AltEnergy Investor

Vestas wins new order

A good day for Vestas yesterday - Germany's Plambeck Neue Energien AG has just ordered 22 wind turbines. Vestas closed up nearly 7% at DKK 121.

How many wind turbines could power America?

It's totally impossible of course, but it's worth asking theoretically how many wind turbines and how much space would be required to power the whole of the USA. This might give you a sense of why the wind industry is still in its infancy.

First of all though, a few facts;

• America's snapshot electricity demand is 411 gigawatts
• Annual electricity consumption was 3,602,000,000,000 kilowatt hours
• Roughly 2 acres of a windfarm will give you a 90% available megawatt

To meet 100% of the demand with wind turbines running at a typical 25% load factor will require 1,644 gigawatts of turbines, a huge figure - in the whole world there are only around 48. Indeed, right now, the American Wind Energy Association forecasts an installed capacity of 9.2 gigawatts in the near future.

So how big a land footprint would 1,644 gigawatts take up of the USA?

Just under 3 million acres out of a total land area of 2.3 billion acres. A large area, but nothing like the scale of Texas (171 million acres).

Now how many wind turbines would that take?

Let's assume we use the GE 3.6 MW model, and this would require 456,667 turbines.

Electrical load balancing, the lack of mass production facilities and public opinion preclude this kind of wind penetration into America. But 10% does not look like an impossible goal - especially with natural gas prices where they are today. . . wind could actually start bringing down energy prices.

Windpower - report shows lower subsidies are possible

A just published report commissioned by the UK's Department for Trade and Industry clearly shows that onshore windfarms are more than capable of commercially existing with lower subsidies than they do now. I'd go a bit further myself - some can exist quite easily without subsidies altogether.

Two forces are at play here;

1) The cost of wind turbines are still falling

2) The external cost of other energy sources - specifically coal and gas - are rising

It has been estimated that a 40% drop in the cost of windpower would make it the most competitive form of electricity generation. Some have predicted this happening by 2020. Far more likely is a 20% drop and a 20% rise in conventional fuels, yielding the same 40% drop.

Either way, as Britain's wind industry grows, there will be pressure to reduce subsidies, not increase them.

Suzlon Energy IPO off to a flying start

Suzlon Energy - India's wind turbine manufacturer who make machines from 350 kw to 2 mw in size - completed its listing on the Bombay Stock Exchange, with the issue reportedly oversubscribed more than 45 times. Suzlon  raised a total of INR 13.6bn (USD 310m).

The company also delivers turnkey wind farms (ones with all the necessary turbines and electrical infrastructure in place literally ready to turn on), most notably Asia's largest in  Vankusawade of 201 mw.

What's impressive is that Suzlon is reaching the required design standards of West European manufacturers - Germanische Lloyd - and is able to sell turbines as far afield as Minnesota USA. Assuming the de-industrialization of Western Europe continues, expect Suzlon to be a key benefactor.

Babcock and Brown Wind Partners

Australian financial group Babcock and   Brown announced plans to list its partially owned investment vehicle,   Global Wind Partners, on the Australian Stock Exchange. The company will be   renamed Babcock and Brown Wind Partners (BBWP) and  market capitalisation expected to be in the region of AUD   657m-692m.

The newly-listed Babcock & Brown Wind Partners (BBWP) will initially hold stakes in 15 wind farms across Europe, the United States and Australia, with combined generation capacity of 672 MW.

This is one of the widest geographical wind portfolios I've ever seen - a good thing. Each nation's annual wind output can vary hugely, as in Europe in 2003.

Now nuclear is buying into wind

Repower Systems AG which yesterday closed up over 9% to EUR 33.20 is trading at a 3 year high.

One of the reasons is that Areva has bought 21.1% of Repower's shares. What's fascinating is that France-based Areva SA is the world's biggest maker of nuclear reactors, turning over 11 billion euros last year. Repower covers all parts of the wind industry from the development, licensing, production and sale of turbines and has a 10% market share in Germany. So much for the wind and nuclear industry being at loggarheads with each other!

The strategy for Areva might be to zero in on what many think is a sleeping giant - French wind power. Repower for it's part, gets a rich partner and a huge distribution network.

Clipper Windpower - IPO in London

US based Clipper Windpower has just completed a successful IPO on London's AIM stockmarket, raising $135m.

Clipper Windpower describes itself as a rapidly growing wind energy technology company which manufactures the 2.5 MW Liberty turbine and actively develops wind power generating projects in the Americas and Europe.

It's actually quite unusual in the wind industry to manufacture the turbines and develop the wind farms for sale. But you have to respect the pedigree of the Chairman and CEO, Jim Dehlsen who launched Zond Wind Corporation in 1980.

He has been in this business right from the start.

Vestas increased Q2 loss and rated a "sell"

Danish wind turbine giant Vestas has had a bad week.

Losses were reported of EUR 80m (USD 98.0m) for Q2 2005, compared to a loss of EUR 53m in Q2 2004. The company seems to be having difficulty integrating Danish wind turbine manufacturer NEG Micon.

Meanwhile, Analyst Jesper Klitgaard Frederiksen of Jyske Bank has given it a sell rating.

Vestas has had a meteoric rise on the back of the Danish and German wind booms. But now surely the future of manufacturing wind turbines belongs to China - a land of enormous wind resources. If China can do with wind turbines, what they are starting to do with cars, windpower could make that final cost breakthrough.

That's why on the positive side, it's exciting to hear that Vestas is setting up a blade factory in China.

2004 - Solar v. Wind - an Industry Comparison

2004 was a busy year globally for both the wind and solar industries. But it's worth stacking them up against each other to do a basic comparison;

2004 - Newly Installed Capacity

Solar - 927 Megawatts

Wind - 7,976 Megawatts

2004 - Industry turnover in Billions of US Dollars

Solar - 6.5

Wind - 9.79

The quick conclusions are then;

1. Wind per installed megawatt is much cheaper than solar
2. Solar production is way behind wind in added capacity
3. Solar is not far behind wind in turnover

However, I suspect that in turnover in billions of dollars, solar power will overtake wind power possibly as soon as 2006. But for the investor, the paradox is that there are many more pure solar play stocks than wind stocks. And I expect this to continue . . .

Solarparc AG, formerly Windwelt builds axis tracking solar system

Solarparc AG, formerly known as Windwelt AG prior to 22nd June, has just developed a solar PV systems that follows the sun, increasing power output by up to 30%.

The name change by the way - which in English translates from Wind World to Solar Park -is to represent the strategic future of the company. They believe that there is far more of a future for them in the solar business. Yesterday, Solarparc AG closed at 16 Euros.

Planning not cost is the barrier for windpower

As I remarked in an earlier post, rising oil prices are a driver for alternative energy. So I feel vindicated when John Rice, CEO of GE Energy, the world's 2nd largest manufacturer of wind turbines says

“We’ve had some large wind customers tell us that at a natural gas price of $5 per (million Btus), that wind is competitive without the production tax credit . . .That’s always a function of the actual project. But at $5, you’re in the hunt, no question.”

So windpower is already cost competitive in parts of the United States, depending on the price of electricity in that state. A recent Financial Times article mentioned that the cost of the most efficient US windpower was $48 a megawatt hour and the cost of a megawatt hour of gas was between $36 and $72.

GE of course, is a massive New York Stock Exchange listed company, so its wind turbine division, despite making $2 Billion of annual sales don't actually amount to much out of their enormous total - over $130 Billion in 2003 alone. Still, their purchase of Enron Wind in 2002 for just $325m looks smarter every day.

How much windpower does each country have?

If ever you want to get a quick idea of how much windpower a given country has, check out this page.

In doing so, you'll quickly see why Denmark has the world's largest - and copenhagen stock exchange listed - wind turbine manufacturer, Vestas. Today it capitalizes at over $20 Billion.

It would also indicate that the sleeping giants in windpower are the USA and . . . China . . . if they built just a quarter as much as Denmark has per head, then few could dispute that windpower would be at the start of a very long boom.

Plambeck Neue Energien AG - surpasses stock price target

Plambeck Neue Energien AG, has just surpassed a stock target of EUR 0.95 set by a recent BUY upgrade by First Berlin by today closing at 0.96, 10.34 % up on the day. Plambeck is principally a wind company, developing and managing wind farms. Although the company also has much smaller interests in biomass and solar thermal energy.

The recently published half-yearly report showed a major increase in turnover from EUR 12.5 m to this year's 19.7 m.

Most of the prime wind sites in Germany have been taken and Plambeck is sitting quite pretty with just under 500 MW in onshore capacity. But Plambeck's future expansion will have to be offshore at sea and through its French partner, Ventura in France. And both of these have yet to become a major part of the business.

Danish Greentech Energy Systems on a roll

Copenhagen listed Greentech Energy Systems stock continues to impress - from a low of 17.9 in early May, it yesterday closed up at 37.9. Since announcing a Q1 operating profit of DKK 1.50m (USD 0.25m) on May 31st, this company's stock has been consistently improving.

Unusually for a small windfarm developer and operator the company plans significant expansion abroad, namely Italy and Poland.This strategy makes sense because having your windfarms in very diverse locations, hedges the risk of the inherent intermittency in wind power.

Denmark has led the world in its adoption of windpower. It even has the world's largest manufacturer, Vestas, also a listed company.

REH - does wind, but what about CETO?

Renewable Energy Holdings Plc yesterday announced that provided certain conditions are met, it will buy 2 wind farm projects in Germany. The cost of the projects to REH is expected to be GBP33 million, with 80% funded through debt financing and the remaining GBP6.6 million supplied through REH's existing cash reserves.

Today the shares are trading up by over 3.5% to 55p. It is still way off its April peak though of 75.5p. Since going public last year, the plan was that 85% per cent of the money raised was earmarked for investment in proven renewable technologies such as windfarms.

Fine. But it's the CETO wave device that I'm really interested in. This is currently being tested but no date has yet been give for its commercial release.

Testing in this sort of technology has happened for at least 3 decades. And it's still really hard to buy tidal/ocean power devices off the shelf from anywhere.

Let's see if REH can crack it.

Canadian Windpower - endless expansion?

For an enormous country and relatively few people, Canada has an abundance of alternative energy stocks. Take wind for example. There is Sea Breeze Power Corp, Canadian Hydro Developers, Boralex and Talisman.

And just over a week ago Creststreet Kettles Hill Windpower completed a CAD $40 m IPO creating yet another. In most of the developed world, erecting windfarms can run up against many hurdles; land constraints, planning permission, environmental impact and grid connection costs to remote locations.

Canada hardly has these problems at all. There's no shortage of land, planning permission is easy, the environmental impact is negligable and grid connection costs can be almost nothing if the plant is located next to one of their many hydro faciltiies.

So Canada's expansion in windpower has a long, long way to go.

India's Suzlon - the IPO is coming

Suzlon Wind Energy, the world's 6th largest manufacturer of wind turbines is going public.

Speaking after the filing of the DRHP, Tulsi Tanti, Chairman & Managing Director, Suzlon Energy said, "We have been in the business of wind energy for over ten years. We are India's leading manufacturer of wind turbine generators. Our accumulated sales were 1,126.6 MW as of March 31, 2005. We also installed 42.8% of the total capacity installed in India during the year ended December 31, 2025 and were the sixth largest wind turbine manufacturer in the world".

Manufacturing wind turbines is still largely dominated by Danish and German companies in their respective countries. However, you have to wonder how much longer they can compete when countries like India and China start to move in. My guess is that some time over the next couple of years, these companies will be forced to open a manufacturing plant in China and close down a couple of factories at home.

Let's see . . .

Gamesa wins contract in Italy

Spanish based Gamesa Corporacion Tecnologia SA's Wind Division has just won a contract in Italy for 116 MW of wind turbines, as well as their installation, operation and maintenance.

Gamesa sticks out as a player in the wind business who not only manufacture, but do everything else as well. They really are vertically integrated. The contract in Italy is of note because they have heretofore mostly catered to the domestic market in Spain.

Gamesa also makes aeronautical components, even working on Europe's Typhoon fighter jet. In broad terms, the development of wind power has closely mirrored the development of aircraft. From wood, to metal, to composites. For both industries, the challenge was to create materials strong and light enough to withstand increasing speeds and stresses.

And that engineering envelope is still being pushed.

Texas shows Europe how to do Windpower

Texas-based windpower, already the cheapest in the world, is set for further expansion. Yesterday the Texas Senate approved a massive increase in renewable power. With just a third of the population of the UK, it already has 40% more windpower at 1400 MW, with a new mandate increasing that to 5880 MW by 2015.

So why is Texas windpower so inexpensive?

It's the much lower subsidy married to some geological features, ridges, that accelerate wind speed. The US-based Production Tax Credit costs between 1.5 and 1.8 cents per kilowatt hour. This translates into a contracted price between the operator and the electricity supplier at under US 3 cents a kilowatt hour, or just under 5 cents with the PTC added back in. Meanwhile Britain and particularly Germany hand out subsidies perhaps 4 times higher, making it less and less popular to the consumer, and notably, the politician. 

The irony - for Europeans - is that in Texas the Renewables Portfolio Standard was originally passed by Governor George Bush in 1998 and Texan Republicans are driving it today. As well they might, it's no longer a European Industry. Just take a look at these listed stocks, General Electric - now the 2nd largest manufacturer in the world of wind turbines and the globe's largest wind farm operator - Florida Power and Light.

REPower make them big

A classic example here of how 3 listed Wind Energy stocks are working together to drive uptake in alternative energy. Repower Systems AG, who make the world's largest commercially available wind turbines at 5 MW, have just signed a contract with Scottish Southern Energy and Talisman for a sale of two 5 MW units, to be located off the coast of Scotland.

In Windpower, size matters because by doubling the size of the windswept area, the amount of power increases by 8 times. This also means that the maintenance cost per megawatt declines significantly. Going offshore is important for the future of the industry too. Virtually no planning constraints, higher windspeeds and when the costs are recouped - admittedly after a longer time than onshore - cheaper and higher availability electricity.