Energy Secretary Steven Chu took to the airwaves this week to talk about our looming energy challenges.

And in what is becoming his typical cautiously optimistic style, he addressed several of the elephants in the energy room.

It's important to pay attention when a guy this high in the food chain gives candid answers to big questions. His answers can provide clarity on the big picture and, if you listen carefully, can even shed light on possible profit opportunities.

Let's take a look at what he had to say. . .

No Need to Freeze Goldfish

Apart from cleaner energy producing technologies, energy habits also need to be understood and changed. This is often a point of contention in the energy debate — one of those elephants I was referring to.

The problem — as is the case with most issues that have political underpinnings — lies with the interpretation of this idea and the extreme ends of the spectrum. "Changing your energy behavior" has a different meaning for everyone.

For some it means acceptable changes: turning off the lights when you leave a room; conserving water; being more conscious of how you use energy. Others may think they're being asked to give up modern comforts like heating or air conditioning or the use of a vehicle altogether.

In the interview, Chu uses the extreme example of someone thinking that by changing energy behavior, they'll be forced to spend the night in sleeping bags during the winter without heat. In his anecdote, the only result is the accidental freezing of the family goldfish.

In reality, the Secretary doesn't think we'll have to make any changes quite that drastic. Instead, he believes Americans can do what we currently do with half the energy "in a way that doesn't call for the freezing of the goldfish."

And that, he says, is figuring conservatively.

Profiting from the End of New Slavery

Whenever we're talking about changing energy behavior, there are profit implications involved. That's because "changing energy behavior" is political codeword for implementing energy efficiency measures and deploying a smart grid.

Chu uses the framework of energy servants to convey his point. As humans, we need only 2,500 calories of energy per day to thrive.

But here in the States, the advent of cheap energy after the industrial revolution enabled us to become gluttons, routinely using 100 times that amount for our daily needs.

Metaphorically, that means each American goes about life as though we have 100 personal servants — each consuming 2,500 calories — each and every day, as we are excessive in everything from laundering our clothes to cooling our homes to importing our groceries from around the country and world.

The goal is being able to continue our daily routines without interruption while reducing the number of energy slaves we use.

Doing that would not only significantly reduce our demand and solve part of the energy problem, but it would also boost the portfolios of savvy energy investors.

From Theory to Application

Of course, it's easy to talk about such grand-scale changes from an armchair. But it's much more difficult to execute them. . . not just from a scientific standpoint, but from a political one, as well. Hence all the animosity about the current climate-energy bill circling Congress for fear of the proverbial frozen goldfish.

Indeed, it may seem that what Mr. Chu is talking about is outside the realm of our current reality. But that couldn't be further from the truth. The changes he's proposing are already taking effect in a big way. . . albeit with much work left to do.

Take California, for example, where Los Angeles recently reduced their year-to-year energy consumption by 318 gigawatt-hours without any impeding changes in day-to-day operations. This was accomplished mainly through new lighting initiatives, some of which cut the energy bills of small businesses by more than 25%.

Not only are these changes "invisible" to consumers, they're also saving businesses money. This goes against the general fear mongering, which touts unbearable changes at exorbitant costs.

What's more, these changes aren't just good for the dual bottom lines of energy demand and costs; they can also do wonders for our personal bottom lines by simply taking notice and acting on the trend. That's what Green Chip is here for.

In this case, companies are being paid up-front to reduce energy consumption and costs in the long term by simply installing more efficient lighting.

From Application to Profit

One of those companies is Cree Inc. (NASDAQ: CREE). And look what's happened to their share price as efficient lighting initiatives take root around the country:

That's a 170% rise in less than a year. And it's just one in a large group of energy efficiency-related stocks that have done the same thing over the past year — spurred, in part, by the billions allocated to efficiency and smart grid development in the stimulus.

Those billions are still being approved and spent. . . and will continue to be for some time, inciting easy profits along the way. You just need to be alert (or very well-informed), to know where to invest.

To get you started, I suggest taking a look at Itron Inc. (NASDAQ: ITRI), a company I've recommended to readers of the Alternative Energy Speculator and one that will achieve stalwart status in the arena of efficiency.

Itron is Google's exclusive smart meter provider for its PowerMeter venture, which will be rolled out later this year. They're also the exclusive smart meter provider for a growing number of utilities across the country. National Grid (NYSE: NGG), the nation's second-largest utility, announced last week they are also considering using Itron's meters.

The stock has gained over 20% in the last four trading weeks, as Itron's story becomes evident to traders of all brands. And the company will certainly be the beneficiary of numerous efficiency contracts going forward.

Yet, Itron is only one of dozens of stocks that will balloon as Chu's vision becomes reality. To read about other companies profiting from the efficiency trend — and to stay ahead of the investment pack — click here.

Call it like you see it,

Nick

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