Subscribe to Entrepreneur for $5

Renewable Energy is a Hot Commodity

Some businesses are cashing in on increased demand for alternative energy.

This story appears in the October 2009 issue of Start Up.

A wise (albeit fictional and homicidal) man once said, "First you get the , then you get the power." But these days in , if you've already got the power, they've got some money for you.

For years, the U.S. Treasury Department has offered tax credits to companies at the forefront of creating renewable energy sources. But now, as part of the American Recovery and Reinvestment Act (commonly known as the economic stimulus package), such companies--as judged by the Department of Energy--will be reimbursed through direct cash payments. Long story short: The alternative energy business is hotter--and more profitable--than ever, and a handful of companies are already ahead of the game.

Most companies like to talk about being the future of their industries, but IST Energy delivers, conjuring futuristic Hollywood images of flying cars powered by coffee grounds and milk cartons with its Green Energy Machine. GEM literally takes trash--up to three tons of it a day--and turns it into energy, mashing the trash down into pellets, which are in turn converted into gas electricity.

With a price tag of around $850,000, GEM is ideally suited to large institutions like schools and hospitals, but IST is also working on smaller versions. The machine's two main components can be operated separately. Doing so would allow a city, for example, to collect trash in one location and then use the pellets to generate power in another. Even further down the road, IST might consider going literal with its company name, using GEM to create and then sell power. Customer demonstrations are set to begin in September.

On the other end of the technological spectrum is Great Plains, a Montana-based biodiesel company that has discovered the seemingly supernatural powers of camelina, a plant that can grow almost anywhere under any conditions and that, unlike soy, isn't really good for anything else. Great Plains founder Sam Huttenbauer discovered the plant while trying to create therapeutic proteins, and realized that it was mostly oily waste. Now that oily waste is on its way into the fuel tanks of jetliners, to the tune of 2009 sales figures that are nine times what they were last year. And as revolutionary as the product is, Great Plains' business plan is keeping pace.

"We came at it from the opposite end that most players have come at it from," Huttenbauer says. "They came at it from the production side and were looking to source their materials and then sell it as a fuel. We came at it from the seed development and the growing of the crop. Our ultimate outlet is going to be direct to consumers or direct to businesses."

Continue reading this article - and everything on Entrepreneur!

Become a member to get unlimited access and support the voices you want to hear more from. Get full access to Entrepreneur for just $5.

Entrepreneur Editors' Picks