Shares in clean energy company ITM Power (LSE: ITM) have slumped by over 20% today after it released a half-year update and news of a placing. ITM has raised £2.1m through a firm placing with institutional investors having issued 14.3m shares at a price of 15p per share. Additionally, ITM plans to issue up to 24.9m further shares to qualifying shareholders at the same price to potentially raise an additional £3.7m.

The proceeds from the placing will be used to strengthen ITM’s balance sheet and support its commercial relationships. And on this front ITM appears to be making encouraging progress, with its results for the first half of the year indicating improvement.

For example, ITM has increased revenue by 27% versus the first half of the previous year and has been able to narrow its loss from operations by 14% to £3.17m. Furthermore, the company has agreed a strategic siting partnership with Shell to locate three hydrogen refuelling stations on Shell forecourts in the UK. And with ITM also launching its first hydrogen refuelling station in Rotherham (close to the M1 motorway), it appears to be making pleasing progress with its long-term strategy.

Fossil Fool?

Of course, clean energy is becoming an increasingly important consideration for the world. With climate change being of major importance to governments globally, it’s likely to continue to become a key growth area in the long run. As such, many investors may feel that buying a clean energy company such as ITM is a better idea than adding a slice of a fossil fuel-focused company such as Tullow Oil (LSE: TLW) to a portfolio.

However, this may not be the case. That’s because fossil fuels are still expected to form a major part of the energy mix for the coming decades. That’s especially the case in the developing world, where although the use of cleaner fuels is forecast to rise, oil and gas are likely to remain prevalent over the long term. As such, and even though the price of oil has collapsed, buying oil stocks such as Tullow Oil could still be a highly profitable move.

Looking ahead, 2016 is expected to be a very exciting year for Tullow Oil. That’s at least partly because its Project TEN in Ghana is expected to begin production in the middle part of the year and this will significantly increase Tullow Oil’s production. The result of this is forecast to be a rise in pre-tax profit from £67m in 2015 to £142m in 2016 and this could have a hugely positive impact on investor sentiment and on Tullow Oil’s valuation.

In addition, Tullow Oil’s ramping-up of production is set to generate substantially higher cash flows in future years and this could fund rapid dividend rises. Although income seekers may be put off Tullow Oil by its high degree of volatility, it could become a top notch income play to add to its potential as a strong growth play over the long run. Therefore, while ITM may be worth a closer look, Tullow Oil seems to be the preferred choice at the present time.

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Peter Stephens owns shares of Royal Dutch Shell. The Motley Fool UK has recommended Royal Dutch Shell B and Tullow Oil. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.