For those of you that have been reading the Smug Investments blog, Smugly Green, you will be familiar with our total green portfolio concept. For non readers, the ever expanding universe of green, light green, and responsible ETFs are making it possible to start thinking out of the box when creating your green portfolio. In order to do it right and be properly diversified, the notion of green may have to be stretched, but it's well worth the effort to create a more fully sustainable investment portfolio that doesn't necessarily sacrifice performance.

The obvious start to any green portfolio is the green energy options, some of which I laid out in my Beginner's Guide to Green Investing on Seeking Alpha. However, green energy is just a piece of the overall puzzle, albeit it an important one. The best way to start expanding the notion of a total green portfolio is to redefine asset allocation categories - instead of Small Cap, Mid Cap, Large Cap, and Bonds, Smug Investments' allocation classes look like this:

Soaring oil prices should give a boost to alternative energy sources, but it is likely to be several years before they develop a meaningful share of energy supplies, Standard & Poor’s concludes in a new report.

To meet U.S. electricity needs, alternative fuels will likely play a greater role in the years to come, either through mandates or increasingly competitive pricing, S &P says. “Nevertheless, more often than not, it is substantial federal financial support that makes these changes happen.”

Japanese oil giant Showa Shell Sekiyu which owns a network of 4,575 gas stations across Japan, - according to AFP reports, plans to build one of the world’s largest solar panel plants with an investment of at least 100 billion yen (948 million dollars), a spokesman said Wednesday.

Showa Shell Sekiyu, 40%-owned by Royal Dutch Shell (RDS.A), is one of Japan’s leading oil refiners. The company plans to begin construction in 2011, said the company spokesman. The location has not yet been decided but the Tokyo-based refiner is studying sites in Japan, Europe or the Middle East.

BREAKING NEWS. The world has an enegry crisis. The price of oil is rising. The sun provides more potential energy on a daily basis than fossil fuels do in a year.

CONVENTIONAL WISDOM. If something is appears too good to be true, it generally is. Eventually solar panels will become a commodity (think computer chips - Intel / AMD) and prices will find their equillibrium (think calculators, cell phones, VCRs) levels.

Hydrogenics Corp. (HYGS) shares continue to rise following last week's announcement that a hydrogen fueling station that was opened by Shell Oil (RDS.A) in Los Angeles last week built by Hydrogenics.

On Wednesday morning, shares in Hydrogenics were up almost 30% to C$2.37. Since June 13, when shares closed at C$0.79, the stock has risen everyday but one. 

The news Tuesday that a Goldman Sachs analyst had downgraded Trina Solar (TSL) sent Trina and several of its competitors on a downswing. The analyst cited “cash flow concerns” that applied not only to Trina, but to “many” other solar companies as well. In the afternoon, the Motley Fool chimed in with the insight that companies like Solarfun (SOLF) and ReneSola (SOL) aren't doing nearly as well as their accounting numbers might let on.

That's right, folks. Forget all those pesky little digits. Nobody likes math anyway. It's better to base your financial decisions on vague, unsupported opinions from people who, for all you know, have a vested interest in your agreement.

As oil prices continue soaring and consumers’ preference shifts to smaller and more fuel efficient vehicles, we are likely to see a proliferation of hybrid technology. Looking at the most recent car sales data in the US, Honda (HMC) and Hyundai out-sold both GM (GM) and Ford (F), mostly due to their wide selection of smaller more fuel efficient vehicles.

So what does this have to do with batteries? I believe quite a lot... It would appear the next natural progression in the auto industry will be the development and sale of plug-in hybrids [PHEV]. Thus far, production of PHEVs has been extremely limited, mostly due to battery related issues. However, given the current record oil prices and recent advancements in battery technology it is likely this market will show significant growth over the next several years.

Note: This article was provided to subscribers of Envoy Global Research on June 12, 2008.

Introduction

This post is devoted to some thoughts on companies in the solar industry, particularly the Chinese polysilicon-based solar module manufacturers. The basic issue I address here is the risk for a serious cash crunch at some of these module manufacturers given their working capital deficits and their capital expenditure requirements.

Fuel Systems Solutions (FSYS) has had a tremendous rise since my piece back in April. The shares have nearly quadrupled in less than three months and are due for a correction, They have simply gone up too far in too short of a time frame.

The shares are pricey: Trading at 38 times 2008 earnings estimates and nearly four times book value of $9.70, the stock is vulnerable to some hefty selling if FSYS fails to execute its business plan flawlessly, as this equity is priced to perfection and beyond.

Director of Zacks Equity Research Dirk van Dijk, CFA has long considered the affects of sky-high energy prices for an extended period of time on the overall global economy. Today we have him spell out a couple scenarios that may be plausible in the months and years ahead.

What do you foresee if oil prices remain at high levels?

There are investment opportunities in changing our economic lifeblood from oil to ingenuity, preempting the need for oil in urban transport. 

Unexpected innovations (positive Black Swans) such as personal computers, the Internet, lasers, penicillin, often require preparation to allow investment.  The objective of this paper is to alert investors so those interested can exploit current opportunities and organize their charter to for direct investments in the Personal Rapid Transit [PRT] industry - the Physical-Internet.

Further government intervention will be required in order to meet the policy goal of supplying 20% of US power needs by 2030, according to a recent analysis by the Congressional Research Service.

Although windpower currently provides only about 1% of U.S. electricity needs, it is growing more rapidly than any other energy source. In 2007, over 5,000 megawatts of new wind generating capacity were installed in the United States, second only to new natural gas-fired generating capacity. Wind power has become “mainstream” in many
regions of the country, and is no longer considered an “alternative” energy source.

Solar stocks are again feeling the heat from a report that Spain plans sharp reductions in subsidies for solar power. On Friday, a number of solar stocks dropped sharply after Lehman’s Vishal Shah asserted in a research note that the country was considering sharp cuts in its solar subsidy program. Today, there were further reports on the same theme.

According to Bloomberg, the Spanish newspaper Cinco Dias reported that the Spanish industry ministry is considering cutting the electricity rate paid to photovoltaic installations by as much as 35%.

Are you interested in wind energy, but don't have billions to invest like T. Boone Pickens? Are you afraid that you are going to pick the next pets.com, and not ebay.com? Don't fear. IndexUniverse.com is reporting that the PowerShares Nasdaq OMX Clean Edge Global Wind Energy Index (ticker: PWND - prospectus) is expected to begin trading next week.

It is actually not the first wind ETF. A few weeks ago, the First Trust ISE Global Wind Energy Index Fund (ticker: FAN - prospectus) hit the market. The PWND ETF will begin with 31 companies in its portfolio. The FAN ETF currently has 67 companies. Both have a high level of global diversification, which makes sense, given that I am not sure how they could even find 31 companies in the U.S., let along 67, with a significant exposure to wind energy. As a result of reaching out to global players, PWND is able to list that 90% of its companies are pure-plays. FAN has about 66% pure-plays. What is a pure-play? As defined, most of the business in the company must comes directly from wind energy - or specifically, the company must either produce 1,000 megawatts of energy, or generate $1 billion a year from wind-related power. Non-pure-plays include companies such as General Electric and Siemens, each which have significant interest in wind energy, but for which wind is still a relatively small profit center when compared to other business operations.

On the first day of the second half of a thus-far difficult 2008 – and the second half is supposed to be the stronger half – we sat down with Director of Zacks Equity Research Dirk van Dijk, CFA for his take on what can be expected in the days, weeks and months ahead.

What is your latest thinking on the astronomical prices of oil these days?

By Murray Coleman

Less than two weeks after the first wind energy exchange-traded fund hit the market, a more concentrated and at least initially more expensive alternative is set to launch.

Wind power is widely seen as the alternative energy source that's closest to prime time. Wind can compete head-to-head on a cost basis, without subsidies, with most other kinds of electrical generating power.

First Trust launched the first wind-power ETF in the U.S. on June 17, with the First Trust ISE Global Wind Energy Fund (ticker: FAN). Robert Carey, chief investment officer for First Trust, spoke with the editors of HardAssetsInvestor.com about how the new fund works and where it might fit in an investor's portfolio.

A team led by MIT students this week successfully tested a prototype of what may be the most cost-efficient solar power system in the world--one team members believe has the potential to revolutionize global energy production.

I'm trying to build a 3 position basket of "alternative energy" (non-solar) names. I started this basket with a small stake in American Superconductor (AMSC) which I actually added a bit to here as it pulls back to $36 and fills a gap from June 9th. [Jun 12: Starting a Beachhead in American Superconductor (AMSC)]

A-Power Energy Generation Systems, Ltd., formerly Chardan South China Acquisition Corp., through its PRC operating subsidiaries, is the largest provider of distributed power generation systems in China and will enter into China’s wind energy market in 2008. The Company is also focused on developing and commercializing additional renewable energy technologies

This company moved to the NASDAQ Global market on Jun 2, 2008, and is actually followed by a few smaller brokerage houses; therefore I can conclude it's not a complete scam .. something I worry about with any tiny far flung Chinese name. At a market capitalization of about $800M at today's prices, it's far smaller than our average fare and I believe either the 2nd or 3rd smallest current holding.