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All this week NPR News has been investigating power - not political power, but electric power. We've been taking a close look at the existing electrical grid and what's to come. Now an argument for updating the grid is to encourage the development of more renewable forms of energy like wind and solar.

Policy makers have gotten behind so-called green energy and there's a concerted effort to help that industry grow. Now in the wake of the housing bubble and the Internet bubble, some people are asking whether the country is headed for a renewable energy bubble. NPR's Jeff Brady reports.

JEFF BRADY: The stimulus legislation President Barack Obama signed last February in Denver includes more than $25 billion to jump-start the renewable energy industry. That'll help pay for things like 40 million new electric meters and research into fuel cells. During his bill signing speech, the president said an updated grid is necessary to bring renewable energy to market.

President BARACK OBAMA: We are taking big steps down the road to energy independence, laying the groundwork for new green energy economies that can create countless well-paying jobs.

BRADY: This type of significant government action is one important element in creating a bubble, according to Eric Janszen. He's a financial advisor and founded the company iTulip, named for the Dutch tulip bulb bubble that took place in the 17th century. He's made a career out of studying the dynamics of bubbles.

Mr. ERIC JANSZEN (iTulip): You'll know that we're at some stage of an energy bubble when you start to hear about how you can get rich quick in the energy market.

BRADY: Janszen says bubbles tend to start with a kernel of something good - say, owning a home or the development of the Internet - in this case energy that causes less pollution. But then outside forces come in and create a sort of mania.

Mr. JANSZEN: To really make these things go, you need a new source of credit.

BRADY: In the housing bubble, it was those mortgage-backed securities. Janszen says credit is important because you need a whole bunch of capital gushing in to inflate stock and other asset prices.

But renewable energy developer and Texas oilman T. Boone Pickens says a renewable energy bubble is just about the last thing on his mind.

Mr. T. BOONE PICKENS (Renewable Energy Developer): I don't see how it's going to happen, but you know, there's a lot of things happening that I may not anticipate. Certainly this last crash.

BRADY: Pickens bet wrong that oil prices were going to stay as high as they were last summer. That cost him and other investors hundreds of millions of dollars. And now the credit crunch has forced him to delay plans to build a thousand megawatt wind project, so he's not losing sleep over the prospect of a bubble.

Mr. PICKENS: Not that I wake up in the night as where I'm going to get the money to build this project, because I've already got $150 million in it.

BRADY: Pickens says part of the problem is low natural gas prices. It's difficult to justify using wind to generate electricity when gas is so much cheaper.

Then there's the other challenge with wind. It's going to rely heavily on an upgraded electricity grid that isn't built yet to get power from wind corridors to population centers. Pickens says that while most everyone has gotten the message that the Obama administration is going to give renewable energy a boost, they're waiting on more specifics to act.

Mr. PICKENS: So a lot of it is just not understood and not ready to go, but I think by the time you get out - when you get through this year, it's going to be pretty clear how they expect - you know, cause the industry to kick off and go.

BRADY: Congress is working on a cap-and-trade bill that would limit greenhouse gas emissions and then turn them into a commodity that can be traded. And in that Eric Janszen says there might be the seed for creating the credit necessary to get a renewable energy bubble going.

Mr. JANSZEN: Some think the investment banks will get in the cap-and-trade business and figure out a way to use that market to create securities which can then be the foundation for an asset price inflation.

BRADY: So while a few people out there still see the potential for a renewable energy bubble, more pieces have to fall in place first, not the least of which is major upgrades to the country's electricity grid. Planning for that is underway.

Recently the Electric Power Research Institute was given $1.3 million in stimulus money to develop a framework for grid developers. The group expects to complete that work by early summer.

Jeff Brady, NPR News.

INSKEEP: And you can learn more about wind and solar power and see a map of the U.S. electric grid at npr.org.

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