The wind energy industry may have experienced a slowdown in 2010, due largely to the recession, but the future remains healthy and overall wind power capacity is expected to “rise at a healthy pace” and triple by 2017. That’s among the conclusions contained in a comprehensive report prepared by Pike Research (http://www.pikeresearch.com/research/global-wind-energy-outlook).
When we last took a look at wind energy and smallcap companies in May, Google had just plunked down $55 million for a major wind farm venture in Central California, which directly followed Google’s $100 million investment in what is called the world’s biggest wind farm–the 845-megawatt Shepherds Flat Wind Farm now being built near Arlington, Oregon scheduled to be finished in 2012.
The Pike Research report includes a forecast that total wind generation capacity will jump from 194.3 gigawatts (GW) in 2010 to 562.9 GW by 2017 when wind power installations will be a $153 billion industry, compared to $56 billion in 2010. China, of course, is expected to continue to lead in wind energy deployment with Europe a technology leader and the most expansive explorer of offshore deployment.
While the future looks bright, according to Pike, the small caps we have been following were beaten down in early August, along with the rest of the market, until they joined the big rally on Aug. 9.
Ann Arbor, MI-based Kaydon (NYSE:KDN, http://www.kaydon.com/), like many small caps recently, has seen its market cap drop from $1.2 billion in May to $989 million Aug. 8. The company makes parts such as custom bearings for windmills. In 2008 they built a manufacturing facility in Monterrey, Mexico devoted to servicing the wind energy industry. In 2010 the stock was trading for $45; in July its price was nearly $36. At the end of trading Aug. 8 KDN was trading for $30.60 but rebounded with the Aug. 9 rally to $32.48.
Fergus Falls, Minn-based Otter Tail Corp. (Nasdaq: OTTR, http://www.ottertail.com/) is an electric utility ($674 million market cap) that manufactures and markets wind towers and also distributes electricity in Minnesota, North Dakota and South Dakota. On May 25 the stock was trading at about $21.39. On Aug. 8, after dropping $1.28 on the day the market was pummeled in all directors, OTTR closed at $18.70. But it rallied on Aug. 9 to $21.44.
Canada-based Western Wind Energy (TSX:WNDEF.PK, http://www.westernwindenergy.com/) is a small company ($82 million market cap) that owns and operates wind and solar farms in Southern California and Arizona. About 15 months ago their thinly-traded shares were selling for $1.52 and the price hasn’t changed much since. In late May the shares were trading for $1.63. They largely escaped the market onslaught in early August and closed Aug. 9 at $1.39.
In our previous posts on wind power we have also mentioned two other non-U.S. companies. Japan’s Loopwing (http://www.loopwing.co.jp/) has created a design to greatly reduce vibration and noise compared to more traditional designs. And across the pond, privately-held, Suffolk-based Wind Power Ltd. (http://www.windpower.ltd.uk/) develops large scale vertical axis wind turbine technology. The company began as a small research group but now offers a range of products and services