NEW YORK ( TheStreet) -- Energy investors like to take sides. Buy coal; short solar. Go long wind; any skepticism about the sectors is the work of short sellers, probably in cahoots with Chevron ( CVX) and maybe Exxon Mobile ( XOM).

It's not just idle talk. In fact, there was even a recent article in the financial press about generating short-term investment profits from coal stocks while solar struggles.

German conglomerate Siemens, on the other hand, likes to apply the diversification mantra to its big energy business in the U.S. -- nuclear, clean coal, wind and concentrated solar power. Siemens is not making one bet, but developing a diversified energy portfolio that it hopes will all add up to a reflection of the future energy capacity mix of the U.S. The diversified approach received a vote of confidence when President Obama recently voiced support for nuclear power, which had been a pet project of Republican lobbyists for decades.

Solar and wind stocks remain under pressure, though, and project financing uncertainty lingers for various energy sectors across the U.S. The federal cash grant program that has supported alternative energy project finance during the slump in tax equity investment has an uncertain legislative future.
Randy Zwirn
Randy Zwirn, CEO of Siemens Energy Americas

Through it all, Siemens continues to invest, without picking one workhorse in the energy sector. TheStreet recently spoke with the CEO of Siemens Energy Americas, Randy Zwirn pictured above, about recent developments on the energy landscape in the U.S., from New York Senator Charles Schumer's bill to put strict limits on funding for alternative energy projects based on domestic job growth quotas, to the electric car as the holy grail in the problem of storing energy generated by intermittent renewable energy sources.

TheStreet: Pure-play wind energy stocks like Broadwind Energy ( BWEN - Get Report) and American Superconductor ( AMSC - Get Report) have been under pressure, with utilization rates near or at a trough. If there is so much support for renewable energy, why has recent sentiment and demand for wind stocks been negative?

Zwirn: We look at the U.S. wind market as already being a viable sector. We categorize it as a mature and important part of energy capacity planning in the U.S. going forward.

Actually, in the past few months we've seen an uptick in sales. Last year, the market was clearly impacted by a lack of project financing, but the stimulus bill and the cash grants were a major step forward in mitigating the lack of tax equity investment.

If we look back at the history of wind energy, we lived year to year holding our breath on production tax credit extensions. As major manufacturers like us have come in and made substantial investments in scale and technology, we are closing the gap in terms of what would make wind profitable on a stand-alone basis, though I wouldn't want to predict that day is one year or two years or three years away.

Wind energy may be dependent on tax credits today, but it is clear that short-term funding mechanisms for an industry that is by definition long-term are not effective. A more effective funding mechanism is necessary for wind to facilitate investments in facilities and technology, and in order to achieve what we think is the full potential. The combination of a national, renewable energy standard and effective carbon legislation would change the playing field.

TheStreet: Yet Washington has been dominated by the health care agenda. What's the likelihood of traction for more meaningful energy policy from the Capitol, and do you think a feed-in tariff of the type that has supported solar growth overseas is a viable option in the U.S.?

Zwirn: No one could have predicted that health care would steal the entire national agenda, and hopefully over the next few weeks there will be interest on the energy policy side for reform. From the visits I have made to Washington and talks with stakeholders, there doesn't seem to be much objection to the fact that we need a renewable portfolio standard. On both sides of the aisle, I can say I don't see a huge difference when it comes to this idea.

Our view is that a national renewable production standard is the most effective method. If today we had such a standard, and it was combined with carbon legislation, wind and solar would immediately be in a more favorable position. Though in the short- erm, there is probably a better chance of legislative action on a renewable production standard. The whole cap-and-trade debate remains a hot political issue.

TheStreet: And your view on feed-in tariffs?

Zwirn: I think FITs have been effective for providing certainty for renewable investors, in terms of project returns and financing. However, the fact is that U.S. electric rates are regulated on a state-by-state level, and a national FIT in the U.S. would be complex and difficult to implement. I haven't seen any traction there yet because it is so complicated.
Solar Energy

That said, a potential game-changer is the development of the electric car. If we think of the FIT issue in relation to the electric car, a practical business case could be made based on the future use of the electric car as a storage device for intermittent energy for renewable sources. A full realization of electric cars would require a different approach to how energy units interface with the grid, and then the issue of a feed-in tariff could be viable on the national political landscape.

TheStreet: One alternative energy legislative issue getting press even as health care dominated the agenda was Senator Schumer's latest broadside against companies receiving federal money for alternative energy while not creating what he thinks would be adequate job growth in the U.S. Senator Schumer laid into Chinese alternative energy player A-Power Energy (APWR) and its West Texas wind farm project. Is the debate about energy running the risk of becoming too much about U.S. job growth and too little about the importance of the energy generation itself?

Zwirn: I think Senator Schumer's bill is extremely troubling. It's a bad bill, and it will freeze out the very incentives that have been successful in creating jobs and a wind industry in the U.S. We went from a handful of people in the renewable energy business in the U.S. to 1,000. I just think the bill is a bad bill, and would really be a step back into the type of uncertain political environment that slows alternative energy project growth and, as a result, slows job growth.

TheStreet: Where are we today in terms of the progress made on the elusive storage issue for intermittent energy that you alluded to in talking about a national feed-in tariff program?

Zwirn: Storage is critical, but we have not had a breakthrough there. The electric car looks very promising from the standpoint of being able to get the U.S. off oil while also helping to solve the issues around energy storage, and we are investing heavily there. There's no doubt that the storage issue is really critical to the economic viability of renewable energy. I don't know that is transformational in terms of the way we look at energy, but it's definitely part of the solution of how we store wind energy at night and disperse it during the day.

With the type of concentrated solar power in which we have invested, we have a little bit of storage capability in the transfer fluids.

We have the capabilities for a significant breakthrough in storage, though it could be five to ten years away.

TheStreet: Siemens has made a bet on concentrated solar power. Is that an investment that specifically reflects a better outlook for concentrated solar than photovoltaic solar power?

Zwirn: Solar continues to have a higher cost than wind, but as we start to scale up in some larger concentrated solar power projects, we believe certain regions of the world, such as North Africa, and even the deserts here in the U.S. southwest, are places where concentrated solar power can be competitive.

As to whether it is concentrated solar or photovoltaic solar, the jury is still out, and it is really too soon to tell, and there is likely enough space for both.

We always have this discussion that the energy landscape winners can be picked over time, and we wind up guessing wrong more often than not. I can remember when the statement was being made that we would run out of natural gas and that's why we have to shift to coal. It's all about portfolio theory. We are not giving up hope on coal. It's still 50% of energy generation in the U.S. and it's not going away, even if it has its challenges.

TheStreet: Can you rank the energy technologies against each other without picking a winner? In the foreseeable future, is it clean coal, nuclear, wind or solar that leads?

In the U.S., because of planning cycles for nuclear and coal, I think for the next seven to 10 years it will be wind and gas turbines that will dominate. However, in the long term, I think 50% of energy will come from coal, and another 20% from nuclear.

Today we are doing lots of life extension on the nuclear side of the energy equation, but eventually nuclear plants have to be retired. Nuclear is base load, and the question is, if we don't replace current plants with new coal or nuclear plants, what is the solution? There is a physical limit to how much wind we can have on the grid. That's why I say the next seven to 10 years it's wind and gas, and then nuclear versus coal and carbon capture.

TheStreet: You didn't mention solar in that equation. What is the role of solar?

Zwirn: I put solar in the renewable category with wind, but wind has a big head start. We see solar as having a larger role, a share of the pie in the future. It may not be as large as wind but, clearly, our intent is to develop solar, and the market that is most attractive in the U.S. is concentrated solar power in the West. I like to think that solar is at the stage where wind was five to seven years ago, and now it is becoming a mainstream technology, with much heavier investment brought to bear.

-- Reported by Eric Rosenbaum in New York.


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