Global banking giant, Credit Suisse, announced the launch of a new index to track alternative energy.

The firm says that alternative energy is on its way from being a sub-component of the energy or industrial sector to becoming a fully-fledged sector in most indices in the near future — similar to software or semiconductors in the early 1990s. In anticipation of this development, Credit Suisse has launched the Credit Suisse Global Alternative Energy Index.

It says that, boosted by impressive market growth rates, and the enormous amount of IPOs (like in the solar industry in 2006), the alternative energy universe is likely to reach a size justifying its independence as a sector in the coming three to five years. “Significant technological improvements, CO2 neutral energy production, increased independence from oil (decreasing oil reserves), energy supply security and diversification are the main growth drivers in the alternative energy segment,” it adds.

The index will track all official alternative energy sources (as defined by the International Energy Agency), including: natural gas, wind, solar, bio-energy, geothermal & hydropower and hybrids & batteries. Those sectors are equally weighted in the index. It will consist of the largest 30 companies in this universe – six companies from each sector whose selection is based on a well-defined index rule book, which includes market capitalisation, free float and average daily volume. The index components will be regularly rebalanced by the same rule process on a semi-annual basis.

“The CSGAE provides a tradable and investable indicator that reflects the expected impressive growth rates in the alternative energy market segment,” Credit Suisse says.