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If conversation and consternation over renewable energy translated into action, we'd be a wind-powered society by now. We're not.

According to a Web site produced by the Union of Concerned Scientists, America's utilities were using renewable energy sources to generate only 2% of their electricity as of May 2004. With the delays and disappointments, it doesn't sound like a field ripe for investment, right? Wrong.

There are dozens of signs that massive markets are being created to develop cheap renewable energy sources. The list includes all the typical suspects, including tax credits, new state initiatives, and investments by huge companies such as General Electric. Now you can add pop culture references.

Less than two weeks ago, NBC's The West Wing dedicated an entire episode called "King Corn" to the debate over the usefulness of ethanol as a fuel additive. In advance of the Iowa caucus, the candidates for president to replace Martin Sheen's Jed Bartlet gave their views on the subject in front of the Iowa Corn Growers' Expo. (Corn is used to make ethanol.)

Call me crazy, but I think primetime references like these are a sure signal that Rule Breaking advances in this area are starting to make national hay, leaving in their wake opportunities for investors with the guts to get in early.

What is it?
The best explanation of renewable energy I've seen comes, not surprisingly, from the National Renewable Energy Laboratory (NREL) in Golden, Colo. It says:

The United States currently relies heavily on coal, oil, and natural gas for its energy. Fossil fuels are nonrenewable, that is, they draw on finite resources that will eventually dwindle, becoming too expensive or too environmentally damaging to retrieve. In contrast, renewable energy resources -- such as wind and solar energy -- are constantly replenished and will never run out.

While renewable energy is typically clean and better for the environment, it isn't cheap. An estimate from the website Solarbuzz reports that solar energy, for example, can cost anywhere from 10 cents to 40 cents per kilowatt hour (kWh). And that low end typically can't be achieved without major government incentives. By contrast, William Baxter, one of the directors of the Tennessee Valley Authority, says his facilities generate electricity for 4.5 cents per kWh using coal and 6 cents per kWh using natural gas.

So what's the fuss?
There's no denying it: We're still likely to be mining, refining, and burning this stuff long after you and I are long gone. So why on earth take a chance on renewable energy?

Simple: As these finite resources become scarcer, they get pricier. Consider coal, for example. Estimates show our coal reserves could last anywhere from 50 to 250 years, but demand is creeping ever upward. That means today's prices of $50 a ton could rise to $70 or $80 per ton in only a few short years, if not sooner. No wonder Fool contributor Bill Paul sees major investing possibilities in the stuff this year.

But this same scenario is equally bullish for investing in renewable sources. The primary inhibitor to mass adoption of renewable energy has been cost. The cheaper it gets relative to the fossilized alternatives, the more likely it will become widely available. So as coal prices skyrocket, as oil hovers near $50 a barrel, and as the surplus that has conspired to keep natural gas prices low evaporates, it's worth asking: Where will our cheap energy come from 5, 10, and 20 years from now? And how can we, as investors, profit? Let's examine three potential sources.

A nice suntan
The sun is a nearly infinite energy resource. In fact, it supplies more energy than the entire world uses in a year. Really. It's just that harnessing those UV rays isn't economically feasible -- unless, of course, you're wearing a swimsuit and sporting a heavy dose of Hawaiian Tropic. That's why Solarbuzz estimates that solar energy production accounts for less than 0.01% of global energy demand.

Creating solar power requires solar cells that use material similar to that in computer chips to absorb photons and knock loose electrons, which in turn produces electricity. This has come to be known as the photovoltaic (PV) effect. Cells are arranged in PV panels and can be deployed individually or in huge systems used by utilities.

The good news for investors is that utilities are increasingly turning to solar power as an alternative. Solarbuzz reports that demand has grown roughly 25% annually over the past 15 years.

So, where are the investing possibilities? Interestingly, four companies account for more than 50% of the market for solar cells: Sharp; Kyocera (NYSE:KYO); BP Solar, a division of BP plc (NYSE:BP); and Shell Solar, a division of Royal Dutch Petroleum (NYSE:RD). Sharp is the world's largest supplier of solar panels, most of which are delivered in its home country of Japan.

Surprisingly, there are also several start-ups dealing in solar power. A cursory check for growing revenues and positive net cash reveals a company we've profiled here before, Evergreen Solar (NASDAQ:ESLR), as a possible long-term winner.

Full of hot air
Of all the available renewable energy sources, hydrogen just might have the worst reputation. And it's no wonder. You remember the Hindenburg, right? But it's a bad rap.

Hydrogen is the simplest and most abundant element in the universe. Fuel cells capture the chemical energy it generates to create electricity, and with no fiery explosions involved in the process. Nope, instead of smog-producing smoke, fuel cell-powered autos would emit nothing more than distilled water. No wonder the president made fuel cells a cornerstone of his 2003 State of the Union address.

Since then, the Feds have promised $1.2 billion to create renewable energy sources based on hydrogen. That's a major commitment that has attracted equally major interest from private enterprises. More than 1,000 companies had been involved in creating hydrogen fuel cells by the end of 2003, and growth continues unabated. According to researcher Freedonia Group, the total fuel cell market will reach $1.1 billion by 2008. BCC Research estimates more than 25% annual growth in portable hydrogen fuel cells.

Fortunately for investors, many of the companies pushing hydrogen-based products are public, but many are also early in their development. That's primarily a function of the nascent nature of the market and the costs involved in creating fuel cell alternatives. For example, prototype fuel-cell powered autos created by Honda (NYSE:HMC) and Toyota (NYSE:TM) could fetch $100,000 or more today. Prices are expected to come down dramatically in the next five years, creating a mass market from which today's fuel cell pioneers would see enormous benefits. Among the list of the more promising are Ballard Power (NASDAQ:BLDP), Distributed Energy Systems (NASDAQ:DESC), FuelCell Energy (NASDAQ:FCEL), Hydrogenics (NASDAQ:HYGS), and Plug Power (NASDAQ:PLUG).

Breaking wind
Wind is the most likely renewable energy source to achieve mass adoption soon because it's relatively cheap. With tax credits, wind costs between 3 and 4 cents per kWh, making it a cost-competitive alternative to generating electricity using coal or natural gas. No wonder estimates from the European Wind Energy Association say the global market could reach $150 billion by 2012. That would equal a more than 1,500% increase from $9 billion in 2003, the last full year for which wind market statistics are available.

Even if that estimate proves aggressive, local efforts to make utilities more dependent on renewable energy are sure to aid growth. Consider my home state of Colorado, for example. Last November voters approved Amendment 37, which stipulates that state utilities must generate or purchase 3% of their available electric power from renewable energy sources beginning in 2007. The requirement rises to 10% by 2015.

The amendment is expected to benefit wind power firms the most because, well, we've got an awfully windy state. Plus, Colorado has a number of ranchers who could theoretically lease portions of their land to install wind turbines. If that sounds like a far-fetched idea, consider that the next 20 years is expected to bring more construction of power-generating facilities than in the prior century.

There are lots of good reasons to be enthusiastic about wind power, but sadly there are precious few public companies in the field. Instead, GE has proven to be the dominant supplier of wind turbines. But there are smaller alternatives, including power distributor AES (NYSE:AES), which earlier this month made large investments in wind power projects in Texas, and U.S. Wind Farming, a penny stock on the pink sheets that owns majority interests in wind-generating power cooperatives in rural areas. Both could be promising, but risk abounds. For example, U.S. Wind Farming is still working on its audit and a complete set of financial statements is not yet available at its website. That makes buying shares in the company an act of faith more than an investment at this point.

Renewable profits?
Let's close with a caveat: Each of the small-cap companies mentioned here carry enormous risks because the markets we've covered are still in their formative stages. And they could remain there for years to come. So, tread carefully.

But also remember not to let Wall Street worrywarts squash a sound thesis when it appears. Will the price of oil and coal rise over time? Undoubtedly. Will the cost of renewable sources come down over that same period? Absolutely. Will there be money made by investing in the stocks of renewable energy pioneers? Yes, huge sums, in fact. It's just that there's no crystal ball capable of divining winners.

As Fool.com co-founder David Gardner has said many times before: Rule Breaker investing is both art and science. That makes it hard. Fortunately, you don't have to do it alone. The community at Motley Fool Rule Breakers is exploring dozens of possibilities in the quest for the next big investing breakthrough in renewable energy, RFID, commercial space travel, smart homes, digital entertainment, and dozens of other industries. Profits will come to the bold. Do you, dear Fool, have the guts to join us?

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Fool contributor Tim Beyers fancies himself a rebel investor but didn't own shares in any companies mentioned in this story at the time of publication. To see what stocks are in his portfolio check out his Fool profile, which is here . The Motley Fool is investors writing for investors and has a disclosure policy .