I have written extensively about the big profit potential that can be found in Green Energy investing; most recently in this article: (The Profit Potential in This Sector Will Have You Seeing Lots of Green). Wind power is one of the leading alternative energy sources, especially in Europe where windmill farms dot the coastline.
But now it seems that the race to harness the wind as a renewable energy source has hit an air-pocket: interest in new high-tech windmills around the world has been so red-hot, that the makers of wind-turbines simply can't keep up with surging demand.
According to a recent article in the Wall Street Journal, “improved technology has made it possible to build bigger, more efficient windmills. That, combined with surging political support for renewable energy, has driven up demand. Now, makers can't keep up -- mostly because they can't get the parts they need fast enough.”
European Firms Set for a Wind-fall in Green Energy
Utilities in Europe are far ahead of their U.S. counterparts in embracing alternative energy technology, particularly when it comes to the promise of wind power. So now that there’s a wind-turbine supply bottleneck, these European firms enjoy a competitive advantage in the green energy sector.
In fact, a number of wind-power projects in the U.S. have been stalled due to shortages of available wind-turbine equipment. Meanwhile, utilities in Europe are cashing in, since they locked in long-term supply contracts with wind turbine manufacturers, anticipating the current surge in demand. In some cases, the biggest European buyers of wind energy technology made strategic investments in the suppliers of turbine equipment, so now they’re sitting pretty.
For instance, the big Spanish utility Iberdrola SA, a global leader in renewable energy, paid about $4 billion last year to buy a 24% stake in Spanish turbine maker Gamesa SA – and lock up most of it’s production through 2009! This investment gives Iberdrola a big edge in the industry since it now controls its own supply.
Euro-Utilities on the Prowl for U.S. Wind Energy Assets
The move really paid dividends for Iberdrola last year when it was contacted by Community Energy, a utility in Pennsylvania that was stalled in its own efforts to build a new wind farm.
Iberdrola provided the wind-turbine technology that Community Energy was lacking (and ended up buying the company outright), and today the utility provides enough power from the wind to light up about 6,500 homes.
Iberdrola is also on the prowl in other parts of the U.S.; buying out two other wind farm developers last year in Iowa and Virginia. Just last month, Iberdrola offered to purchase Maine’s Energy East Corp., a large utility based in Portland for $4.6 billion. Part of the attraction here is U.S. government tax credits offered for alternative energy investment in wind power.
This is only the tip of the iceberg for wind power going mainstream.
Europe has already committed to a plan that calls for 20% of its energy needs to come from renewable sources by 2020, up from just 6% today, and wind power is expected to play a leading role.
U.S. Playing Catch-up in Wind Energy
The U.S. is working hard at playing catch-up. Last year alone, 2,454 megawatts of wind power was installed in the U.S. – more than the combined power output of two nuclear reactors.
But even though more new wind farms were constructed here last year than anywhere else on the planet, the U.S. sill only gets about 1% of its power needs from wind. But that's about to change, “20 states now have price supports for wind-generated electricity, and there is a federal tax credit to encourage new wind-park development.”
The big question now is: who’s going to earn the biggest windfall in wind energy riches: European, or U.S. firms?
So far, European firms like Iberdrola seem to have the upper hand in terms of installed wind energy capacity, and it’s not alone.
This year, a Portuguese utility purchased Horizon Wind Energy of Houston, another Spanish utility bought a wind power firm in the Midwest, and BP Alternative Energy, part of the UK’s energy giant BP Plc (BP), bought Virginia’s Greenlight Energy last year.
In fact, “European companies are estimated to own 20% of all the wind energy in the U.S.,” according to a report from Emerging Energy Research, as quoted in the Wall Street Journal article.
U.S. firms are still scrambling to close the windmill gap: Chicago based Invenergy LLC signed a $1 billion deal with General Electric Corp. (GE) to secure its own supply of high-tech turbines. Also, Florida Power & Light (FPL) our own local utility here is ranked #2 among global utilities in its use of wind energy technology.
What’s the Best Way for You to Profit from Green Energy
At the Sovereign Society, we have long recognized the fact that there is plenty of money to be made in the green energy sector. In our monthly newsletter we recommended buying Vestas Wind Systems, the world’s leading manufacturers of wind turbines; the shares have shot up more than 70% in value since then.
I also recommended an exchange traded fund in May that invests exclusively in the clean energy sector; this ETF is already up about 14% in less than three months. Recently, I took a special look inside what’s making the alternative energy sector tick, and the reasons why it should prove to be such a money-maker for investors over the next several years.
In my special report: Go Green and Grow Rich, I detail how big-money venture capital firms are pouring money into investments in the green energy industry; and I reveal several specific investments you can take advantage of now in this booming sector. To access my special report, click here.
According to new academic research, “corporate executives have been able to secure more favourable research ratings for their companies from investment banks by bestowing professional favours on Wall Street analysts”.
