The Future of Green Tech Investment

green technology investmentAccording to a recent article in Green Technica by author Joshua S. Hill, green tech investment could “skyrocket” by 2030. Hill cites research from Bloomberg New Energy Finance, including a detailed analysis of three different potential scenarios. As their research shows, wind and solar could have the efficiency and popularity needed to bring the renewable energy industry into its own.

Although clean energy ETFs have been underperforming in an era where fossil fuels have largely recovered from recession-era prices, each of the three scenarios explored by Bloomberg New Energy Finance shows an increase in green technology investing. A 230% increase in annual investment by 2030 would mean increasing to a total of $630 billion per year. Bloomberg New Energy Finance largely attributes this to the decreasing cost of wind and solar technologies, as compared to fossil fuel alternatives. The report also shows increased use of hydro power, geothermal and biomass.

Michael Liebreich, Bloomberg New Energy Finance’s chief executive, believes that we have already passed the “tipping point” for clean energy technology. He points out that, even though most news coverage is discussing the future of fossil fuels, costs for green energy and implementation are falling. He says, “The news right now is dominated by stories of pain caused by overcapacity on the supply side of clean energy, and the lure of cheap shale gas, but this is playing out against the falling costs of renewable energy and of all the technologies required to integrate it into our energy system, and falling costs win. What it suggests is that we are beyond the tipping point towards a cleaner energy future.”

The three scenarios explored by Bloomberg New Energy Finance are “New Normal”, “Barrier Busting” and “Traditional Territory”. “New Normal” is cited as the most likely, and ends with a probable $630 billion per year in green tech investing. Each scenario calls for growth in the renewable energy sector, notably in solar and wind energy, along with decreases in fossil fuels. Even the modest “Traditional Territory” scenario shows green tech investment increasing to $470 billion by 2030.

Guy Turner, the head of economics and commodities for Bloomberg New Energy Finance, says that renewable technologies will be the “anchor of new generating capacity additions” in all scenarios. He points out, “The main driver for future growth of the renewable sector over this timeframe is a shift from policy support to falling costs and natural demand.” Read the original article.

When we last looked at solar energy in particular, we noted that 2013 is a slower year for installations due to an oversupply of solar panels. However, by bringing this technology to end-users more quickly and at lowered prices, we explored the idea that solar energy may be closer to being at parity with fossil fuel based energy. Also helping the situation is a budgeted increase in spending for the Department of Energy, including a 75 percent increase in spending on advanced vehicles to $575 million, and a 29 percent increase in spending on the ongoing effort to integrate solar and wind power into the national electric grid.

Advertisements

Obama Budget Proposes Big Increases for Spending on Clean Energy

Photo courtesy of KMBC.com

Photo courtesy of KMBC.com

President Barack Obama’s fiscal year 2014 budget proposal made headlines this week mainly for its changes to Social Security, but the increases proposed in US government support for clean energy spending did not go unnoticed. Reuters News Service called the increases for electric cars, wind power and other green technology “dramatic,” particularly because they arrive in the face of Republican criticism.

While many government agencies get slimmed down in the budget proposal, the Department of Energy would get an 8 percent increase to $28.4 billion next year, Reuters reported. Included are a 75 percent increase in spending on advanced vehicles to $575 million and a 29 percent increase in spending on the ongoing effort to integrate solar and wind power into the national electric grid, Reuters reported. Support for biofuels would increase by 24 percent.

“These increases in funding are significant and a testament to the importance of clean energy and innovation to the country’s economic future,” the Obama administration wrote in the budget proposal, according to the Reuters report.

While Republicans have criticized the US backing of companies like Solyndra, a solar panel maker that went bankrupt, and Fisker Automotive, a hybrid sports care maker which is struggling and laying off employees to hold off bankruptcy, President Obama has maintained that clean energy is a key to the country’s future.

Government support for the clean energy industry “has nearly doubled (the US) energy generation from wind, solar, geothermal and other renewable energy sources” since Obama took office in 2008 and maintaining this level of support “could lead to breakthroughs in the years to come,” Reuters reported.

We’ve been following several wind and solar energy companies, including:

Newbury Park, CA-based Sauer Energy (OTC: SENY, http://www.sauerenergy.com/) is a development stage company developing vertical axis wind turbines for commercial and residential uses. Formerly BCO Hydrocarbon Ltd., the company disposed of its oil and gas interests and in July 2010 purchased Sauer Energy and in May 2012 purchased Helix Wind Corp. Back on Dec. 24 it was trading for $0.24. It closed April 12 at $0.10, down 1 cent for the day. Its market cap is now $9 million and 52-week range is $0.08-$0.39.

China-based China Ming Yang Wind Power Group (NYSE: MY, http://www.mywind.com.cn/) is a wind turbine manufacturer focused on designing, manufacturing, selling and servicing megawatt-class wind turbines. Last July, MY announced it was considering a joint venture with China-based Huaneng Renewables Corp. to develop wind power and solar power projects in China and overseas markets. MY stock closed Dec. 24 at $1.21. It closed April 12 at $1.35, up 1 cent for the day. Its market cap is now $169 million and 52-week trading range is $1.06-$2.47.

Chatsworth, CA-based Capstone Turbine Co. (Nasdaq: CPST, http://www.capstoneturbine.com/) develops and markets microturbine technologies, including technologies used to provide on-site power generation for wind power. It closed Dec. 24 at $0.91 with a market cap of $278 million.CPST closed April 12 at $0.93, down 4 cents for the day. Its market cap is now 282 million and 52-week trading range is $0.73-$1.20.

San Mateo, CA-based SolarCity Corp. (Nasdaq: SCTY, http://www.solarcity.com) designs, installs and sells or leases solar energy systems to residential and commercial customers, as well as electric vehicle charging products.  It closed March 15 at $16.74 with a market cap of $406.5 million. SCTY closed April 12 at $19.97, down 41 cents for the day. Its market cap is now $1.5 billion and 52-week trading range is $9.20-$21.40.

Ontario, Canada-based Canadian Solar (Nasdaq: CSIQ, http://www.canadian-solar.com/ ), which sells a variety of solar products, closed back on March 15 at $3.50 with a market cap of $151 million. It closed April 12 at $4.07, down 3 cents with a market cap of $176 million. Its 52-week trading range is $1.95-$5.15.

San Jose, CA-based SunPower Corp. (Nasdaq: SPWR, http://www.sunpowercorp.com/), which makes a wide variety of solar products and systems, closed back on March 15 at $11.80 with a market cap of $1.4 billion. SPWR closed April 12 at $11.06, up one cent for the day. Its market cap is now $1.8 billion and its 52-week trading range is $3.71-$13.88.

China-based Trina Solar Ltd. (NYSE: TSL, http://www.trinasolar.com/) designs, manufactures and sells photovoltaic modules worldwide. Back on March 15, TSL closed at $4.11 with a market cap of $291 million. It closed April 12 at $4.19, up one cent, with a  market cap of $335 million. Its 52-week trading range is now $2.04-$7.99. 

China-based Yingli Green Energy Holding Co. (NYSE: YGE, http://www.yinglisolar.com/) makes photovoltaic products including cells, modules and systems. YGE closed back on March 15 at $2.47 with a market cap of $387 million. It closed April 12 at $2.12, down 5 cents, with a market cap of $324 million. Its 52-week trading range is $1.25-$4.12.

China-based Suntech Power Holdings (NYSE: STP, http://am.suntech-power.com), the world’s largest producer of solar panels, closed at $0.70 back on March 15 with a market cap of $127 million. It closed April 12 at $ 2012, and then rose to $1.87 in early January, but has been falling since. STP closed March 15 at $0.75, udown 12 cents for the day, with a market cap of $135 million. Its 52-week trading range is $0.30-$2.96.

St. Peters, MO-based MEMC Electronic Materials (NYSE:WFR, http://www.memc.com) manufactures and sells silicon wafers and photovoltaic materials. Through SunEdison, it’s a developer of solar energy products. It closed March 15 at $4.53 with a market cap of $1 billion. WFR closed April 12 at $4.76, down 6 cents, with a market cap of $1 billion. Its 52-week trading range is $1.44-$5.70.

Offshore Wind Power Industry Getting Boost from Obama Administration

Photo courtesy of treehugger.com

Photo courtesy of treehugger.com

President Obama has always been a champion of offshore wind energy, as his administration’s comprehensive National Offshore Wind Strategy demonstrates. This month, the fledgling U.S. offshore wind energy industry got a boost with the announcement that the Obama administration would help finance seven offshore wind projects in Maine, New Jersey, Ohio, Oregon, Texas and Virginia.  The money, about $4 million initially for each project and $47 million over four years (subject to Congressional approval), will be used to launch these projects by financing the engineering, design and permitting efforts as the initial steps to eventual offshore installations.

According to a recent report commissioned by the U.S. Department of Energy, offshore wind is a viable, sustainable, abundant and largely untapped clean energy resource. The report notes that the investment in the offshore wind industry could generate and support up to 200,000 jobs in areas such as construction, manufacturing, operations and supply chain services throughout the country.

The report suggests that offshore wind could be as successful at generating jobs and clean energy as the onshore wind energy industry has proven to be.  During 2011, 32 percent of the additional electric capacity in the U.S. was generated by land-based wind power. In addition, the wind power industry is generating jobs at home for U.S. companies, based on the fact that 70 percent of the equipment installed at U.S. wind farms – things like wind turbines, gears, blades and generators.

Large cap companies like GE, Honeywell and United Technologies are investing in the wind industry, but, so far at least, the number of publicly-traded small cap companies focused on wind power is limited. We have been following several small caps, including

Newbury Park, CA-based Sauer Energy (OTC: SENY, http://www.sauerenergy.com/) is a development stage company developing vertical axis wind turbines for commercial and residential uses. Formerly BCO Hydrocarbon Ltd., the company disposed of its oil and gas interests and in July 2010 purchased Sauer Energy and in May 2012 purchased Helix Wind Corp. Its stock is languishing. In late August SENY was trading at $0.26 with a 52-week trading range of $0.10-$0.95. In late October is was trading at $0.25. It closed Dec. 24 at $0.24, no change for the day.

China-based China Ming Yang Wind Power Group (NYSE: MY, http://www.mywind.com.cn/) is a wind turbine manufacturer focused on designing, manufacturing, selling and servicing megawatt-class wind turbines. In July, MY announced it was considering a joint venture with China-based Huaneng Renewables Corp. to develop wind power and solar power projects in China and overseas markets. MY stock is also stuck in a narrow range. It was trading for $1.21 in late August,  $1.32 in late October. It closed Dec. 24 at $1.21, down 2 cents for the short trading day.

Chatsworth, CA-based Capstone Turbine Co. (Nasdaq: CPST, http://www.capstoneturbine.com/) develops and markets microturbine technologies, including technologies used to provide on-site power generation for wind power. The stock continues to trade very well, about 700,000 shares a day but is stuck around $1.00. On Aug. 23, CPST shares crossed their 50-day moving average and closed the day at $1.05 with 2.8 million shares sold. By late August it was trading at $1.01, by Oct. 31 it had moved down slightly to $0.96. It closed Dec. 24 at $0.91 with a market cap of $278 million.

Naperville, IL-based Broadwind Energy (Nasdaq: BWEN, http://www.bwen.com/) announced Aug. 23 that it was reducing its manufacturing footprint and shifting its “capacity and marketing focus to non-wind sectors.”  BWEN closed Aug. 27 at $2, Oct. 31 at $2.30 and Dec. 24 at $2.11 with a market cap of $30 million.

Global Wind Power Market Growing at 25 Percent Annual Rate

The good news in the recent Siemens AG announcement that the sprawling, 165-year-old global company was abandoning the solar business was that it was sticking with its wind power business, at least for the time being. Siemens CEO Peter Loscher, who came to Siemens in 2007 and has spent much of his time revamping the entire business, is scheduled to unveil his new strategy on November 8 and wind power (as well as hydro power) is expected to be part of his plans.

The wind power market has been growing steadily at about a 25 percent compound annual growth rate for the past five

Photo courtesy of Howstuffworks.com

years, according to a market research report by Transparency Market Research (http://www.transparencymarketresearch.com/wind-energy-wind-turbine-market.html). In recent history Europe has been the leading market, followed by Asia-Pacific and North America, but China is gaining ground quickly and is expected to soon be the leader, according to the report. About 95 percent of all wind power is generated onshore, with offshore wind power installations still at a “nascent stage,” the report notes.

We’ve covered a variety of wind power and wind turbine small caps in recent months. Most of them are very small, even development stage.

Newbury Park, CA-based Sauer Energy (OTC: SENY, http://www.sauerenergy.com/) is a development stage company developing vertical axis wind turbines for commercial and residential uses. Formerly BCO Hydrocarbon Ltd., the company disposed of its oil and gas interests and in July 2010 purchased Sauer Energy and in May 2012 purchased Helix Wind Corp. When we last checked in late August SENY was trading at $0.26 with a 52-week trading range o $0.10-$0.95. It was trading at $0.25 at the opening of the market Oct. 31.

China-based China Ming Yang Wind Power Group (NYSE: MY, http://www.mywind.com.cn/) is a wind turbine manufacturer focused on designing, manufacturing, selling and servicing megawatt-class wind turbines. In July, MY announced it was considering a joint venture with China-based Huaneng Renewables Corp. to develop wind power and solar power projects in China and overseas markets. MY closed Aug. 27 at $1.21 with a market cap of $147.5 million. It opened for trading on Oct. 31 at $1.32 with a market cap of $165 million.

Chatsworth, CA-based Capstone Turbine Co. (Nasdaq: CPST, http://www.capstoneturbine.com/) develops and markets microturbine technologies, including technologies used to provide on-site power generation for wind power. On Aug. 23, CPST shares crossed their 50-day moving average and closed the day at $1.05 with 2.8 million shares sold. Back on Aug. 27, CPST closed trading at $1.01. It opened the market Oct. 31 at $0.96 with a market cap of $288 million.

Naperville, IL-based Broadwind Energy (Nasdaq: BWEN, http://www.bwen.com/) announced Aug. 23 that it was reducing its manufacturing footprint and shifting its “capacity and marketing focus to non-wind sectors.”  BWEN closed Aug. 27 at $2. It opened Oct. 31 at $2.30 with a market cap of $32 million.

Large Cap Siemens AG Leaves Solar Business to ‘Specialized Companies’

Citing “sinking prices and  cutbacks in government support for solar-thermal projects,” Siemens AG announced this week that it was exiting from the solar power business but would continue its alternative energy focus on wind and hydro power, according to several newspapers including the Wall Street Journal (http://online.wsj.com/article/SB10001424052970203406404578072493375180894.html?KEYWORDS=siemens+vanessa for subscribers). The much publicized austerity measures throughout Europe, the glut of solar panels that have devastated market prices for panels and cutbacks in solar-thermal projects all played a role in this decision, the WSJ reported. 

Photo courtesy of Siemens AG

It was just three years ago that Siemens paid $418 million for Israel-based Solel Solar Systems as well as a stake in Italy-based Archimede Solar Energy, according to the WSJ report. The solar announcement comes on the heels of Siemens previous decision to shelve its nuclear power ventures.

Michael Suss, a Siemen energy division head, suggested that “only specialized companies” will thrive in today’s solar market. Siemens was focused on solar-thermal technology, “which unlike solar panels, uses the sun’s rays to heat water in large-scale projects, turning it into steam” to generate electricity.” the WSJ report noted. Siemens is apparently in talks to sell off the solar division of its business.

It was only a month ago we took a look at a few small cap solar stocks (call them “specialized companies”), which back then were struggling with many of the same issues as giant Siemens (73.5 billion Euros in annual revenues during its last fiscal year) and trying to keep from being delisted by Nasdaq and the NYSE. So let’s see what’s happened since.

Tempe, AZ-based First Solar (Nasdaq: FSLR, http://www.firstsolar.com/), which specializes in thin-film solar modules, is not a small cap but we include it anyway. FSLR closed Sept. 25 at $20.51. FSLR closed Oct. 23 at $23.31, down 49 cents, with a market cap of $2 billion.

Ontario, Canada-based Canadian Solar (Nasdaq: CSIQ, http://www.canadian-solar.com/ ), which sells a variety of solar products, closed Sept. 25 at $3.01 with a market cap of $130 million. CSIQ closed Oct. 23 at $2.61, up 1 cent, with a market cap of $112.6 million.

San Jose, CA-based SunPower Corp. (Nasdaq: SPWR, http://www.sunpowercorp.com/), which makes a wide variety of solar products and systems, closed Sept. 25 at $4.60 with a market cap of $547 million. SPWR closed Oct. 23 at $4.34, down 4 cents, with a market cap of $516 million.

China-based LDK Solar Co. (NYSE: LDK, http://www.ldksolar.com/) manufactures solar products and silicon materials. LDK closed Sept. 25 at $1.25 with a market cap of $167 million. LDK closed Oct. 23 at $0.88 with a market cap of $117 million.

China-based Trina Solar Ltd. (NYSE: TSL, http://www.trinasolar.com/) designs, manufactures and sells photovoltaic modules worldwide. It has a chart similar to many of the other solar stocks, which reached highs in the summer of 2011. TSL closed Sept. 25 at $4.47 with a market cap of $316 million. TSL closed Oct. 23 at $4.42, up 12 cents, with a market cap of $312 million.

China-based Yingli Green Energy Holding Co. (NYSE: YGE, http://www.yinglisolar.com/), which makes photovoltaic products including cells, modules and systems, closed Sept. 25 at $1.74 with a market cap of $272 million. YGE closed Oct. 23 at $1.72, up1 cent, with a market cap of $269 million.

China-based Suntech Power Holdings (NYSE: STP, http://am.suntech-power.com), the world’s largest producer of solar panels, closed at $0.92 on Sept. 25. STP closed Oct. 23 at $0.85, up 3 cents, with a market cap of $154 million.

Bipartisan Support in Senate Points to Bull Market for Wind Power

Thanks to high-profile bankruptcies like Solyndra and Evergreen Solar, good news has been in short supply this year for companies in alternative energy. But the wind energy industry bucked that tide earlier this month.

On Aug. 2, the Senate Finance Committee voted to renew a tax credit for wind power for one more year, according to

Photo courtesy of Knowledge-Allianz.com

the New York Times (http://www.nytimes.com/2012/08/03/business/wind-industry-wins-senate-panels-support-for-a-tax-break.html). The provision to renew the tax break is part of a $200 billion package that still must be passed by Congress when it returns from summer break. Furthermore, the vote was bipartisan (19-5) with several Republicans from key wind power states joining the Democrats in favor.

While still not a done deal, it is clear that “the wind industry convinced a key Senate committee that green can be good politics in red states as well as blue states,” the Times noted.

A week after the vote, the American Wind Energy Association announced that the U.S. “hit 50 gigawatts of wind-powered electric capacity in the second quarter of this year.” Energy and Capital noted that so far in 2012, “the nation has had 2,800 megawatts and 1,400 wind turbines installed countrywide, chiefly across Nevada, Idaho, Iowa, Hawaii, Oklahoma and California.” A total of 39 states now have “utility-scale wind facilities” with most of the growth in the industry is coming from domestically manufactured turbines and materials, according to Energy and Capital.

Let’s take a look at a few randomly chosen small cap companies that are involved in wind turbines and wind power.

Newbury Park, CA-based Sauer Energy (OTC: SENY, http://www.sauerenergy.com/) is a development stage company developing vertical axis wind turbines for commercial and residential uses. Formerly BCO Hydrocarbon Ltd., the company disposed of its oil and gas interests and in July 2010 purchased Sauer Energy and in May 2012 purchased Helix Wind Corp. SENY currently has a market cap of $20.6 million and a 52-week trading range o $0.10-$0.95. It closed trading Aug. 27 at $0.26, up 2 cents on the day.

China-based China Ming Yang Wind Power Group (NYSE: MY, http://www.mywind.com.cn/) is a wind turbine manufacturer focused on designing, manufacturing, selling and servicing megawatt-class wind turbines. In July, MY announced it was considering a joint venture with China-based Huaneng Renewables Corp. to develop wind power and solar power projects in China and overseas markets. MY’s market cap is $147.5 million and 52-week trading range is $1.10-$3.73. It closed Aug. 27 at $1.21, down 4 cents for the day.

Chatsworth, CA-based Capstone Turbine Co. (Nasdaq: CPST, http://www.capstoneturbine.com/) develops and markets microturbine technologies, including technologies used to provide on-site power generation for wind power. On Aug. 23, CPST shares crossed their 50-day moving average and closed the day at $1.05 with 2.8 million shares sold. Its market cap is $302.6 million and 52-week trading range is $0.85-$1.53. It closed Aug. 27 at $1.01, down 1 cent for the day.

One company in the news lately is Italy-based Enel Green Power, which trades on the Milan Exchange (EGPW.MI) and is Italy’s biggest renewable energy company (http://www.enelgreenpower.com/) . EGPW announced in early August that it will partner with GE Capital to build the Prairie Rose wind farm in Minnesota, expected to have a total installed capacity of 200 megawatts. The farm is scheduled to commercially operational  in this year’s fourth quarter. This follows earlier announcements of other investments in wind farms in Oklahoma, Mexico, Denmark and Croatia.

Finally, Naperville, IL-based Broadwind Energy (Nasdaq: BWEN, http://www.bwen.com/) announced Aug. 23 that it was reducing its manufacturing footprint and shifting its “capacity and marketing focus to non-wind sectors.” In early August the company reported a $4.2 million loss for the fourth quarter. It also made a 1-10 reverse split of its common stock. BWEN closed Aug. 27 at $2, down 26 cents for the day.

Solar Inverter Companies Facing Same Issues as Solar Panel Makers

In the solar power business, the inverter is the second major component after the solar panel itself. And like the solar panel business, the solar inverter business is also facing a shakeout due to decreasing margins and increasing competition, according to Forbes.com blogger Tom Konrad (http://www.renewableenergyworld.com/rea/news/print/article/2012/06/solar-inverter-shakeout-3-survivors-2-buyers-a-loser-and-a-wildcard), who conducted a mini-survey on the issue from a group of green money managers. His

Photo of Power-1 Aurora courtesy savingenergyonline.com

posts also run on Seeking Alpha.

The inverter is the device that takes the DC power generated by the solar module and turns it into AC power to be fed into a home or business. But inverters are becoming increasingly commoditized, according to the money managers. The inverter companies who survive this shakeout will be those that can diversify their business, build market share and maintain a strong balance sheet as the global market expands, which it is likely to do over time.

The consensus is the undercapitalized companies, while apparently fewer in the solar inverter business than in the panel business, are going to have to last somehow as new low-cost Asian entrants join this market.

So who are the inverter companies to watch? Here is a short list, along with some of the comments from the money managers in Konrad’s article.

Camarillo, CA-based Power-One (Nasdaq: PWER, http://www.power-one.com) also manufactures wind energy inverters and a variety of other electronic components it sells to computer and storage customers. The managers say Power-One is well capitalized with a strong balance sheet. PWER’s market cap is not about $551 million and its 52-week trading range is $3.51-$8.23.  It closed June 27 at $4.52, up 9 cents on the day.

Boston-based Satcon Technology Corporation (Nasdaq: SATC, http://www.satcon.com) makes inverters called PowerGate Plus, Equinox and Solstice, among others. It is struggling, according to Konrad and his sources, due to shrinking sales and poor operating margins. SATC’s market cap is now about $33 million and its 52-week trading range is $0.18-$2.75. SATC closed June 27 at $0.23, up 1 cent on the day.

Germany-based SMA Solar Technology AG (OTC: SMTGF, http://www.sma.de/en.html) is global in scope and offers inverters under the brand names Sunny Boy, Sunny Tripower, Sunny Central and Sunny Tower brand names, among others. Like Power-One, SMA is well capitalized with little debt, according to the money managers. SMA’s current market cap is $1.1 billion and its 52-week trading range is $30.25-$110.50. It closed June 27 at $31.25, down $3.15 for the day.

Fort Collins, CO-based Advanced Energy Industries (Nasdaq: AEIS, http://www.advanced-energy.com/) is well-positioned because inverters are only a small part of its business. Its market cap is currently about $525 million and its 52-week trading range is $7.56-$15.07. AEIS closed June 27 at $13.21, up 1 cent on the day.

Petaluma, CA-based Enphase Energy (Nasdaq: ENPH, http://www.enphase.com) is growing due in part to its technological advantage: it makes microinverters that simplify the installation and also are “better at optimizing system output,” according to the article. Because it is growing and has advanced technology, it’s considered a wildcard and an acquisition candidate, some say. ENPH currently has a market cap of about $238 million and a 52-week trading range of $4.90-$9.57. It closed June 27 at $5.85, down 14 cents on the day.