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After a couple of years during which equity markets have not been kind to our sector, it is nice to see that companies have started filing for IPOs again. The list of 2011 green IPO filings below shows a marked uptick during the second half of the year and reveals that 9 of the 13 companies are from the Bio Chemicals, Fuels and Materials sub-sector, continuing the trend of recent IPOs.

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by Rona Fried, Ph.D., Contributing Editor

Over the past few months, we've seen dramatic progress in the Desertec Industrial Initiative project, the "impractical, pie-in-the-sky" concept which few thought would actually take shape. The far-reaching, visionary plan calls for turning much of the Sahara desert into solar fields. Besides providing local clean energy, it would supply a solid 15% of Europe's energy via transmission cables built under the Mediterranean Sea.

But it's actually coming to fruition! Desertec now has 56 partners in 15 countries and key projects, including the transmission infrastructure, are coming into place.

In November, Morocco got the go-ahead for a 500 megawatt (MW) concentrating solar power (CSP). CSP plants produce electric power by converting the sun's energy into high-temperature heat using various mirror configurations, unlike solar photovoltaic (PV) which transforms the sun's rays directly into electricity. The World Bank will provide $297 million in loans to help finance the first phase of construction.

The Ouarzazate CSP plant will be the first in Morocco's $9 billion solar program. Five other plants are planned between 2015 and 2020 for a total capacity of 2000 MW. The plants will, of course, mitigate the country's greenhouse gas emissions, while generating home grown energy for the first time. Morocco imports almost all its energy, mostly oil and coal.

In 2009, the World Bank's Clean Technology Fund approved a $750 million investment plan for CSP in the Middle East and North Africa region. It plans to raise an additional $4.85 billion for projects in Algeria, Egypt, Jordan, Morocco and Tunisia. The goal of the fund is to develop 900 MW of CSP in the region by 2020.

In late January, Algeria signed on to an unbelievable 22 gigawatts (GW) of renewable energy, to be installed by 2030. Algerian energy company Sonelgaz signed the agreement with Desertec. 10 GW of that energy will be exported to Europe.

And Tunisia just joined the Desertec project with an agreement to build 2 GW of CSP. The mammoth TuNur solar thermal plant, which will also have energy storage capacity to produce solar electricity at night, will be six times larger than any CSP plant built yet. It will supply energy to about 750,000 homes in Europe.

Mediterranean solar developer Nur Energie will build the plant. It will manufacture the 825,000 heliostats in Tunisia, creating about 20,000 jobs and spurring investment in solar skills development to maintain the plants long-term.

Nur Energie has already signed an agreement to deliver the energy to a grid operator in Italy via ultra-efficient direct current transmission cables, which only lose about 3% of the electricity they carry per 1,000 kilometers.

Desertec and STEG Energies Renouvelables (STEG ER) also signed a Memorandum of Understanding (MOU) to conduct pre-feasibility studies for large-scale solar and wind projects in Tunisia, including their integration into local grids and export of power to Europe.

The grid development project, Medgrid, plans to develop transmission cables under the Mediterranean Sea to export about 5 GW of energy to Europe as early as 2020.

CSP plants are notorious for water consumption, however, which is needed to keep the heliostats clean. That's especially true in the Saharan desert where blowing sand leaves layers of dust. Siemens is designing new solar panels that repel dust and resist sand build-up in a partnership with the Masdar Institute of Technology in Abu Dhabi.

Founding members of Desertec, which was formed in 2009, include: ABB, Abengoa Solar, Cevital, Deutsche Bank, EON, HSH Nordbank, Muenchener Rueca, M+W Zander, RWE, Schott Solar and Siemens.

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Rona Fried, Ph.D. is CEO of SustainableBusiness.com, which published Progressive Investor for eight years before merging with The Green Investor in November 2010.

We endeavor to align The Green Portfolio composition to match our allocation targets, but with few closed positions and only 1 or 2 new stock recommendations per month, it is easy to fall behind. This is especially true after a year like 2011 during which we witnessed great performance variations between industry sectors and geographies, but also between individual stocks within these groupings. Further, there is a rapid shift and evolution happening within sectors of the market, some maturing with slowing growth and fewer investment opportunities, others rising from research and development stage to commercial status with private companies turning public, as well as sectors hit by growing pains or unexpected windfalls. Adding to the challenge of maintaining a portfolio allocation target, and actually keeping up with that target, are the vagaries of economic and market cycles.

Now representing just over 20% of The Green Portfolio dollar value, the wind sector has done very well and now outweighs all other sectors. The wind energy industry as a whole did not perform that great, in fact, when measured with the ISE Global Wind Energy Index (tracked by the ETF FAN), the sector lost a little over 20% in the last twelve months. We are very pleased that most of our wind stock picks (it's hard to forget the AMSC debacle!) managed substantially better, with all current positions up over 25%.

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We chronicled the painful collapse of the solar equity sector since May of last year, and you know our feelings about the extreme under-valuation most solar stocks have reached. The trouble with oversold conditions is that they can persist for long periods of time and the last thing we want is to catch the proverbial falling knife. Calling the exact bottom of any market or stock is but pointless guesswork. This is why we have patiently been waiting for the market to clearly establish a bottom before we pull the trigger and replenish the solar sub-segment of the portfolio.

While the solar market as a whole has a lot of work to do to get itself back to the type of growth we expect, the charts show that solar equities have stopped their free fall late last year and many of the leading indicators we work with are revealing a renewed bullish trend. It may not be obvious yet, but the stock market tends to look ahead and what it sees right now for the solar sector is light at the end of the tunnel.

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