Association of Commercial Energy Assessors

Introduction

Solar power is estimated to have enough physical potential to cover the world’s entire energy needs some 1,800 times over making it by far the most abundant power source on earth with around 10 times more potential than all the other power sources (both conventional fossil fuels and renewable sources) combined. The trick is to harness this potential economically. For now, the technology remains costly compared with conventional and other renewable power sources but the industry is working hard to lower the generation costs. In spite of this cost gap the industry has enjoyed very strong growth rates in recent years and, following a potential slump in demand this year, the sector is forecast to resume its strong volume growth from 2010. After first describing briefly the different technologies, the solar value chain and the prospects for solar power, this second article of Investing in Renewable Energy will focus on the European and UK listed companies predominantly active in solar power, either as supplier of equipment to the industry or as manufacturers of solar power components or as developers and installers of systems or projects.

Driven not only by the growing realisation that global warming needs to be addressed via reductions in emissions of carbon (and other harmful gases) which is heralding regulatory changes around the globe, the depletion of oil and gas reserves mean that alternative power sources need to be developed to replace not only the share of generation currently supplied by fossil-fuels but to also meet demand from a growing economy. While perhaps hard to imagine in the current crisis, long-term forecasts expect global energy demand to expand at an average annual rate of 1.6% to 2030 according to the International Energy Agency (World Energy Outlook 2008 Reference Scenario) driven by economic and population growth meaning energy demand then will be 45% higher than now.

This article is not about investing in a home installation of a wind turbine or of solar power panels to reduce dependence on the grid and, over time, save on electricity costs. Instead it will focus on outlining some of the companies active in the renewable energy/clean technology world that are listed on various stock exchanges and that represent interesting opportunities to invest in what is expected to be one of the emerging mega-trends in coming years: the shift from fossil-fuel based energy towards sustainable power. This first article will concentrate on companies active in wind power. Later articles will focus on solar power and other clean technologies.