Markets

22 renewable energy focus July/August 2008

NEX update: April - May IT HAS BEEN A ROLLERCOASTER RIDE FOR THE NEX SINCE

ITS SLIDE AT THE BEGINNING OF 2008, BUT THE MONTHS OF

APRIL AND MAY SAW INVESTORS AGAIN KEEN ON SOLAR,

WIND AND POWER STORAGE, REPORTS NEW ENERGY

FINANCE’S TOM GREENWOOD.

The months of April and May saw the WilderHill New Energy Global

Innovation Index (NEX) take a signifi cant rebound from the huge falls at

the beginning of the year, as investors began to regain confi dence in the

sector. The NEX rose over 13% during the two months, beating both the

Nasdaq and the S&P 500, but couldn’t match the 18% gains of AMEX Oil

– attributable to the soaring prices for the commodity. It should also be

noted that all of the major indices in the US, Europe and Japan also rose

during the period.

Every renewable energy sector was up, with even the worst performer

biofuels and biomass (which are treated as one sector), still gaining

5.3%, despite suffering from increasingly bad press as the global

concern over food prices gains momentum – with some eager to lay

the blame on the diversion of a portion of food crops to the energy

industry. However, the strength of the oil price continues to be a posi-

tive driver behind biofuels in particular, as well as the other clean

energy sectors.

Shares in solar companies in the NEX went up more than any other

sector, rising 19.2% on average. A series of large secondary offerings

in the sector, as well as some good financial results announcements

served to facilitate a bounce back from the falls of over 30% that were

seen earlier in the year.

The next best performing sector was wind, which saw average share

prices rise 14.5%. Turbine manufacturers, which traditionally outperform

project developers in the wind sector, continued to benefi t from strong

demand for turbines, with several supply contracts being signed guaran-

teeing business well into the future. Additionally margins continued to

improve as the industry matures, improving cash fl ows with the majority

of the larger players now turning a profi t.

The power storage sector – excluding fuel cells which are classed as their

own sector along with hydrogen on the NEX – also showed “standout”

performance, almost matching wind with a rise of 13.5%. Companies in this

sector support a wide range of markets from electric vehicles to power for

laptops, so performance cannot be attributed to one factor. The sector is up

around 30% for 2008, possibly due to broader demand coming from the

electronics markets, as well as growing interest in electric vehicles, more

recently.

Energy Conversion Devices, a US-based firm which operates in the

solar PV thin-film manufacturing equipment market (as well as in

materials for PV solar, power storage and fuel cells applications), was

the top performer during April and May, rising a massive 112%. On 8

May the company released results which beat analysts’ expectations,

causing the shares to jump 36% on the day.

Capstone Turbine, another US-based company which produces low-emis-

sion micro turbines for on-site generation was the second top performer

Tom Greenwood

German feed-in-tariff (FiT) law updated

On Friday 6 June 2008, details of the new German Erneuerbare-Energien-Gesetz (EEG) were fi nally announced, confi rming the Government’s commitment to double the share of renewable energy in the electricity supply from 14% to 25-30% by 2020.

The new law increased tariff s for biomass and wind energy as a response to increased feedstock and turbine prices respectively. However, solar tariff s will depreciate much faster than previously anticipated, putting pressure on the industry to reduce costs. The decision is likely to hurt developers of large solar projects in the country. The reason for this cut is that PV accounts for less than 0.5% of Germany’s total electricity production, yet by 2006 the sector had already accounted for 20% of the EEG’s expenses.

In 2007 Germany made up 43% of the global PV market, and it was thought that the country would be able to absorb most of the global increase in module production to 2010. However, the sharper than anticipated reduction in the German FiT may have a serious impact on price elasticity of global module demand. As a result of anxiety about the decision, solar stocks overall suff ered in the week before the decision became public on 29 May. However, German stocks gained slightly once the decision became public, perhaps a refl ection that the tariff cut was not as drastic as some had feared, while US stocks continued to slide.

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Markets

renewable energy focus July/August 2008 23

with a gain of over 77%. Capstone booked strong orders in April, for appli-

cations ranging from biogas fuelled power plants to hybrid electric buses.

Other top performers were Chinese LDK Solar, a silicone wafer producer,

US FuelCell Energy, and American Superconductor, a high tech energy

efficiency company, rising 71%, 52% and 52% respectively.

Companies that suff ered during the period were German Schmack Biogas,

Irish insulation supplier Kingspan, Chinese effi cient lighting company Zhejiang

Yakon Group and US-based fuel cell developer Medis technologies, with the

worst performer, fi ttingly, being a US biofuel producer, Verenium.

Although Medis has one of the more marketable products for a fuel cell

company its Q1 results were disappointing and the company is still

spending on developing its production line.

Verenium announced at the end of March that it made a loss of nearly

US$108 million in 2007, causing auditor Ernst and Young to record

substantial doubt about the company’s ability to continue as a going

concern. Verenium is active in the fi eld of cellulosic ethanol research

and has spent huge amounts on R&D but has yet to generate any signif-

icant revenues from sales. Both companies fell by nearly 32% during

April and May.

NEX Output: 31 March 2008 to 30 May 2008 (best and worst 20 performing companies)

No. Name Country Primary Sector Exchange Ticker Local Currency

Market Cap (US$)

% Change

27 Energy Conversion Devices Inc. US Renewable - Solar NASDAQ NMS ENER USD 2539 112.3%

14 Capstone Turbine Corp. US Energy Effi ciency NASDAQ NMS CPST USD 545 77.4%

49 LDK Solar Co. Ltd. ADS China Renewable - Solar NYSE LDK USD 4812 70.6%

36 FuelCell Energy Inc. US Hydrogen & Fuel Cells NASDAQ NMS FCEL USD 689 52.3%

4 American Superconductor Corp. US Energy Effi ciency NASDAQ NMS AMSC USD 1446 52.1%

16 Centrotherm Photovoltaics Germany Renewable - Solar XETRA CTN EUR 1571 49.8%

42 Hansen Transmission UK Renewable - Wind London HSN GBP 3821 48.0%

61 PV CRYSTALOX WI UK Renewable - Solar London PVCS GBP 1501 41.9%

39 GS Yuasa Corp. Japan Power Storage Tokyo 6674 JPY 1390 40.6%

64 REpower Systems AG Germany Renewable - Wind XETRA RPW EUR 2908 37.2%

50 Maxwell Technologies Inc. US Power Storage NASDAQ NMS MXWL USD 259 34.0%

29 EnerNOC Inc. US Energy Effi ciency NASDAQ NMS ENOC USD 267 30.3%

52 Meidensha Corp. Japan Energy Effi ciency Tokyo 6508 JPY 711 29.1%

11 Brasil Ecodiesel Industria e Comercio de Bioc

Brazil Renewables - Biofuels & Biomass Sao Paulo ECOD3 BRL 455 28.8%

67 Sanyo Electric Co. Ltd. Japan Power Storage Tokyo 6764 JPY 4784 28.1%

85 Vestas Wind Systems A/S Denmark Renewable - Wind Copenhagen VWS DKK 25310 27.9%

8 Baldor Electric Co. US Energy Effi ciency NYSE BEZ USD 1619 25.7%

62 Q-Cells AG Germany Renewable - Solar XETRA QCE EUR 9545 24.3%

18 Comverge Inc. US Energy Effi ciency NASDAQ NMS COMV USD 249 23.8%

78 Takuma Co. Ltd. Japan Renewables - Biofuels & Biomass Tokyo 6013 JPY 278 23.3%

30 EnviTec Biogas AG Germany Renewables - Biofuels & Biomass XETRA ETG EUR 318 0.0%

21 Cosan S/A Industria e Comercio Brazil Renewables - Biofuels & Biomass Sao Paulo CSAN3 BRL 2983 -1.5%

5 Arima Optoelectronics Corp. Taiwan Energy Effi ciency Taiwan 6289 TWD 165 -2.1%

31 Epistar Corp Taiwan Energy Effi ciency Taiwan 2448 TWD 1685 -2.5%

53 MEMC Electronic Materials Inc. US Renewable - Solar NYSE WFR USD 15449 -3.2%

19 Conergy AG Germany Renewable - Solar XETRA CGY EUR 651 -4.8%

58 PNOC Energy Development Corpora-tion

Philip-pines

Renewable - Other Phillippine EDC PHP 1920 -5.1%

60 Power-One Inc. US Energy Effi ciency NASDAQ NMS PWER USD 264 -5.3%

15 Centrotec Sustainable AG Germany Energy Effi ciency XETRA CEV EUR 317 -5.7%

68 Sao Martinho Brazil Renewables - Biofuels & Biomass Sao Paulo SMTO3 BRL 76 -5.8%

82 VeraSun Energy Corp. US Renewables - Biofuels & Biomass NYSE VSE USD 530 -7.5%

13 Canadian Hydro Developers Inc. Canada Renewable - Other Toronto KHD CAD 792 -7.7%

23 Cree Inc. US Energy Effi ciency NASDAQ NMS CREE USD 2161 -9.1%

73 Solaria Energia y Medio Ambiente S.A. Spain Renewable - Solar Madrid SLR EUR 1619 -12.8%

12 BYD Co. Ltd. Hong Kong

Power Storage Hong Kong 1211 HKD 236 -13.7%

69 Schmack Biogas AG Germany Renewables - Biofuels & Biomass XETRA SB1 EUR 17385 -19.5%

48 Kingspan Group PLC Ireland Energy Effi ciency Dublin KSP EUR 1787 -19.5%

88 Zhejiang Yankon Group Co. Ltd. China Energy Effi ciency Shanghai 600261 CNY 332 -30.4%

51 Medis Technologies Ltd. US Hydrogen & Fuel Cells NASDAQ NMS MDTL USD 217 -31.8%

84 Verenium Corp. US Renewables - Biofuels & Biomass NASDAQ NMS VRNM USD 151 -31.8%

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