NEW YORK (TheStreet) -- Renewable energy has been one of the most complicated market segments in which to invest for many years. The reason for this is perhaps counter-intuitive but can be understood.

In general terms, when the price of oil goes up it creates the sentiment that the world needs more renewable energy sources and infrastructure to offset higher oil or natural gas costs and so prices for wind and solar stocks goes up.

When the price of oil goes down, it creates the perception that there is less need for renewable energy and so the price for wind and solar stocks goes down.

The price of crude oil peaked in the summer of 2008 at $147. Despite being up 15% year to date, it is still down almost one third since that 2008 peak. Since the peak in crude, the

Guggenheim Solar ETF

(TAN) - Get Report

is down 87% and the

First Trust ISE Global Wind Energy Index Fund

(FAN) - Get Report

is down 63%.

Against the backdrop of crude oil's rally this year, however, TAN is up 92% and FAN is up 44%.

The performance dispersion between the two funds has to do with their respective constituencies. TAN is 80% technology stocks and 20% industrial stocks and all of the holdings are pure solar plays. FAN allocates 57% to utilities and some other companies like

General Electric

(GE) - Get Report

that might be big players in the industry but for whom the industry barely moves the needle.

Next Era Energy

(NEE) - Get Report

is the old Florida Power & Light, but is heavily involved with transmitting wind power to its customers. NEE is a legitimate holding in the fund but does not capture the production of turbines like Danish company Vestas Wind -- FAN's second largest holding -- does.

For five years, Vestas is down 80% but is up 289% year to date while NEE is up 41% for five years and 14% in 2013.

Renewable energy is evolving to become more important to business. Both


(AAPL) - Get Report



(GOOG) - Get Report


investing into the space

. Google just announced that it bought 240 megawatts from a wind farm near Amarillo, Texas, to help power its data center in Oklahoma starting in 2014. Apple has bought a third-party renewable energy and built a solar farm, both in North Carolina, to help power its data center in that state.

Data centers use tremendous amounts of energy and, of course, the need to store data is growing exponentially but there are other environmental needs for renewable energy as well. Earlier this week, the

Washington Post

ran an article on

two stroke engines

, noting that leaf blowers "emit more pollutants than a 6,200-pound 2011 Ford F-150 SVT Raptor."

Two stroke engines can also be found in things like weed eaters and chainsaws. Although there are electric versions of these tools, as anyone who has ever tried to buck a tree with an electric chainsaw will tell you they are far less efficient.

The realistic future, however, is not in chainsaws but electric vehicles, solar power and wind power.

There are several risks to investing in renewable energy. One is innovation that creatively destroys what was previously leading edge technology.

LDK Solar


used to be one of the big players in solar and has a large weighting in the solar ETFs. Although the company is still in business, its stock is down 97% since its 2007 peak and is hemorrhaging money. This will happen to other companies.

Another risk comes from the extent to which renewable energy is subsidized by the government. Last year Spain announced it was ending subsidies for solar power due to economic reasons and Germany has announced it will end them by 2018.

Solar's reliance on subsidies in order to be viable is also a warning sign for near-term investing but also cause for optimism that the industry has a lot of room for new efficiencies and innovation to be brought to the market. This is where the long term investment opportunity will come from.

At the time of publication the author had no position in any of the stocks mentioned.

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This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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