New Index Fund Brings Investor Power to Clean Energy Sector

New Index Fund Brings Investor Power to Clean Energy Sector

PowerShares Capital Management LLC has introduced a new exchange traded fund (ETF) based on the WilderHill Clean Energy Index, the first index comprised of companies focused on developing renewable sources of energy, clean energy technologies, and environmentally preferable technologies within the energy sector. The new PowerShares WilderHill Clean Energy Portfolio replicates the WilderHill Clean Energy Index, which was developed by Dr. Robert Wilder as a benchmark for the clean and renewable energy sector.

According to industry research, the total clean energy market for wind, solar and fuel cells will grow to $92 billion in 2013, roughly seven times its present size. Lower costs from advances in technology are helping fuel the growth in alternative energy investment. According to the U.S. Department of Energy, the cost of wind and solar technology has declined by 80% over the past two decades. As the prices of crude oil and other petroleum products remain near historic highs, investment in the development and use of alternative sources of energy becomes more attractive and cost effective. Thirteen states now require utilities to obtain a portion of their electricity from renewable sources.

Nonpolluting alternative energy sources including wind, solar, hydroelectric, bio-fuel, geothermal, hybrid automotive and fuel cells have become multibillion dollar markets in recent years. The WilderHill Clean Energy Index, which uses modified equal dollar weighting, is composed of 37 companies that are working in six clean energy areas:
  1. Power Delivery and Conservation (companies working on technologies that match power loads to outputs, conversion of DC to AC, etc.)

  2. Cleaner Utilities (companies focused on cleaner methods of making electric power including wind, solar, bio-fuel, geothermal and hydroelectric)

  3. Energy Conversion (companies developing devices to convert fuels such as bio-fuels to electric power)

  4. Cleaner Fuels (companies involved in researching the production of hydrogen as a power source for such things as personal electronic devices and automobiles)

  5. Energy Storage (companies creating products that store energy)

  6. Renewable Energy Harvesting (producers of renewable energy and manufacturers of products that are used to capture and convert renewable energy such as solar, wind, and bio-fuels.)
Companies in the index range from Burnaby, B.C.-based fuel cell company Ballard Power Systems to energy management system providers like Spokane, Wash.-based Itron, Corp. to power providers like Boise-based Idacorp and Scottish Power.