Solar? Eclipsed. Why does wall street continue to look down on renewable energy?(Cover Story)

Byline: Rana Foroohar

If alternative-energy companies are so hot, why are their stocks so unpopular? Record-high oil prices make wind and solar increasingly competitive. Fear of climate change should brighten prospects for any alternative to fossil fuels, which release the greenhouse gases that cause global warming. Yet over the past two years, the worldwide stock-market value of companies developing renewable energy--which includes everything from wind and solar to recycling--fell from $13 billion to $10.7 billion, while the value of fossil-fuel companies surged to record highs of more than $1.2 trillion.

The reason, in a word, is uncertainty. Despite all the clamor about climate change, governments around the world have yet to ratify the Kyoto Protocol on reducing greenhouse-gas emissions. The result is piecemeal national rules and on-again, off-again support for subsidizing alternatives. Until it's clear how much green energy individuals and companies have to use, and by when, the renewables market will continue to suffer, says Mark Campanale, a manager at Henderson Global Investors in London: "There's simply not a feeling of certainty in the market about renewable energy."

Memories of the bubble don't help. In the late 1990s many of these companies rose and fell like dot-coms, burning through cash without turning a profit. The poster child for green hype was Ballard Power Systems--a fuel-cell maker that was trading recently at $8, down from a 2000 peak of $192. Wind power suffered from tight margins, thanks to high R ...