Posted by admin | Posted in Green Energy | Posted on 30-07-2009
Tags: energy, environment, fuel, oil, politics
Alternative Energy: Outlook On Alternative Energy
ALTERNATIVE ENERGY OUTLOOK
The Alternative Energy industry is going through a recovery after absorbing the global recession and the cascading fall in global crude oil prices. Earlier this year, quite a few alternative energy companies were in the trough. Though these alternative energy companies have recovered from their lows, their valuations are still extensively lower than their 52-week highs.
The growth of alternative energy companies is closely tied to the fortunes of the economy. In its latest release, the Energy Information Administration (EIA) predicted that total U.S. electricity usage will decline by 3.3% in 2009 before growing by 1.3% in 2010 as the improving economy coaxes a gradual recovery in electricity sales. In fiscal 2008, annual U.S. photovoltaic (PV) installed capacity grew by 63% year-over-year, bringing the cumulative installed capacity to 792MW.
According to the Solar Energy Industries Association (SEIA) — the U.S. trade association on behalf of close to 500 companies in the solar energy industry — Germany ranked first followed by Spain, Japan and U.S. in terms of cumulative installed solar electric power as of year-end fiscal 2008. However in fiscal 2008, Spain (2.46GW in 2008) beat Germany (1.86GW) in terms of new installations. World solar PV installations reached a record high of 5.95GW in 2008, representing growth of 110% over 2007.
According to the European Photovoltaic Industry Association (EPIA) — the world industry association for solar photovoltaic electricity market — the cumulative global installed PV capacity stood at almost 15GW, compared to only 9GW in 2007.
ALTERNATIVE ENERGY OPPORTUNITIES
Alternative Energy Environmental Advantage: Solar power is one of the most benign electric generation resources. Solar cells make electricity without air or water emissions, noise, vibration, habitat impact or waste generation.
Fuel Risk Advantage: Unlike fossil and nuclear fuels, solar energy has no risk of fuel price instability or delivery risk. Although there is variability in the amount and timing of sunlight in the day, season and year, a properly sized and configured alternative energy system can be designed to be highly reliable while providing a long-term, fixed-price electric supply.
Locational Advantage: Unlike other renewable resources such as hydroelectric and wind power, solar power is generally located at a customer’s site due to the general availability of sunlight. As a result, solar power limits the expense and energy losses related with the transmission and distribution from large-scale electric plants to the end users. For most residential consumers in quest of an environment-friendly power alternative, solar power is currently the only viable choice as it can be sourced in urban and rural environments.
Subsidy Programs: Governments, most notably that of China, have augmented their financial support for alternative energy and solar projects. China is aiming at increasing its installed solar power capacity to 2GW by 2011 from 140MW capacity at the end of fiscal 2008. To satisfy this objective, the Chinese government offers 50% of the cost of investment of solar power projects. For solar projects in remote areas, the government subsidizes 70% of the project cost. A company under our coverage benefiting from this move includes Solarfun Power Holdings Co. Ltd. (SOLF – Snapshot Report).
Through the American Reinvestment and Recovery Act (ARRA) passed in February 2009, the U.S. Treasury Department has implemented a alternative energy program to hand out cash grants in lieu of the investment tax credit for renewable energy projects. Recent focus on renewable sources will greatly benefit green crusader companies like Rentech Inc. (RTK – Snapshot Report). Also, the Department of Energy (DOE) in the U.S. has implemented a loan guarantee program to help developers obtain financing for solar power projects.
ALTERNATIVE ENERGY WEAKNESSES
Recent Start-ups: A large number of alternative energy companies are recent start-ups with limited resources. As such, quite a few depend on their customers’ ability to finance solar projects.
Global Recession: The global economic crisis has affected alternative energy sales and earnings growth. Weakness in the debt and equity markets, for as long as it lasts, will raise costs of capital for firms in this emerging sector and may hinder project financing, working capital requirements and new research and development.
Fortune Tied to Crude: Alternative energy stock prices generally rise and fall in direct proportion to the price of crude oil. While in times of high oil prices this may present an opportunity, it also increases volatility in the sector.
Excess Capacity: Industry-wide excess solar cell and module capacity have led to stockpiling across the board. As a result, we think the performance of alternative energy companies such as Evergreen Solar Inc. (ESLR – Analyst Report), JA Solar Holdings Co Ltd. (JASO – Analyst Report), A-Power Energy Generation System (APWR – Snapshot Report) and LDK Solar Company Ltd. (LDK – Snapshot Report) — weighed down as they are with high inventory levels — will remain under pressure in the near term.
German Roll-back: Germany, one of the prime solar markets with a lucrative subsidy alternative energy program, is considering a roll-back of its grants. This will affect companies such as First Solar Inc. (FSLR – Analyst Report) and SunPower Corporation (SPWRA – Snapshot Report), who cause a substantial portion of their sales from Germany.
About the Author
Ahmadinejad Claims Oil Price Increase ‘Fake’
|
|
60 Minutes – The Ethanol Solution (May 7, 2006) $17.95 Can the fuel distilled from corn and other renewable materials one day replace the billions of barrels of oil the U.S. imports each year? Brazil has managed to do this and Dan Rather talks to scientists, farmers and others who think, eventually, the U.S. can too.This product is manufactured on demand using DVD-R recordable media. Amazon.com’s standard return policy will apply…. |
|
|
2008 Global Conference: Revisiting Nuclear Energy $29.95 Over the past decade, the construction of nuclear power plants slowed to a virtual halt. But with skyrocketing energy prices, increasing demand for electricity, the perilous rise in greenhouse gas emissions and a heightened awareness of climate change, nuclear power is getting a second look. The 2008 Milken Institute brought together a group of experts to explore nuclear energy from the standpoint… |
|
|
Power Trip: From Oil Wells to Solar Cells—Our Ride to the Renewable Future $5.84 In the tradition of Eric Schlosser’s Fast Food Nation and Thomas L. Friedmam’s Hot, Flat, and Crowded, prominent journalist Amanda Little maps out the history and future of America’s energy addiction in a wonk-free, big-picture, solutions-oriented adventure story. After covering the environment and energy beat for more than a decade, Amanda Little decided that the only way to really understand A… |
|
|
Biodiesel America: How to Achieve Energy Security, Free America from Middle-East Oil Dependence, and Make Money Growing Fuel $2.15 How to Achieve Energy Security, Free America from Middle-east Oil Dependence And Make Money Growing Fuel by Josh Tickell With a new slant on biodiesel, here’s a readable overview of the biodiesel world. Whether you’re a seasoned pro or a newbie, you’ll find straightforward language in an industry that abounds with complicated concepts. It’s a necessary read for those interested in renewable fuel… |
|
|
Internal Combustion: How Corporations and Governments Addicted the World to Oil and Derailed the Alternatives $5.98 Internal Combustion is the compelling tale of corruption and manipulation that subjected the United States and the world to an oil addiction that could have been avoided, that was never necessary, and that could be ended not in ten years, not in five years, but today. Edwin Black, award-winning author of IBM and the Holocaust, has mined scores of corporate and governmental a… |