It only took seven years to go from the first commercially available Web browser to virtually every major company building a Web presence. Can this country make similar strides in terms of its energy production and distribution? Or will we forever endure the constraints of rolling blackouts and temperamental OPEC nations? The inertia appears to be ending. Fuel cell companies are receiving backing from venture capitalists and automotive companies. Utility companies are re-examining solar and wind alternatives. And, if the status of energy technology progresses from a research and development stage to one of full-scale implementation, the Commonwealth could be a significant beneficiary.

MID: The early 90s was the initial hot period for biotech investing, and the late 90s/ early 2000 was the hot period for Internet investing. I'm hoping the next arena to receive attention will be energy technology. What do you think the chances of that are?
Prouty: Energy has been and will continue to be one of the largest global sectors--right up there with transportation and healthcare. It can be said emphatically that energy touches everyone's lives. I think investors should start looking at some of these energy technology names as an investable sector.

MID: What are some of the new energy technologies that may become part of our everyday lives?
Prouty: I think a lot of the technologies you might have seen during the [President Jimmy] Carter years are seeing a resurgence of interest, such as solar and wind technologies. I often get asked by investors, "Why is it different this time around?" I think one of the big issues is that the cost of these technologies has come down significantly. In California especially, we're definitely seeing a resurgence in the use of renewables. Throughout the U.S., there has been a renewed interest in large scale wind [power] development with wind power starting to be developed on a utility scale.

MID: Explain more about how wind is being utilized.
Prouty: We're seeing large projects in states such as Minnesota; Texas, surprisingly enough, is seeing tremendous growth in wind farm development. And, not only do you have the "clean" aspect of wind power, but wind helps utilities hedge against price surges in natural gas.

MID: You're talking about an existing utility company using wind power to augment its regular electricity supply?
Prouty: Sure. Florida Power & Light is a prime example of this. This is a utility company that is also engaged in large-scale, wind farm development.

MID: How does it work? What is a wind farm?
Prouty: It's basically an area that has a lot of large-size wind turbines sited. You pick areas where the wind is very amenable to the production of wind power. So, it's much like putting up a power plant somewhere. Wind power, especially on a large-scale, is starting to become cost competitive with centrally generated electricity.

MID: Moving from wind to the sun, what's your outlook for solar power?
Prouty: We're seeing a lot of interest in solar power. A lot of individuals in California are starting to take advantage of incentive programs that makes the cost of solar power fairly attractive. These are primarily small systems going up on people's roofs. The government agencies that run these incentive programs have seen a ground swell of interest in solar power, which certainly increased tremendously with the power problems and rolling blackouts out in California. That being said, solar power still remains very, very expensive.

MID: If I'm an investor interested in taking a look at wind power, are there some companies specifically focused on that space?
Prouty: The real leaders in wind turbine technology are European--one company called Vestas Wind Systems; NEG and Micon, both out of Denmark; and Nordex, a German company that just went public.

MID: Are the Danish ones publicly traded?
Prouty: Yes. In solar power, there are publicly traded companies here in the U.S. You have the larger of the group, Astropower (NASDAQ-APWR). Currently, we do cover that stock. We have them rated a MARKET PERFORM. They are, certainly, a significant player in this industry. They are profitable, so it's a very solid company.

MID: What do you think about a local player like Evergreen Solar (NASDAQ - ESLR)?
Prouty: They're working on an interesting new technology. It is earlier stage than Astropower--they're just starting to ramp up their manufacturing. We don't cover Evergreen, but they do have a new technology and an interesting marketing relationship with a large Japanese company, Kawasaki.

There's another one in Massachusetts called Spire (NASDAQ - SPIR). We don't cover them. They don't make actual solar cells, but they make the equipment that helps to produce solar modules and solar cells. They're a capital equipment provider, sort of like an Applied Materials [semiconductor equipment manufacturer].

The last company that has some exposure in the solar area is a company called Energy Conversion Devices (NASDAQ - ENER), although they do many other things. They have a subsidiary called United Solar which does have some interesting solar technology.

MID: What do you think about the fuel cell space?
Prouty: Fuel cells kind of run the gamut across all sorts of different technologies, going from companies that are looking to provide fuel cells for the home market to companies that are targeting the automotive market to people targeting the commercial/industrial market. We cover Plug Power (NASDAQ - PLUG), which is one of the companies targeting the residential market. We have it rated a market perform.

MID: What is their product?
Prouty: It's a fuel cell. It's a power plant at the home, where a homeowner, much like having a solar panel, could generate some or all of their electricity at their house. Or, they can use it for back up power.

MID: What does it cost to do that?
Prouty: Well, all of the fuel cell companies are primarily development stage companies. Talking about cost today is a little bit difficult, but it is very expensive. All of these fuel cell companies, across the board, need to lower costs significantly. There are still some technological hurdles to overcome in order to drive down costs. But, it certainly is an interesting area to look at.

You also have the fuel cells that are targeting the automotive market. You have Ballard Power (NASDAQ - BLDP), which we have a BUY rating on. It's a Canadian company. Their fuel cell would basically replace the internal combustion engine in the automobile.

MID: Do you think there is a lot of resistance from auto manufacturers to this technology?
Prouty: One of the reasons we like Ballard is that they have teamed-up with a few of the household names in the automotive area like Daimler-Chrysler and Ford. Automotive manufacturers are all pursuing varying advanced technologies, but they have made significant investments in fuel cell technology.

MID: The automotive manufacturers have?
Prouty: Yes they have. Daimler-Chrysler and Ford are working in conjunction with Ballard. General Motors has a very advanced fuel cell program. Toyota is working on fuel cells. Really everyone is working on this technology.

MID: What do you think about a local company like SatCon (NASDAQ - SATC)?
Prouty: SatCon really [works with fuel cell companies] across the board. I would call an aspect of their technology an "enabling" technology. They have developed a range of products in an area we call power electronics, which would be one of the components to make a fuel cell system work. They have some interesting technology.

One of the other fuel cell players that we cover is called Fuel Cell Energy (NASDAQ - FCEL). They're out of Danbury, CT. They have a much larger fuel cell system and are really targeting commercial entities.

So these are much larger power plants than the ones that would be powering a home. We like that market. We have a STRONG BUY rating on the stock. This is a development stage company, but our belief is--as far as fuel cell companies go--we like the market and technology of Fuel Cell Energy the best.

MID: What do you think it will take to catalyze the rapid deployment of these technologies, similar to the rapid adoption of Internet technologies?
Prouty: I don't think there will ever be some "snap of the finger" mass adoption of any of these technologies. There are companies producing solar cells like Astropower, which is profitable.

The wind business is very profitable and is a fairly large business right now. But, we already have a grid in place and it's already depreciated almost down to zero. We have large central power plants producing an awful lot of electricity.

I always caution people to [not look at this sector] as something that, with a snap of the finger, is going to rocket to the moon. Where I think it does get interesting is in some of the emerging markets where you don't have this infrastructure already built. But, we have a huge infrastructure here in this county.

MID: Jumping to another local company, what do you think about American Superconductor (NASDAQ - AMSC)?
Prouty: Both American Superconductor, and a company up in New York called Intermagnetics General (NYSE - IMG), are looking to solve some of the power transmission issues that we have.

A lot of the power problems this country faces isn't a matter of generation, it's really a transmission and distribution issue. Much like an Internet bandwidth issue, there is only so much electricity you can put through a power line.

Nowadays, it's very difficult to get enough power into some cities like San Francisco and New York City. This superconductive wire these companies are working on would allow utilities to send more electricity through the same size wire. It quite often is equated to optical fiber.

MID: If you were to pick one company in alternative energy that you're really bullish on, who would that be?
Prouty: It's funny, because a lot of people wouldn't consider this alternative energy, but we cover a company called C & D Technologies (NYSE - CHP). It's actually North America's largest provider of reserve power batteries.

Most people would not think of this as exotic technology for these are primarily lead acid batteries, but C&D is kind of the "work-horse" of backup power right now, whether it be computer networks, data centers or cell towers--all of these use lead acid batteries for backup power.

It's an interesting play into what we call the power quality/reliability market. We have a BUY rating on it and have a $36.00 price target. Last fiscal year they did almost $600 million in revenue.