Clean Energy ETFs Follow Oil’s Lead
As oil prices carve out new 2009 highs, clean energy ETFs are also grabbing their share of a solid bull run. Although clean energy producers dived during the credit crunch, they’re back with vengeance, moving up more than 70% since March.
The iShares S&P Global Clean Energy Index Fund (ICLN: Quote, Profile, Advanced Chart, News) has been one of the biggest movers, helped in part by its exposure to a variety of components. The fund allocates 45% to solar, 33% to energy producers and transmitters, and 15% to wind power investments. A handful of batter makers and geothermic energy producers round out the well balanced portfolio, TheStreet.com reports.
Clean energy isn’t without its downsides, however. Due to a whipsaw commodities market and the complications of a newly developing industry, the iShares S&P Global Clean Energy Index Fund has a beta of 2.01, making it twice as volatile as the S&P 500. The following chart illustrates the weekly performance of ICLN over the past year.
The push to develop a national “smart-grid,” which will more effectively transfer energy around the country, is setting up an opportunity for quick ETF profits. The project, which could cost as much as $2 trillion, will be a boon for many energy service corporations.
The wind power industry is set to balloon 143% in the next six years, with the amount of electricity to be produced by wind to grow from 121,000 megawatts in 2008 to 294,000 in 2015. However, the tremendous growth will not be derived through personal wind power installations, but in well placed wind power ETFs.
Alternative energy has become a vital issue in addressing climate change and a global recession. Even prior to environmentally-conscious U.S. President Barack Obama taking oath, the United States was well on its way to expanding clean energy through the use of wind power. 
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