If you follow alternative energy stocks, you have likely noticed a disturbing price trend. The widely watched WilderHill New Energy Global Index (NEX) is nearing the all-time lows that it struck in early 2009. The Ardour Global Index (AGIGL), a broad benchmark of alternative energy companies, is down over 11% from a year ago, and down 66% from its high in late 2008. Solar stocks have been hit the worst, with the Ardour Solar Energy Index (SOLRX) down fully a third from its recent peak just five months ago. These types of numbers test the mettle of an alternative energy investor.

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This is in sharp contrast to information just released by Bloomberg New Energy Finance. In the report, Bloomberg states that new investments in clean energy projects jumped substantially in the second quarter of 2011. New investments were 22% higher than a year ago, up to $41.7 billion globally. This was a 27% jump from new investments in the first quarter of 2011. This made the second quarter of 2011 the third highest quarterly number on record!

China had the most new spending on clean energy investment, about $12 billion. This was, however, down 11% for China when compared to the previous quarter. The U.S., on the other hand, had a huge 195% increase in investments, which brought the U.S. total up to $10.5 billion.

Much of the jump is attributed to large-scale solar thermal projects in California, Spain and South Africa, which outpaced photovoltaic installations.  Solar thermal facilities generate power by focusing the sun’s rays to a single point, which generates steam to turn a turbine. In contrast, photovoltaic  panels convert rays directly into electricity. In many sites, solar thermal generation is preferred to photovoltaics, since electricity is generated through more conventional technologies like electrical turbines. Other new investments include a large geothermal energy project in Kenya and bioenergy development in Germany.

What does this jump in new investment, and contrasting drop in stock prices, mean for the clean energy sector? I see this as a clear buying opportunity for the long-term investor in alternative energy companies. Even on a bad day, I remain convinced that alternative energy companies will benefit from a long-term secular trend that is moving the world toward a clean energy mix. By holding a portfolio high-quality companies diversified by size, alternative energy sector and geographic location, a patient investor can ride out the dips and be well positioned for the gains (see the Roen Financial Report’s Paradigm Portfolio). So if you have the stomach for it, this may be the perfect time to add to your positions.

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