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.

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.

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.

Chinese Wind Tower Companies Latest to Be Hit by U.S. Tariff

It was only a few weeks ago that the U.S. Department of Commerce announced plans to slap duties on Chinese solar panel manufacturers. On May 30, the Commerce Department followed suit by announcing plans to tax Chinese manufacturers of towers for wind turbines after determining that they receive unfair government subsidies, according to the New York Times (http://www.nytimes.com/2012/05/31/business/energy-environment/us-imposes-duties-on-chinese-wind-towers.html?partner=rss&emc=rss). The proposed duties range from 13.7 to 26 percent, according to the Times article.

While all the major news outlets covered the story, there are several reasons why the wind tower stocks didn’t really rally on the news. First, the entire market is in the midst of a serious slump: The month of May saw Nasdaq dip 7.2 percent, Dow drop 6.2 percent and the S&P 500 decline by 6.3 percent. Second, as noted by Forbes, most of the wind tower stocks aren’t “pure plays” (http://www.forbes.com/sites/tomkonrad/2012/05/31/us-imposes-tariff-on-chinese-wind-towers-why-wind-tower-stocks-are-down/).

We covered a few randomly chosen companies in the wind power space last October. Here’s a comparison of then and now, as of close of market June 1.

China-based China Ming Yang Wind Power Group Ltd. (NYSE: MY, http://www.mywind.com.cn/) makes, services and sells wind power turbines in China, which means they may be the focus of a tariff. Formerly China Wind Power Equipment Group Ltd., the company’s  market cap dipped from $334 million in October to $165 million currently. Daily trading volume dropped from about 170,000 shares a day to 145,000.  Its stock has gone from about $14 in late 2010 to $2.45 on Oct. 7 and closed at $1.35 June 1, down 10 cents on the day.

Ann Arbor, MI-based Kaydon (NYSE: KDN, http://www.kaydon.com/) 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. On Aug. 9 2011 KDN was trading for $32.48, dropped to $28.81 on Oct. 7 and closed June 1, 2012 at $21.79, down 52 cents on the day. It trades about 375,000 shares a day.

St. Louis-based Zoltec Companies (Nasdaq :ZOLT, http://www.zoltek.com/) was mentioned in an Investopedia article as another way to play the wind energy market (as was Kaydon and Ming Yang Wind Power Group). ZOLT makes carbon fibers used to reduce weight in turbine blades so they spin faster and recently won a $3.7 million grant from the US Department of Energy for carbine fiber research. If you go back to February 2011 its stock was trading at $16 but had dropped to $5.93 by Oct. 7. It closed at $7.95 on June 1 2012, down 40 cents on the day.

Another way to look at this market is through two ETFs that offer a group of wind energy companies to invest in. They include PowerShares Global Wind Energy (Nasdaq:PWND), which dropped from $7.09 last Oct. 7 to close at $5.10 on June 1, down 15 cents on the day (52-week range is $5.18-$10.38) and First Trust Global Wind Energy (NYSE: FAN) which closed Oct. 7 at $8.31 but had dropped to $5.89 (52-week range is $5.92-$11.18).

Wind Power Market Expanding While Wind Power Stocks Weather the Storm

Of the alternative energy sectors, wind power seemed to be getting the best headlines in recent weeks. First came the report from Pike Research Oct. 3 that government incentives and “an expanded awareness of small wind technologies as an alternative source of electrical power” will help double the global small wind power market to $634 million by 2015. The report adds that the payback period for “a small wind system can be 5 to 10 years in a region with adequate wind resources.”

The came the report in the Los Angeles Times that “Kansas is to wind as Saudi Arabia is to oil,’ noted in a story focused on British Petroleum’s plans to build an $800 million, 252-turbine wind farm in the state (http://latimesblogs.latimes.com/nationnow/). The farm is called Flat Ridge 2 and will sprawl out on 66,000 acres. BP Wind Energy is expected to start constrution this year and complete the project by 2013. An estimated 500 construction jobs will be generated. The 200 landowners whose property will be part of the farm will get $1 million a year for 20 years. Local governments will also get funded.

More wind news came last Sept. 20 in the Wall Street Journal where it was reported that a Chinese wind turbine maker, Xinjian Goldwind Science and Technology Co. (China’s second largest wind turbine producer judging by new capacity sold, according to the WSJ), has plans to build a $200 million wind farm in Illinois. Gov. Pat Quinn’s office suggests that the project will generate more than 100 construction jobs and about 12 permanent ones (http://online.wsj.com/article/SB10001424053111904106704576579741179230646.html?KEYWORDS=brian+spegele+xinjiang).

Is this kind of good news doing anything to bolster smallcap wind power-related stocks? Like most small caps in this market, they’ve been beaten down, but at some point they will have bottomed out. We’ve been following a few (please send us any others you can suggest). They include:

China-based China Ming Yang Wind Power Group Ltd. (NYSE: MY, http://www.mywind.com.cn/) makes, services and sells wind power turbines in China. Formerly China Wind Power Equipment Group Ltd., the company has a market cap of $334 million and trades about 170,000 shares a day. Investopedia recently named it one of five wind energy stocks to watch. Its stock was more than $14 about a year ago but has dropped considerably, closing Oct. 7 at $2.45, down 21 cents on the day.

Ann Arbor, MI-based Kaydon (NYSE:KDN, http://www.kaydon.com/) 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. On Aug. 9 KDN was trading for $32.48. It closed Oct. 7 at $28.81, down 92 cents on the day. Its 52-week range is $26.45-$41.71.

St. Louis-based Zoltec Companies (Nasdaq :ZOLT, http://www.zoltec.com/) was also mentioned in the Investopedia article as another way to play the wind energy market. ZOLT makes carbon fibers used to reduce weight in turbine blades so they spin faster and recently won a $3.7 million grant from the US Department of Energy for carbine fiber research. Its stock closed at $5.93, down 28 cents on Oct. 7 but was a high as $16 in February.

Another way to play might be two ETFs that offer a group of wind energy companies to invest in. They include PowerShares Global Wind Energy (Nasdaq:PWND), which closed Oct. 7 at $7.09, down 15 cents (52-week range is $6.63-$11.76) and First Trust Global Wind Energy (NYSE: FAN) which closed Oct. 7 at $8.31, up 1 cent (52-week range is $7.59-$12.28).