Wind Energy Investing

Are These The Wind Energy Stocks To Own?

Written by Brian Hicks
Posted April 14, 2009

The American Wind Energy Association released its annual industry report yesterday.

According to the report, in 2008, the U.S. surpassed Germany as the country with the largest amount of installed wind power capacity. This, after more than 8,500 megawatts of new wind power increased the nation's cumulative total to more than 25,300 MW - representing a growth of about 50 percent.

Based on this growth rate, and assuming long-term policy support, this puts the U.S. on a trajectory to generate 20 percent of our electricity from wind energy by 2030. This is a massive jump, based on the 1.25 percent that was generated by installed wind projects at the end of 2008 - and a massive opportunity for investors.

This latest report shows GE continuing to run the turbine show, boasting 43 percent of newly installed capacity in 2008. Vestas (CO:VWS) came in second, Siemens (NYSE:SI) in third, and Suzlon (NSE:SUZLON) and Gamesa (MCE:GAM) rounding out fourth and fifth.

As far as developers are concerned, NextEra Energy (which used to be FPL Energy) owns the most wind energy assets, boasting a total of 6,290 MW - or about 25 percent of all installed capacity.


Growing In The Wind

Wind energy growth has also accelerated job creation in manufacturing across many parts of the country. Over the past two years, wind turbine and turbine component manufactures added or expanded to over 70 facilities - with 55 in 2008 alone. And once fully online, these new manufacturing facilities will represent a total of 13,000 new direct jobs and almost $2 billion in investment.

Now it should be noted that the recent economic downturn has forced some of these manufacturers to announce some layoffs recently. But as the market rebounds, especially with so much government support expected to flow into the sector later in the year - many of these workers will be rehired.

In total, the wind industry added 35,000 jobs in 2008, bringing us up to about 85,000 people employed in the wind industry. In 2007, that number was around 50,000. These include everything from manufacturing, construction, maintenance, legal, marketing and project development.

Incidentally, the wind energy industry in the U.S. offers so much potential at this point, that five foreign manufacturers - Vestas, Gamesa, Suzlon, Siemens, and Acciona - all have U.S. manufacturing presence now. And Nordex will soon become number six.

Now the truth is, the wind power industry does owe much of its growth to a new, and encouraging renewable energy policy here in the U.S. Let's recap...

  • The American Recovery and Reinvestment Act of 2009 includes a 3-year extension of the production tax credit (PTC), as well as a new program that allows wind developers the option of bypassing the PTC, and securing a Treasury Department grant in the amount of a 30 percent investment tax credit (ITC)

  • The recovery bill also eliminated the $4,000 cap on the small wind ITC, so that now investors can claim a full 30 percent on small wind development.

  • An additional $1.6 billion of new renewable energy bonds will also be distributed to tribal governments, public power providers, and electric cooperatives in an effort to help finance new renewable energy projects - including wind.

  • $3.25 billion has also been set aside for additional borrowing authority for the Bonneville Power Administration and the Western Area Power Administration. This is for transmission lines constructed after February 17, 2009 that will move renewable power.

The next order of business will be the new national renewable electricity standard, as well as legislation that will support the construction of what has been called the Green Power Superhighways - which is basically transmission that will be used to enable continued renewable energy development.

All the pieces of the renewable energy puzzle are coming together. Between new energy policies that strongly favor the full scale development of renewable energy to the basic fundamentals of supply and demand - we truly are witnessing the dawn of what will soon prove to be one of the greatest investment opportunities of the 21st century.

To a new way of life, and a new generation of wealth...


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