorado's geothermal development along the way.

In the meantime, don't be surprised to see other states that already have renewable portfolio standards in place increase those standards in the coming years.

As it stands, more than half the states in the country already have some kind of RPS in place. And for those that don't have one now, rest assured... they will have something in place once a national RPS gets approved.

Don't kid yourself on that one. It's going to happen, and probably a lot sooner than you think.

And those who are properly positioned now are going to make a killing.

To a new way of life, and a new generation of wealth...

jeff signature

Jeff


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