Alternative energy goes after investor dollars

Executives tell big investors the cost of producing power in the sector is dropping.

By Steve Hargreaves, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Executives from some of the world's leading alternative energy companies argued their case to big investors Wednesday, outlining why money thrown into the red-hot sector will pay off.

Much of the rationale centered around costs, which leaders of renewable energy firms contend are dropping at a breakneck clip.

"We need to make sure solar is becoming cost effective compared to other energy sources," Erik Thorsen, president of the Norwegian solar firm Renewable Energy Corporation told the crowd at Piper Jaffray's second annual conference on investor opportunities in alternative energy.

Thorsen said the company planned to cut silicon costs by 70 percent by 2010 by using less silicon in solar energy devices, combined with higher efficiency solar cells.

Silicon costs have been a major hurdle to developing solar power, as the price of the material, which is also used in computer chips, has soared in recent years due to skyrocketing demand.

California-based Applied Materials (Charts), which makes semiconductor production equipment and recently moved into making equipment for manufacturing solar power cells, also outlined strategies to reduce production costs.

Applied Materials presented a solar panel design four times larger than current panels, basically something the size of a large garage door.

The company said the design would save up to four times on costs associated with framing and connecting a solar set-up.

Sunpower Corporation (Charts), also based in California, said it was looking at shaving 30 percent off installation costs, partly by designing solar panels that take the place of normal construction materials, like roofing tiles.

Sunpower's executive, Tom Werner, also pointed to the massive potential of the electricity market, which he said was valued at over $1 trillion annually, and that the company is poised to take an ever larger share of that pie with each corresponding drop in solar's price.

"The upside opportunity here is fantastic," said Werner.

While there may be tremendous opportunity in investing in alternative energy companies, investors should always understand that the companies are often new and small, and can therefore be very volatile.

Take ethanol darling Verasun (Charts), which debuted last summer at over $30 a share, quickly lost half it's value, rose to near $30 again, and now trades at $15.

Among larger companies at Wednesday's conference, DuPont (Charts) outlined its emerging bio program, saying it is nearly ready to introduce a plant-based material that can replace petroleum-based plastics in things like carpet fiber, molded parts and packaging.

John Ranieri, general manager of the company's bio-based materials division, said DuPont is also big in developing organisms that create ethanol or butanol, that later of which he said could be more promising than ethanol for certain fuels because it has a higher energy yield.

In response to a question about when cellulosic ethanol might be cost effective, Ranieri said that "by 2010 we'll be looking at commercial possibilities."

Piper Jaffray, a Minneapolis based investment bank, organized the conference to bring together what a spokeswoman said were top companies and the bank's clients, which include mutual funds, hedge funds, and other institutional investors.

Other publicly traded companies presenting at the conference included MEMC Electronic Materials, Energy Conversion Devices, First Solar, Metabolix, Nova Biosource Fuels, The Andersons, Beacon power Corporation, Akeena Solar, Canadian Solar, Fuel Cell Energy, Active Power, Ormat Technologies, EMCORE Corporation, Medis Technologies, Suntech Power Holdings, Evergreen Solar, Active power, Altair Nanotechnologies, Ultralife Batteries, SatCon Technology Corporation, Power Integrations, Power-One, Spire Corporation and American Superconductor Corporation.

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