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I'm excited to recommend and open a position in EnerNOC (Nasdaq: ENOC).

The business
EnerNOC and Comverge (Nasdaq: COMV) are the market leaders of the demand response industry. Basically, EnerNOC uses technology to monitor, reduce, and coordinate its customers' (large factories, department stores, warehouses, malls, etc.) electricity usage. During times of high electricity demand, EnerNOC can then reduce its customers' power usage, which saves utilities from having to power up extra plants at high costs. For doing this, EnerNOC gets paid by utility companies and grid operators for freeing up electricity. EnerNOC passes along a portion of that cash to its customers, a win for both customers and utilities.

So why do I like it...?

Growing business in a new market…
The demand response industry is just taking off, and EnerNOC's growth has been exploding. Over the past three years, revenue increased at a CAGR of 66%. 2010 was the company's first profitable year, with earnings of $10 million. As more utilities deregulate and EnerNOC expands around the U.S. and into Europe, this growth can be expected to continue.

... with a strong balance sheet ...
EnerNOC has a rock-solid balance sheet, with $257 million in current assets and $100 million in total liabilities. That's an excess of $157 million, which the company will use to invest in its own operations as well as to use in snapping up competitors and increasing market share in the growing demand response industry.

... and a beaten-down price!
You don't get a beaten-down stock because the market is feeling generous. On Feb. 4, the operator of most of the East Coast's power grid, PJM, released a statement saying it believed some demand response firms were "double counting" savings. Then six days later, EnerNOC announced that Chief Operating Officer Darren Brady was leaving the company, fueling investor concerns.

The term "double counting" is a misnomer here, and this really boils down to a rate dispute. PJM wants to use estimated savings, while EnerNOC uses real-time data to show actual savings. EnerNOC has asked the Federal Energy Regulatory Commission to look into the matter and arbitrate. The company also missed analyst earnings expectations two weeks ago, which is another reason for the depressed price. These three items combined have managed to send EnerNOC down 25% in the past month, giving long-term investors an opportunity to get in to this disruptive company at a good price.

The risks
Besides the risks just mentioned, as with all investments there are dangers to face. The demand response industry is relatively new with new business models, and it's unclear how the industry will progress going forward. However, I have high hopes as EnerNOC's business model is a win-win for utilities and large consumers. Another potential risk is that new competitors are entering the space, including Honeywell (NYSE: HON) and Constellation Energy (NYSE: CEG). Both have deep pockets and could greatly change the competitive landscape.

I'm buying $1,000 worth of shares of EnerNOC tomorrow. If you're not comfortable with the risks EnerNOC presents but are still interested in profiting from the growing green tech industry, I suggest you check out Itron (Nasdaq: ITRI), a maker of smart meters, and Cree (Nasdaq: CREE), which makes LEDs, the long lasting bulbs that provide large energy savings over conventional bulbs. I expect all three of these firms to do well as the smart grid expands across the U.S. and world at large.

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Dan Dzombak can be found on his Twitter account: @DanDzombak. EnerNOC is a Motley Fool Rule Breakers selection. The Fool owns shares of EnerNOC. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.