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DAM-L Alternative energy helped by oil prices/LS (fwd)
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Date: Tue, 5 Dec 2000 10:36:58 -0800
To: irn-safrica@netvista.net
From: lori@irn.org (Lori Pottinger)
Subject: Alternative energy helped by oil prices/LS
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Financial Times, London. Nov. 29, 2000
Alternative energy helped by oil price
By Clare MacCarthy, Leslie Crawford and Uta Harnischfeger
Published: November 28 2000 20:15GMT | Last Updated: November 28 2000
20:41GMT
If the fictional Don Quixote were alive today, he would be buying
shares in windmills instead of tilting at them.
The combination of escalating oil prices and increasing concern about
the environmental hazards of fossil fuels has triggered a wave of investor
interest in alternative sources of energy.
European wind turbine manufacturers have emerged as the big winners
in this process and companies such as Vestas Wind Systems and Neg Micon
have seen their share prices soar on the back of bulging order books and a
new conviction that green energy is no passing fad.
"Investors' understanding of renewable energy sources has increased
dramatically over the last 18 months," says Nicholas Wilson, an analyst at
ING Barings in London. "As alternative energy sources go, wind power is
quite cheap. Relative to solar, biomass and wave power, it's very
competitive."
Global electricity capacity stands at an estimated 3,400GW and wind
power provides just a fraction - 14GW - of this.
Denmark, where the sector leaders Vestas and Neg Micon are based, is
also ahead of the pack in terms of the proportion of its power that comes
from wind.
Years of government-sponsored incentives for green energy mean that
around 11 per cent of Denmark's electricity now comes from wind turbines.
According to ING Barings, Europe's wind turbine market could grow by
up to 50 times were the rest of the continent to follow this example.
Against this background, last month's stunning stock market debut by
Gamesa, a Basque manufacturer of wind turbines, is not surprising.
Shares in the company soared from their E12.60 launch price and
traded more than 70 per cent higher within days of the debut.
This rise, analysts say, reflects a high degree of confidence in the
potential of the wind power market and Gamesa's ability to stay at the
cutting edge of technological developments.
Gamesa is the third-biggest European manufacturer of wind turbines
after Vestas and NEG Micon, and the Spanish group is planning to invest
E475m ($403m) over the next two years to develop the market for wind
energy.
In Spain, a country which lacks oil and gas reserves and where coal
production is in terminal decline, the need for renewable energy sources
has become acute following the recent rise in fuel prices.
But perhaps the most important factor in determining wind power
progress is the willingness of governments around the world to introduce
incentives for green power production. Gamesa, like its Danish
counterparts, should benefit from European Union directives that seek to
ensure that 12 per cent of Europe's electricity will come from renewable
energy sources such as wind power by 2010.
Another boost is the US decision to extend its own national subsidy,
known as production tax credits, until the end of 2001. There is also talk
that these will be extended further, and this, observers agree, would
provide even better opportunities for Europe's manufacturers.
"It seems that the political wind is strongly blowing in the favour
of renewable energy at the moment," says Nicholas Wilson of ING Barings.
Germany, the world's leading wind power generator, is a prominent
example. The government there recently approved new power purchase prices
for renewable energy, thereby boosting optimism in the industry. This new
legislation is expected to double the share of electricity generated by
alternative energy sources within the overall energy mix by the year 2010.
That should significantly boost the Danish wind turbine market, since
Germany is the most important export market for the Danish wind turbine
industry. The German association for wind energy predicts that total
installed wind power capacity in Germany at the end of 2000 will amount to
6,000MW produced by 9,000 wind turbines, and should continue to grow by up
to 20 per cent annually in the coming years.
This would mean that half of the wind power generated in Europe is
installed in Germany.
By 2003, Germany is expected to account for one-fifth of the
worldwide wind energy market. In addition, a nuclear energy agreement
between the German government and utilities to phase out nuclear power
plants by 2030 should support the shift, if slowly, towards alternative
energy sources.
Recently listed Energiekontor, the German market leader for wind
power, provides the full range of services from planning to operating wind
power farms. It has seen its shares more than triple to E120 since its May
debut. Analysts estimate that it could more than double sales in 2000 while
almost doubling its profit.
Plambeck Neue Energien, number four in terms of installed megawatts,
was the first German renewable energy company to list in 1998.
Since September its shares have more than doubled to E25.80, which
gives it a market capitalisation of about E200m
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Lori Pottinger, Director, Southern Africa Program,
and Editor, World Rivers Review
International Rivers Network
1847 Berkeley Way, Berkeley, California 94703, USA
Tel. (510) 848 1155 Fax (510) 848 1008
http://www.irn.org
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