As oil begins its creep back up to the $100 a barrel mark, focus has been thrust once again towards renewable and alternative energy. The proxy for green energy sector, PowerShares Wilder Hill Clean Energy (NYSE:PBW), was up, roughly 10% over the last month. Even with this impressive run up, market analysts continue to debate whether solar or wind will be the linchpin towards energy independence from oil.

IN PICTURES: 5 Tips To Reading The Balance Sheet

European austerity plans combined with the general economic malaise makes the renewable sector a dicey bet over the short term. As long-term plays, both solar and wind make sense as overall energy usage is rising exponentially. Nevertheless, there is more than one way to play the sector, outside of the photovoltaic cell and turbine makers.

AC/DC
Rock group aside, alternating and direct current play an important part in our electrical grid and renewable energy. Both solar and wind turbines through their processes create direct current (DC) power. Our appliances, homes and other modern conveniences run on alternating current (AC) power. That generated DC power must be turned into AC electricity, so we can use it. It is in that transition that investors can find an opportunity to play renewable energy through the back door.

An inverter is an electrical device that converts DC to AC. The converted electricity can be at any required voltage and frequency with the use of appropriate transformers and switching equipment. This electricity can now be added to the overall grid for consumption or stored. These devices are vital components to get solar and wind energy into homes. Without them, these renewable sources can't function as power producers.

The solar inverter market is forecasted to be worth over $12.0 billion by 2014, up from $3.1 billion in 2008. Total inverter shipments in 2009 were at 8.1 GW, with analysts estimating slightly more than 11 GW to be produced in 2010. With the potential to be making big money from these devices, power management firms such as Eaton (NYSE:ETN) and ABB (NYSE:ABB) have been expanding their offerings in this area.

Playing the Inverter Market
The big exchange-traded funds tracking solar, the Claymore/MAC Global Solar Energy (NYSE:TAN) and wind, the PowerShares Global Wind Energy (Nasdaq:PWND), offer zero exposure to the power inverters makers.

The First Trust NASDAQ Clean Edge Smart Grid Infrastructure (Nasdaq:GRID) contains quite a bit of energy inverter stocks including SMA Solar Technology, which holds a 42% market share. Investors can use GRID as an overall arcing play on the growth of transmission and smart grid infrastructure throughout the world. For pure inverter plays, investors do have some choices.

Satcon Technology (Nasdaq:SATC) recently posted record revenues and margins and saw its year-to-date bookings increase 1100%. The company has recently partnered with Southern California Edison (NYSE:EIX) to supply inverters for 75% of 250 MW solar rooftop program and PG & E's (NYSE:PCG) largest solar farm. The company's balance sheet isn't great, but the potential for long-term gains is there.

Like SATC, Power-One (Nasdaq:PWER) also reported good second-quarter earnings. The company shipped nearly 529 MW of inverters in the quarter posting earnings of 17 cents per share on revenue of $215 million. This beat analyst's estimates of 10 cents and $185 million. Analysts now have a $17.50 price target on the stock.

Finally, both power conversion specialist Advanced Energy Industries (Nasdaq:AEIS) and industrial conglomerate Parker Hannifin (NYSE:PH) have recently made forays into the PV inverter markets. This can be a continued sign of what's to come from the sector.

The Bottom Line
While the solar cell and wind turbine producers get all the attention from renewable energy investors, without power inverters these technologies are dead in the water. These vital components are required to link solar arrays and wind farms with the transmission grid. As these forms of energy continue to rise in use, so will the stocks of those that make these power inverters. (Learn more about investing in environmentally friendly stocks, see Clean Or Green Technology Investing.)

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