Some Renewables Charge Ahead; Others Face Stiff Headwinds

Yesterday, Provo UT-based Raser Technologies Inc (NYSE: RZ, http://www.rasertech.com), a geothermal power development company, announced yesterday (http://www.rasertech.com/news/scripts/full-news.php?1236266640) that it has completed final preparations to transmit power to the City of Anaheim (CA) from its thermal plant in Utah next week. Raser said that it has already been supplying about 3.5MW to a local utility, and will ramp up to 10 to 11MW. Raser’s market cap is about $165 million; its shares are trading at $2.74 with daily volume of about 475,000.

At the same time, Detroit-based DTE Energy (NYSE:DTE, http://www.dteenergy.com) today said that it has filed renewable energy proposals with Michigan that would significantly increase renewable energy in the state (http://www.reuters.com/article/marketsNews/idAFN0516450120090305?rpc=44). It proposes to add 1,200MW of renewables, with most to come from wind, and a small fraction from solar. DTE has acquired easements on more than 50,000 acres in Huron County for a large-scale wind farm. DTE trades at about $23.90 with a market cap of $3.9 billion.

London-based The Crown Estate, the regal entity that controls UK sea-bed leases for renewable energy projects (among many other holdings), was reported by RenewableEnergyWorld recently to have granted “exclusivity agreements” for 10 offshore wind development projects in Scotland (http://www.renewableenergyworld.com/rea/news/article/2009/02/crown-estate-awards-scottish-offshore-wind-sites). The combined projects could potentially produce 6GW, or enough electricity to supply 3 million homes.

Skeptics abound, however.  Yes, coastal dwellers love offshore wind power that doesn’t clutter up the views.  But offshore turbines cost more to erect and to maintain.  Last week it was reported that Lyme Regis, a coastal town in England familiar to many who saw the film, “The French Lieutenant’s Woman,” is not enthusiastic about having a wind farm in its sightlines.  According to a local official, “I have seen a lot of wind farms around the world and they are incredibly ugly.”  (http://www.energycurrent.com/index.php?id=3&storyid=16379).

There’s also the problem that many wind and renewable power companies are young, some being startups.  Many are clamoring for stimulus dollars in various DOE, DOT and other bail-out budgets.  Some of the challenges they face:

Carpinteria CA-based Clipper Windpower (AIM: CWP, http://www.clipperwind.com) will cut wind turbin production by 15% to 20% this year, and has already furloughed 90 Iowa workers.  Larger turbine companies like the Spanish market leader Gamesa (http://www.gamesacorp.com) and DMI Industries, a subsidiary of Fergus Falls MN-based Otter Tail Corp (Nasdaq:OTTR, http://www.ottertail.com) have announced layoffs already.  Otter Tail shares are trading in the $16 range, down from a high of $46.15.  Even the bigger companies are hurting; Denmark’s Aarhus-based Vestas Wind Systems (http://www.vestas.com), the big daddy of the industry, is seeing reduced demand from the economic situation.  Its shares are trading in Copenhagen in the $35-$40 range, down from $145.00.

Given that global landscape, it makes sense that the Irish Airtricity, the UK-based RWE npower renewables, Norway’s Statkraft (http://www.statkraft.com) and Norway’s StatoilHydro (NYSE: STO, http://www.statoilhydro.com) have formed a consortium called Forewind to better their odds of securing a bid for a Crown Estate license on the Scottish opportunity.  Airtricity’s parent is Scottish and Southern Energy (LSE: SSE and OTC: SSEZY, http://www.scottish-southern.co.uk).  RWE npower renewables is the UK subsidiary of the German firm, RWW Innogy (http://www.rwe.com).

The Scots government still has to look at the environmental impact of the proposed wind farms, but the “exclusivity agreements” allow the developers to start their surveys.  They can award leases for the sites once the environmental studies are complete, and that is expected by January.

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