Longer term, Donge expects to see utilities embrace hybrid technologies. For example, customers could receive solar thermal or natural gas power depending on the season or time or day. And even if we don't get global regulation, she expects more bilateral technology arrangements across countries. "There are tons of opportunities in every country," she says.

Abroad, she likes U.K-based Scottish & Southern Energy PLC, a leader in sustainability strategies for 20 years which is very focused on wind and natural gas. It's in Calvert's Global Alternative Energy and World Values International Equity funds.

Renewable energy utilities (wind and geothermal) currently account for about 6% of the $22 million of assets in the Pax World Global Green Fund, with water utilities contributing an additional 6%, says Simon Gottelier, co-portfolio manager and an investment manager for subadvisor Impax Asset Management Group Ltd. in London.

"The renewable energy sector has underperformed the broader market and the wider environmental sector for two years and it's a challenging investment environment, but we do believe there are signs of improvement ahead," says Gottelier.

A top fund holding is Portugal's EDP Renováveis S.A., a major European energy company which acquired Houston-based Horizon Wind Energy from Goldman Sachs in 2007.  It has 3.26 gigawatts of wind capacity installed in the U.S., mostly in the Midwest. It's now focusing on Washington, California, the Northeast and the Great Lakes Region, areas which offer potential growth opportunities since they are still trying to meet state renewable energy requirements, he says.

Although U.S. regulatory uncertainty could slow growth, EDPR has exposure in fast-growing emerging markets Poland and Romania and is also well-positioned in the Brazilian market, says Gottelier.

He also likes fund holding Ormat Technologies Inc., a Reno, Nev.-based manufacturer of equipment used in geothermal power production and an independent provider of this power. Although it faces permitting and financing challenges, it has "very good economics, endless resources from which it can draw power, and is extremely green," says Gottelier. Another plus: global exposure, with operations in Israel, Guatemala, the Philippines, Kenya and Nicaragua.

China Longyuan Power Group Corp., China's No. 1 wind project developer which is listed on the Hong Kong stock exchange, is another fund favorite. New capacity installed in the Chinese wind market, which grew at a 101% compounded rate between 2005 and 2009, is expected to grow 50% this year and 40% in 2011, he says. The key driver: People moving from rural areas to cities in Mainland China need energy. In parallel, the Chinese government is committed to rolling out renewable energy capacity to 15% of China's total energy mix by 2020.

What about the Global Green Fund's water utilities? California Water Service Group could see earnings growth exceed 20% next year should U.S. regulators permit it to increase customer rates to help recoup its big infrastructure investments as expected, says Gottelier. Philippines-based Manila Water has big growth potential too. It has concessions for half of the capital city's water supply, is trying to get the other half, and is looking at developing concessions in India. "It'll enable people in the slums to get water for the first time in their lives," he says.   

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