Looking at the alternative energy market, the industry's growth rate is between 20% and 30%. Every day you can read about a new technology, a new type of solar cell or a new way to produce electricity from sea waves. This sector is promising. On one hand, after the US Presidential elections, we could see an impulse to renewable energy sources initiatives. Political incentives could influence the industry. On the other hand, growing energy demand will continue in the next years. The oil industry will invest more to increase output, but it will take time.

However, many make assumptions about a peak oil and the fact that increased production, even if possible, would never manage to meet increasing demand. In this context, we have to expect an energy supply crisis in the coming years. Some say it has already started. And renewable sources of energy could help limit the consumption of fossil fuels. Should oil prices remain high or even rise more, renewable energy would become more competitive.

This industry is attractive to investors with an appetite for risk. In the medium term, returns are promising, but volatility is quite high. After the initial phase, when many new companies enter the market, a process of selection begin and only the strongest survive. Since January, renewable-energy companies have been very weak compared to the performance of companies involved in the oil industry.

In fact, as an example, the PowerShares WilderHill Clean Energy Portfolio (PBW) in the figure, has lost about 35% from its high of December 2007. I cannot explain the reason for this poor performance. I would have expected the opposite, actually. One reason could be that, as the economic climate becomes difficult, investments in new technologies could decrease. Most of these companies are still losing money and many could not manage to continue operations. However, I do believe that the sector is quite interesting.