Investing Talk #13: Energy Business
Investing in the energy business offers exposure to one of the most essential and evolving sectors of the global economy. Whether you're drawn to traditional oil & gas, renewables like solar and wind, or emerging tech like hydrogen and battery storage — energy can be a profitable (but complex) area.
1. What Is the "Energy Business"?
The energy sector includes all industries involved in the production, distribution, storage, and consumption of energy.
Key Segments:
| Segment | Examples |
|---|---|
| Oil & Gas | ExxonMobil, Chevron, pipelines |
| Renewables | Solar, wind, hydro, geothermal |
| Utilities | Electric companies (Duke Energy, etc.) |
| Battery/Storage | Tesla, CATL, Enphase |
| Nuclear Energy | Uranium miners, nuclear plant operators |
| Hydrogen & Alt Fuels | Plug Power, Bloom Energy |
| Energy Services | Equipment, drilling, tech platforms |
| Carbon Markets | Emissions credits, carbon capture |
2. Ways to Invest in the Energy Business
Option 1: Public Stocks & ETFs
Invest in energy companies or sector ETFs through a brokerage:
| Type | Example Investments |
|---|---|
| Oil & gas majors | XOM (Exxon), CVX (Chevron), CNQ (Canada) |
| Renewable leaders | FSLR (First Solar), ENPH (Enphase), BEP.UN (Brookfield Renewable) |
| Energy ETFs | XLE (U.S. Energy), ICLN (Clean Energy), TAN (Solar) |
| Utility companies | NEE (NextEra), DUK (Duke), AQN (Algonquin) |
Great for: Passive investors, steady growth, dividends
Option 2: Private Equity or Direct Investment
- Invest in energy startups (via VC, AngelList, or syndicates)
- Fund solar or wind projects (PPAs or co-development deals)
- Invest in mineral rights or oil leases (more advanced)
- Own EV charging infrastructure or battery facilities
High risk, high reward – requires capital & due diligence
Option 3: Start or Buy an Energy Business
- Solar panel installation or energy-efficiency service
- EV charging franchise (e.g. ChargePoint resellers)
- Battery storage or microgrid project in rural areas
- B2B SaaS for energy monitoring or emissions tracking
Entrepreneurial path – best if you have experience or a partner
4. What to Look for in Energy Investments
| Factor | Traditional Energy | Renewable Energy |
|---|---|---|
| Cash flow | Oil & gas = strong CF | Some renewables still scaling |
| Dividends | High in oil & utilities | Rare in newer companies |
| Growth | Slower | High growth potential |
| Volatility | Medium–high | High |
| Subsidies/Policy | Low impact | Crucial (gov incentives) |
5. Risks to Watch
| Risk | Strategy to Manage |
|---|---|
| Commodity price swings | Diversify across sub-sectors |
| Political/regulatory risk | Avoid over-concentration in one region |
| Tech obsolescence | Research before investing in new tech |
| Long project timelines | Mix long-term and short-term investments |
Sample Portfolios by Risk Level
Conservative (Dividend-focused)
- 40% Utility stocks (e.g. NEE, DUK)
- 30% Oil majors (e.g. XOM, CNQ)
- 30% Renewable ETFs (e.g. ICLN, BEP.UN)
Balanced Growth
- 25% Clean tech stocks (FSLR, ENPH)
- 25% Oil & gas (XOM, SU)
- 25% Energy infrastructure (pipeline stocks or REITs)
- 25% Battery, EV charging, or uranium
Aggressive/Speculative
- 30% Renewable microcaps or IPOs
- 30% Energy storage & AI tools
- 20% Hydrogen + nuclear bets
- 20% Emerging market energy projects
Invest in Energy Companies (Passive)
You can invest in public or private companies in:
- Renewables (e.g. Brookfield Renewable, Enphase)
- Oil & gas (e.g. ExxonMobil, Suncor)
- ETFs like:
- ICLN (iShares Clean Energy)
- XLE (S&P Energy)
- TAN (Solar ETF)
- Carbon credits or green bonds (institutional platforms)
Good for long-term, lower-effort exposure.
Option 3: Partner with or Acquire an Existing Business
- Acquire a small solar, HVAC, or battery installation business
- Invest in infrastructure via syndication (e.g. community solar farms)
- Join a franchise (e.g. green energy tech or EV charging networks)
Best if you have capital but not technical expertise.
3. Business Models in Energy
| Model | Revenue Strategy |
|---|---|
| Installation + service | Upfront + maintenance contracts |
| Energy-as-a-service | Monthly billing (e.g. solar PPA) |
| Hardware sales | Panels, batteries, meters |
| Infrastructure leasing | Rent EV chargers or panels to others |
| Data or SaaS platforms | Energy usage analytics for B2B |
4. Challenges to Be Ready For
| Challenge | How to Prepare |
|---|---|
| High upfront costs | Use grants, green loans, investors |
| Regulatory barriers | Work with consultants or local experts |
| Market competition | Focus on niche or underserved segments |
| Long sales cycles (B2B) | Build a pipeline, offer financing |
Grants, Incentives & Funding Sources
Especially in clean energy, many governments offer:
- Tax credits (e.g. Investment Tax Credit - ITC)
- Grants/subsidies for solar, storage, EV
- Green energy loans (low-interest)
- Carbon markets (you can earn/sell credits)
💡 In Canada, the U.S., EU, Australia, and many developing countries — incentives are at historic highs for clean energy in 2025.
Most Common Energy Products in the World (By Type)
1. Fossil Fuel-Based Products
Still the largest share of global energy consumption (~75% as of 2024).
| Product | Primary Use | Notes |
|---|---|---|
| Crude oil | Transportation, heating | Refined into gasoline, diesel, etc. |
| Gasoline (petrol) | Vehicles | Most-used transportation fuel |
| Diesel | Trucks, generators, shipping | Higher energy density than gasoline |
| Natural gas | Heating, cooking, power generation | Cleaner-burning than coal |
| Coal | Electricity generation, steel | Declining but still widespread use |
| LPG (Propane/Butane) | Cooking, heating, rural areas | Portable, used off-grid |
2. Renewable Energy Products
Growing fastest, especially in electricity generation and transport.
| Product | Primary Use | Notes |
|---|---|---|
| Solar panels (PV) | Electricity (residential & utility) | Massive adoption in all continents |
| Wind turbines | Utility-scale electricity | Onshore and offshore wind farms |
| Biofuels (ethanol, biodiesel) | Transportation | Used in cars, especially in Brazil |
| Hydropower systems | Electricity | Largest renewable source globally |
| Geothermal systems | Heating, power (select regions) | Mostly in Iceland, Philippines |
| Biomass fuels | Heating, cooking | Common in developing countries |
3. Electricity-Based Products
Generated from both fossil fuels and renewables.
| Product/Tool | Use | Example |
|---|---|---|
| Batteries (lithium-ion) | Energy storage for EVs, solar backup | Tesla Powerwall, CATL batteries |
| Electricity (grid power) | Powering homes, industries, cities | From coal, gas, renewables |
| EVs (Electric Vehicles) | Transportation | Tesla, BYD, Nissan, etc. |
| Heat pumps | Heating and cooling | Growing in residential markets |
4. Energy Carriers & Infrastructure
These products move, convert, or store energy.
| Product | Purpose | Notes |
|---|---|---|
| Hydrogen (green/blue) | Fuel, industrial processes | Emerging clean energy carrier |
| Compressed Natural Gas (CNG) | Vehicle fuel | Used in buses, taxis, etc. |
| Electric transmission lines | Move electricity long distances | Backbone of the power grid |
| Smart meters/inverters | Manage energy flow | Used in solar, smart homes |
Global Energy Mix (as of 2024-2025 estimates)
| Energy Source | Approximate Global Share |
|---|---|
| Oil | ~31% |
| Coal | ~26% |
| Natural Gas | ~24% |
| Renewables (total) | ~12–14% |
| Nuclear | ~4% |
Most Promising Energy Products for the Future
| Product | Why It’s Promising |
|---|---|
| Solar + storage systems | Cost-effective, decentralized |
| Hydrogen fuel cells | Heavy transport, industrial use |
| Advanced batteries | Grid & EV storage needs growing |
| EVs + charging stations | Global transition to electric |
| Modular nuclear reactors | Clean baseload power (in development) |