Houston, We Have an Opportunity

Late last week, Houston Mayor Bill White announced a plan to negotiate a contract ensuring that his city gets one-third of its electricity from wind power. If the city council approves the deal, it will send investors yet another strong signal of wind power's staying power. Moreover, it could offer investors a profitable opportunity.

The electricity will reportedly be generated by a Shackelford County wind farm operated by Horizon Wind Energy. If so, it could give Energias de Portugal (OTC BB: EDPFY.PK), which purchased Horizon Wind from Goldman Sachs (NYSE: GS  ) earlier this year for $2.9 billion, a nice little lift.

Over the longer term, given that it takes 1.3 billion kilowatt hours of electricity to power Houston's public facilities each year, the size of the deal suggests that the city will be using more than 50 megawatts worth of wind power. Incremental demand is music to the ears of wind-turbine manufacturers, and we'll see how many other cities follow suit.

In just the past year, General Electric (NYSE: GE  ) , Siemens (NYSE: SI  ) , Suzlon Energy, Vestas Wind System, and Gamesa have all built new turbine manufacturing facilities in the United States to keep up with surging demand. With more cities likely to follow Houston's lead, and more states poised to mimic California and Minnesota's renewable-energy standards -- which require utility companies serving residents in those states to produce more of their energy from renewable sources in the coming years -- demand is unlikely to abate any time soon.

Normally, I would recommend Motley Fool Rule Breakers recommendation PowerShares WilderHill Cleantech Energy (AMEX: PBW  ) exchange-traded fund as a diversified way to play such a clean-tech opportunity, but the ETF is suspiciously light on wind companies. In fact, it holds no stake in any of the major wind-turbine manufacturers. A better selection in this case would be Market Vector Alternative Energy ETF (NYSE: GEX  ) , whose top two holdings are Vestas (11%) and Gamesa (8%). Of the two ETFs, Market Vector seems better positioned to catch the wind from Houston's opportunity -- as well as from all the other cities and states that I believe will follow its lead.

Interested in other wind power-related foolishness? Check out these articles:

Fool contributor Jack Uldrich owns stock in GE. The Fool has a strict disclosure policy.

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