Thursday, April 15, 2010

Your Money -- Gone With the Wind

What is it about solar power and wind power that gets people excited about how to spend Other People's Money? Why do these flying carpets continue to thrill investors?

Investing in solar and wind would make sense if the technologies offered an advantage in price or performance. But they offer neither. Solar power and wind power cost more than power derived from convention sources and this unfortunate financial reality will not change anytime soon.

Technical advances can change the picture for solar power. If conversion efficiency improves enough, it is possible for the cost of electricity from solar power to match the price of electricity from our coal-fired plants.

But no technology can turn night into day.

Supporters of solar power love to yammer about the vast untapped quantities of sunlight that bathe the Earth every day. However, Earth already depends on that sunlight to maintain natural processes.

The Greenists claim that humans are causing catastrophic damage to the atmosphere through burning oil, gas and coal. Clearly if we capture large amounts of sunlight and convert it into electricity we will upset Nature's balance in even more profound ways.

The wind may blow everywhere and may blow with considerable power, but the machinery that converts wind energy into electricity is plagued by limitations that are the realities of physics. No human design can improve wind turbines enough to capture more than a small amount of the energy in wind. The amount of energy is too small to give wind turbines a competitive edge over reliable conventional plants except in remote regions where conventional power sources are unavailable. Moreover, even though wind turbines work, sometimes the air is still.

On those steaming hot summer nights when the air does not move, the only relief is from air conditioning. When the sun is down and the wind speed is zero, the only place to get power for air conditioners is the nearest coal-fired plant.

Renewed Appetite’ for IPOs Set to Boost Solar and Wind Power

April 15 (Bloomberg) -- The biggest revival in stock prices since the Great Depression is reigniting interest in initial public offerings by environmental companies, spurring businesses from China to California to issue new shares.

Electric automaker Tesla Motors Inc., U.S. green energy producer Ameresco Inc. and Spain’s T-Solar Global SA have filed to go public, and more companies are set to follow.

“There’s renewed appetite for green IPOs,” says Luigi Ferraris, chief financial officer of Italian utility Enel SpA, which plans to sell a minority stake of its renewable energy unit Enel Green Power for $5.4 billion by the end of 2010.

The initial offering would be Europe’s largest since 2007, Bloomberg BusinessWeek reports in its April 26 issue. Green companies plan to raise $9.6 billion worldwide, more than triple the total value of IPOs for the industry in 2009, according to Bloomberg New Energy Finance.

IPOs have increased as the MSCI World Index of stocks in developed nations surged 80 percent since March 2009, recovering from a 42 percent slump in 2008 that was the biggest on record.

Renewable energy projects such as wind farms and solar parks are drawing the most interest, according to Alex Klein, research director at Cambridge, Massachusetts-based Emerging Energy Research. Energy conservation and water management are also gaining financial backers.

Share Offerings

Of the 19 green companies that have announced IPOs since September, 12 are from wind or solar businesses, according to New Energy Finance. None have sold their shares yet.

Nigel Meir of Ludgate Environmental Fund said two companies in his clean technology fund may seek to offer shares in the next 1 1/2 years. He wouldn’t name them.

“Investment bankers are out there soliciting business,” said Meir of the London-based fund. “The green sector has a lot of forward propulsion.”

His fund has stakes in 10 companies including, a Germany developer of biomass plants; New Earth Solutions of Verwood, England, which turns waste into energy; and the Dutch wind turbine maker Emergya Wind Technologies BV.

Chinese wind turbine producer Xinjiang Goldwind Science & Technology Co. is aiming to raise $1.5 billion in Hong Kong. The company already has a listing in Shenzhen.

British solar energy producer Engyco wants to secure $1.4 billion, while its Madrid-based rival Renovalia Energy SA may raise more than $300 million.

Tapping Markets

San Diego-based Fallbrook Technologies Inc., a maker of efficient transmissions for vehicles, is seeking $50 million. Tesla of Palo Alto, California, plans to raise $100 million.

After more than a year of “weak” equity markets, “now there appears to be a window of opportunity,” Robert Mansley, head of Credit Suisse Group AG’s European renewable energy investment banking unit, said in an interview. The industry “requires substantial amounts of capital.”

Environmental companies have one advantage over many non- green rivals: state support. Countries around the world have earmarked $184 billion to fund renewable energy installations and projects such as modernizing the electricity network, New Energy Finance estimates.

The U.S., Japan and European countries are tightening regulations to force companies to improve energy efficiency and cut carbon-dioxide emissions.

Government Funds

“A big part of the renewables market is the stimulus provided by governments,” said Chris Thiele, head of European utilities investment banking at Morgan Stanley in London.

State funding may ease as governments, particularly in cash-strapped European countries, work to curb growing deficits and subsides that were too generous.

Germany and Spain have cut support for solar power after together capturing about 75 percent of worldwide installations for photovoltaic panels in 2008. Czech Prime Minster Jan Fischer told the E15 newspaper in an interview published on March 8 he’d reduce rates paid to clean power producers.

U.K. Prime Minister Gordon Brown and the Conservative opposition both plan to reduce the deficit, which at more than 12 percent of gross domestic product is the most in the Group of Seven nations.

Green initiatives such as loans for homeowners who install solar panels may be trimmed by politicians under pressure to curb deficits, said Walter Nasdeo of Ardour Capital, a New York bank specializing in clean technology.

Subsidies “are at the whim of whichever party is sitting in power,” he said.

Solar Stocks

Solar stocks have also underperformed the broader equity markets in the past year. The Bloomberg Global Leaders Solar Index, a measure of 38 companies that generate more than half of the solar industry’s revenue, has gained 6.5 percent in the past 12 months, lagging behind the 44 percent rallies for the MSCI World Index and the Standard & Poor’s 500 Index.

Three Chinese solar-related companies, JinkoSolar Holding Co., Daqo New Energy Corp. and Trony Solar Holdings Co., have shelved U.S. IPOs since December, Bloomberg data show.

That hasn’t stopped Enel Green Power. The electricity generator has secured $61 million in U.S. stimulus money for two geothermal power plants in Nevada. It aims to land more federal support for American wind, solar, and geothermal projects.

“The U.S. offers a huge opportunity for growth,” said Ferraris, Enel’s finance director.

‘Once Backed Hope’

In its home market, the Rome-based utility benefits from rules that let it charge customers above-market prices for clean energy.

Enel Green Power plans to invest $6.9 billion in renewables by 2014. All of the IPO money will help pay down its parent company’s $69 billion in debt.

Before the financial crisis, even companies with few customers and unproven equipment could get funding. Steady sales from proven technology are a must, something virtually all the companies looking to list now have, said Stephen Mahon, chief investment officer at Low Carbon Investors.

“People once backed hope,” Mahon said in London. “Now they back revenues.”

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Blogger SNAKE HUNTERS said...

IF we could somehow capture the excess hot-air off the daily Tv speeches prepared for Barry Obama's tele-promters, it might equal the power generators feeding off the turbines at Boulder Dam!


Vote.. > Nov 2nd, 2010

5:00 PM  
Anonymous Anonymous said...

The author of 0bama Speeches? My guess would be Joseph Onek out of Pelosi's Office in San Francisco.


10:31 PM  
Blogger no_slappz said...

Unfortunately, Obama is selling political solutions to complex problems that are far more destructive and costly than even these harebrained energy solutions.

Despite what he says, his plans, if enacted on his terms, will impede the economy and harm America both domestically and internationally.

If he believes in energy independence, then he must support drilling for oil and gas off the coast of California and the other locations where we know it exists in abundance.

If he believes in a strong financial sector, then he must face the facts that the desire to increase the rate of homeownership is more of a threat than a benefit.

What to do? End the mortgage interest tax deduction.

If he believes in a domestic auto industry, then he must abandon support for the United Auto Workers.

If he believes in getting better results from public schools, then he must stop the flood of non-English speaking illegal immigrants into the US.

In addition, he must seek changes in the hiring of teachers, who, now, are required to have useless credentials for certification rather than knowledge and leadership skills.

If he believes in US technical leadership, then he must support the expansion of the HB-1 visa program that brings engineers to the US.

If he believes in safeguarding the US, then he must take steps to destroy the Iranian nuclear program or deal with the aftermath of Iran detonating a nuclear device, most likely in Israel.

4:45 PM  

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