In what the U.S. Department of Energy says is a “major milestone in the effort to spur private sector investments in clean energy and create new jobs for America’s workers,” the Department of Energy and the Treasury today gave $502 million to “green” energy companies in place of tax credits.

The cash, from an American Recovery and Reinvestment Act program, is meant to jumpstart projects that may have been stalled in the downturn

The $502 million awarded today — part of a government give-away that will add up to more than $3 billion — went primarily to 10 wind projects, six of which were in Oregon, New York or Texas.

The government said the program will support some 5,000 bio-mass, solar, wind and other types of renewable energy production facilities in all regions of the country during the life of the program.

The first round of spending will create more than 2,000 jobs in construction and manufacturing, the government said, “while moving the nation closer to meeting the [Obama] administration’s goal of doubling renewable energy generation in the next few years.”

Below you’ll find the project, location, and amount.

1
Penascal Wind Farm
Sarita, Texas
$114,071,646

2
Locust Ridge II, LLC (Wind)
Shenandoah, Pa.
$59,162,064

3
Canadaigua Power Partners (Wind)
Cohocton, N.Y.
$52,352,334

4
Wheat Field Wind Farm
Arlington, Ore.
$47,717,155

5
Hay Canyon Wind Farm
Moro, Ore.
$47,092,555

6
Pebble Springs Wind Farm
Arlington, Ore.
$46,543,219

7
Highland Wind Farm
Salix, Pa.
$42,204,562

8
Evergreen Wind Power V, LLC
Danforth, Maine
$40,441,471

9
Moraine II Wind Farm
Woodstock, Minn.
$28,019,520

10
Canadaigua Power Partners II (Wind)
Cohocton, N.Y.
$22,296,494

11
Solaire Development
Danbury, Conn.
$2,578,717

12
Movement Gym PV System (Solar)
Boulder, Colo.
$157,809

Total:  $502,637,546

The news from Washington came days after reports of $200 million in wind-farm investments by Morgan Stanley (NYSE: MS) and Citigroup (NYSE: C). Those companies made their separate investments to take advantage of these federal dollars.

These investments are just the first wave: $500 million is only a sixth of what the government plans to spend.

Every wind farm needs wind turbines. And it was in anticipation of this massive government support of wind and other renewable energy that I added Vestas (Pink: VWDRY, $23.90) and General Electric (NYSE: GE, $13.34), the No. 1 and No.2 turbine manufacturers, to the Government-Driven Investing Portfolio.

These two companies remain remarkably undervalued: Each is trading at half its typical valuation, GE should be worth 16.9 times earnings. It’s trading for 8.7 times earnings. Vestas is more richly valued and sells for 18.6 times earnings, but it historically has commanded nearly 40 times earnings. These low valuations can’t last long.

This new wave of federal dollars will have a huge effect on these two leading wind turbine producers. Within the past week, more than $700 million in new wind investment has been announced.

More is coming.

The federal government is already authorized to spend another $2.5 billion on renewable energy projects. The majority of any of those dollars that are allocated to wind farms — all but about $3 million of today’s announcement — will to the essential turbines.

This is not a phenomenon that is limited to the United States. Other countries, especially China, are mirroring Washington’s push into renewable resources to meet their growing electricity needs.

Action to Take —> This news is only hours old; the federal government announced the grants this morning. Both GE and Vestas, amazingly, lost ground today. Bad news? Great news! I call it a bargain on a bargain.

These leading companies offer immense appreciation potential. Not only will the billions in federal spending boost their bottom lines, but the massive growth in worldwide wind spending is sure to help buoy their valuations.

Investors seeking growth should consider these portfolio additions immediately. I’m reaffirming my $40 price target on GE and my $50 price target on Vestas.

Many happy returns –

Andy Obermueller
Government-Driven Investing