NEW YORK (TheStreet) -- Over the past year, the alternative energy sector has been hit hard by the global recession and cascading fall in crude oil prices. However, as economies recover, crude gets a bit more expensive and alternative energy dominates political agendas, the sector is likely to reap some benefits.

Most recently, governments around the world came to an agreement to reduce carbon dioxide emissions by pledging an aggregate amount of $100 billion per year to aid developing nations in adopting cleaner and greener energy technology. Additionally, nations like China, India and Brazil continue to focus and invest heavily in solar and wind power, with China expected to allocate more than $450 billion to the wind and solar power industries over the next five years.

In fact, the Chinese have more than augmented their support for alternative energy and solar projects by offering government subsidies. To hit its goal of increasing total installed solar capacity to 2GW by 2011, the Chinese government offers 50% of the cost of investment in solar projects and 70% of the solar projects' costs in remote parts of the country.

In the United States, the drive to cleaner energy seems to be primarily driven at the state and local levels. Around the nation, 26 states and more than a thousand cities have bumped up their environmental standards and energy efficiency requirements, with California leading the way. The sunshine state has a statue that requires its utilities to include 33% renewable energy in its portfolio. As a result,

Southern California Edison

( SCE) and

Pacific Gas & Electric

( PGE) have both developed 250 MW solar projects.

To further add appeal to the sector, it appears that funding is no longer the barrier it once was. Through the American Reinvestment and Recovery Act, the U.S. Treasury Department has implemented a program that hands out cash grants in lieu of investment tax credits for renewable projects. Additionally, the Department of Energy has implemented a loan guarantee program and developed new grants for use in commercial and residential energy efficiency programs. Thirdly, numerous states have developed bond programs like the Property Assessed Clean Energy to make financing easier. Lastly, there are still some tax credits and utility rebates offered by the federal government, which add appeal to going green.

This focus on renewable and alternative energy sources will likely benefit the following ETFs:

Claymore/MAC Global Solar Energy

(TAN) - Get Report

, which holds companies like

First Solar

(FSLR) - Get Report


PowerShares WilderHill Clean Energy

(PBW) - Get Report

, which holds companies like

Trina Solar


, and


(CREE) - Get Report


iShares S&P Global Clean Energy Index

(ICLN) - Get Report

, which holds companies like

Covanta Holding Corp.

(CVA) - Get Report


Market Vectors Solar Energy ETF


, which holds companies like

MEMC Electronic Materials Inc.



When investing in these clean energy focused equities, it is important to consider the volatility of the energy sector and the inherent risks involved in investing. To help mitigate these risks, the use of an of an exit strategy which triggers price points which represent abnormal price weaknesses and an increased likelihood that further price weaknesses are likely to follow is of importance. Such a strategy can be found at


-- Written by Kevin Grewal in Laguna Niguel, Calif.

Kevin Grewal serves as the editorial director and research analyst at The ETF Institute, which is the only independent organization providing financial professionals with certification, education, and training pertaining to exchange-traded funds (ETFs). Additionally, he serves as the editorial director at where he focuses on mitigating risks and implementing exit strategies to preserve equity. Prior to this, Grewal was an analyst at a small hedge fund where he constructed portfolios dealing with stock lending, exchange-traded funds, arbitrage mechanisms and alternative investments. He is an expert at dealing with ETFs and holds a bachelor's degree from the University of California along with a MBA from the California State University, Fullerton.