Brazil looks to “Shoot itself on the Foot” with the ill thought of – Local Content Rules for Wind Energy

27 Jul, 2012 by Sneha Shah

Brazil made a lot of headlines when it managed to auction a couple of gigawatts of wind energy capacity at very low prices to wind energy developers. Note Brazil does not have much renewable energy capacity apart from hydro power, despite huge potential for both wind and solar power. A number of wind turbine producers bagged contracts to supply WTGs to the winners of the wind energy auctions, amongst them were top global wind turbine producers like Vestas, Suzlon, Gamesa, GE and others.

Local Content Rule in Brazil

However Brazil had formed a rule that 40% of the wind turbine equipment must be sourced locally. The reason for the rule was to foster the development of a local wind manufacturing industry. Like China, when Brazil opened its wind market, it too hoped to develop a robust wind turbine industry. But Brazil is not China and the turbine makers have found it impossible to source wind components to meet their requirements. The National Development Bank has announced that five of the wind turbine producers will be ineligible for low interest loans making the wind projects unviable. Local Content Rule are a major headache everywhere in the green industry. Though some countries especially China have benefited hugely from this rule, others have mostly shot themselves in the foot as the local industry is not capable of meeting the requirements or have very high costs which raises the consumer price.

Bloomberg

Wind-farm developers in Brazil may be forced to halt construction on some projects within 15 days because the state development bank BNDES is freezing financing for turbines purchased from suppliers it claims aren’t meeting local-content requirements.

Without loans from Brazil’s biggest wind-farm financier, developers are unable to pay for equipment they’ve already agreed to buy, Elbia Melo, executive president of the Sao Paulo- based wind-energy trade group Associacao Brasileira de Energia Eolica, said today in a telephone interview.

BNDES, formally Banco Nacional de Desenvolvimento Economico e Social, temporarily suspended loans last month for turbines from five foreign manufacturers with operations in Brazil that it says aren’t obtaining enough components from domestic suppliers.

“If this goes on for another 15 to 20 days, projects will stop,” Melo said. Suppliers like India’s Suzlon Energy Ltd. (SUEL) “are already losing new clients.”

BNDES suspended financing for equipment from Suzlon, Denmark’s Vestas Wind Systems A/S (VWS), Germany’s Fuhrlaender AG, Clipper Windpower Ltd. of the U.S and Spain’s Acciona SA, Melo said.

They are initially required to get 40 percent of their components from Brazilian suppliers. The local-content requirement eventually rises to 60 percent on a schedule that varies by supplier, and BNDES may decide next week to extend those shifts, Melo said.

Also Read on GWI:

List of Wind Energy Companies in India.

Pros & Cons Of Renewable Energy.

Another Brutal Year for Solar and Wind Stocks in Offing Despite Growing Demand

1 Feb, 2012 by Sneha Shah

Solar Energy,Wind Energy

Solar and Wind Stocks have been massacred in 2011 mainly due to the following reasons

1) Chinese oversupply which is outcome of its massive industrial overcapacity and investment. This has decimated wind and solar companies in the West while also leading to margins and profits collapsing

China’s rise in solar manufacturing has been nothing short of spectacular.From less than 5% of world marketshare it has gone to more than 50% in the current quarter.Some of its companies like Trina and Yingli are the lowest cost producers of solar modules in the world today.The Europeans like Solarworld and Q-Cells which were dominant until 2 years ago have been swept aside with Q-Cells bleeding red ink . Even in wind energy , China’s growth over the last 2-3 years has been awesome with more than 100% CAGR . It has helped in growing wind turbine manufacturers through domestic content requirements.Now that these companies have sufficient technology and are able to leverage their low cost advantages , China has removed the restrictions in Jan 2010 to attack other markets. Vestas the leading European turbine manufacturer like the solar makers has fallen into the red. The only way for these companies to survive is to move their manufacturing to Asia . Ultimately the technology will also follow ( Applied Materials has also move its R&D to Shanghai). Just like the semi and electronics industry,Europe will start looking like a marginal player in the global alternative energy industry. Despite strong domestic demand and policy support , the European industry has been outsmarted and outplayed by the Chinese

2) Commoditazation of Technology and Erosion of Entry Barriers

3) Massive and Irrational Subsidies by Asian countries to support Green Industry

Despite both Wind and Solar capacity growing strongly in 2011 the stocks have been punished.

2012 has a good chance to be another bad year for these stocks because

a) Wind Power in China has reached a plateau installing almost 50% of the global wind turbine installations

China Wind Power Market has become the biggest in the world with more than 18 GW of capacity installed in one single year, Note China has managed to double its capacity each year since 2005 and at the end of 2010 Wind Capacity totalled 44 GW which makes China the biggest Wind Power country in the world overtaking the USA.China has now got 7 of the Top 15 Global Wind Turbine Manufacturers and 2 of the Top 3 WTG Companies.China’s Massive Demand for Energy has made power plants mushroom in the country where more than 70% of the electricity is met by Coal.Wind Energy still forms only a small part of the power mix at less than 7% of the total power capacity and serves only a fraction of the Kwh of electricity given the lower load factor of Wind Power.Note Wind Power has grown in China as its Advantages as a Clean Source of Energy far outweigh its Cons.However the rapid demand growth has made a top inevitable as a country can only install that many megawatts in a year.

The 2 Biggest Signs of Trouble for the Chinese Wind Power Industry have been seen in the last couple of days.

1) Sinovel has canceled shipments of Electrical Control Systems (ECS) for its Wind Turbines from American Superconductor due to high inventory levels and refused past payments as well.With the biggest Manufacturer of Wind Turbines reporting inventory problems,the situation of the rest can’t be that good

2) The Chinese National Energy Bureau was considering tighter procedures that would include requiring local governments to get the written approval before going ahead with wind projects with installed capacity of less than 50 MW.Earlier it used to be more than 50 MW

3) Hundreds of Wind Turbines have not been connected to the Power Grid due to lack of capacity or transmission lines.China emphasises on investment without factoring in returns is one cause of these orphan wind turbines.

b) Solar Energy Growth may slowdown as well after a blistering 35% growth in 2011 as European countries slow / kill subsidies under the Debt Crisis.

c) Industries have too many players many of which are small and uncompetitive. Though a lot of solar companies have become bankrupt, there still exist too many.

Now a new wave of bankruptcies are on the way with Q-Cells likely facing a credit event as it needs to roll over convertibles which come due in February. Note Q-Cells has fallen a long way from being the biggest solar cell company in 2008. Miasole and Nanosolar were Private Equity backed CIGs darlings that were supposed to become the biggest thing following Firsst Solar . Now Nanosolar faceds executive exits while Miasole has fired large number of its workforce failing to find a big parent to support it. Note the smaller companies like Ascent Solar have found backers in Asia . Solar Technologies are seeing Darwin Survival of the Fittest with crystalline silicon solar panel technology beating out thin film solar and solar thermal technologies

APPENDIX

Wind Energy Stocks

1) Vestas – Vestas the largest Wind Turbine Company in the World has been facing one setback after another.The Danish Company which used to be a Green Investor Favorite till a couple of years can’t seem to find a buyer these days.Stiff competition from China,Slowdown in Wind Energy Farms in the West and now Wind Blade Problems have formed a perfect storm for this company.

2) General Electric (USA) – General Electric is looking to Invest Heavily in the new Age Green Industry like other Industrial Giants like Siemens,ABB etc.General Electric or GE as it is popularly known is one of the biggest players in the Green Industry globally.It generated $18 billion in Ecomagination revenues in 2009 with $1.5 Billion in Investment.General Electric like other industrial conglomerates like Siemens,Areva and others are in fact low risk plays in the Green Investing sector.GE is strong across most of the Green Sectors today particularly in the area of Smart Grid and Energy Efficiency.GE has a 40-50% marketshare of the US market which is the 2nd largest in the world.Due to its vertical integration,it has one of the highest margins in the industry and remains a formidable player with its acquisition Enron’s Wind Turbine arm proving to be a masterstroke.

3) Gamesa (Spain) – Gamesa the Spanish Wind Turbine Producer and Wind Farm Operator has faced the worst year of its history in 2010.Like Vestas and Suzlon,2010 has been a cruel year for the Wind Industry in the Western Markets and the WTG Players dependent on those markets.Gamesa is one of the worst performing Wind Energy Stocks in 2010.Gamesa is looking to restructure its operations and concentrating on the offshore wind market by focusing on higher megawatt turbines.Gamesa is leading a massive Spanish Research Effort to develop a colossal 15 MW Turbine meant for the fast growing offshore wind sector.But this is a long term plan with 2020 set as the target for the complete development of this new Turbine.Meanwhile Gamesa has become the target of takeover speculation by one of the bigger Chinese Wind Turbine players like Sinovel,Goldwind etc.Gamesa has seen its revenue fall by 28% and profits by 71% with Operating Margins of 4-5%.Things don’t look too good for 2011 either though Orders have started ticking up

4) Suzlon Energy is the biggest Indian Wind Energy Company by far with 4-5 Gigawatts of WTG Capacity per year.However Suzlon has languished in red ink since the beginning of the Global Financial Crisis in 2008.The company started by Tulsi Tanti in 1995 was a shining example of Asian CleanTech with a 10% global marketshare and ranking amongst the top 5 Wind Turbine Makers .Suzlon buoyed by its success had bought controlling equity stakes in Turbine Gears producer Hansen Transmission and European Wind Turbine producer Repower.Suzlon seems to be recovering with increase in orders particularly at its German subsidiary RePower,however a huge debt burden poses problems.

5) Siemens – The largest Green Company in the world,Siemens has a strong presence in the Wind Turbine Segment.The company is strong in Europe and is now expanding to emerging markets like Asia.Given its huge technological strengths in electrical equipment,power transmission and large project construction,Siemens is looking for a dominant role in the growing offshore wind market as well.

6) Goldwind – The Wind Energy Market in China has witnessed the growth of almost 90 companies with little differentiation competing fiercely on prices.This has led to low to zero margins for most of these companies.Goldwind has managed to rise above the competition by becoming the single largest Chinese player and looks to takeover the No.1 position in the world in the next few years.By taking bold risks and with the support of the government,Goldwind has become a threat to the established Wind Turbine Order

7) Sinovel – The 2nd largest Chinese Wind Power Company managed to do a successful IPO in Hong Kong last year despite long delays.The company is looking to expand in the foreign markets particularly the US market and has gotten a local management to help it penetrate the newer market.

Dongfang Electric – Dongfang Electric Corporation,China’s largest power equipment producer is also the 3rd biggest Wind Turbine Producer in China as well .The company has managed to grow impressively like the rest of the Chinese and is looking to expand in foreign markets as well.Recently bagged a 276 MW $203 million WTG supply contract with Abhijeet Group.

9) Ming Yang Power- Ming Yang is the only significant non-state owned Chinese Wind Energy Company with a 2009 marketshare of around 4%.The Company has a very short history installing its first Wind Turbine just 2 years ago and has seen an exponential growth riding on the incredible Wind Industry Growth in China.

10) Mitsubishi Heavy Industries , the massive Japanese Conglomerate is looking to overseas market for growing its Wind Energy Division.Mitsubishi like other Japanese companies are looking towards Green Industry for growth.Japan already possesses solid strengths in this area with its traditional focus on resource efficiency.While companies like Panansonic and Toyota looks towards Electric Vehicles and Batteries,Sharp and Kyocera towards Wind Energy,Mitsubishi is focusing its energy on the Wind Sector.

11) Enercon – Enercon is a privately listed German company which has almost 22 GW of Wind Turbine Installations in the world.Enercon was the first company to build a gearless Wind Turbine which is one of the biggest innovation in the Wind Energy Industry in recent times.

12) Nordex – Nordex is another German company in the Wind Turbine Industry which was the first one to build a 1 MW Turbine.The company has not managed to grow fast as the other German companies like Enercon,RePower and Siemens.

13) United Technologies Corporation (UTC) – This US Giant Technology Conglomerate is still a small player in the World Wind Power Market.However it has increased its footprint by acquiring struggling independent US Wind Power company Clipper.

Solar Energy Stocks

Solar Cells Stocks

JA Solar (JASO) ( The Biggest Solar Cell Producer in the World)

Gintech (3514.TW) ( Biggest Solar Cell Supplier in Taiwan)

Motech (6244.TW) ( Solar Cell Supplier in Taiwan with wafer and poly production as well)

E-Ton (3452.TW) ( Survival is in question)

Q-Cells (QCE.DE) The largest solar producer of cells in 2008 faced a horrendous 2009 running losses of as high as Euro 1 billion)

Neo Solar (3576.TW)(Has been one of the fastest growing solar companies)

Del Solar ( Small Solar Cell Supplier)

IndoSolar ( Small Solar Cell Supplier in India)

Emcore (EMKR) ( Small Specialist suppliers of High Efficiency Multijunction Cells)

Solar Panels Stocks

Suntech (STP) ( The biggest Chinese solar panel producer in the world)

Trina Solar (TSL) ( The most valued Chinese solar panel supplier)

Yingli Green Energy (YGE) ( Top 3 Chinese solar panel supplier)

Jinko Solar (JKS)

Canadian Solar (CSIQ) (Despite Canadian in the name is one of the biggest Chinese solar panel suppliers)

Sunpower Corporation (SPWRA)( Makes the Most Efficiency Solar Panels,bought by French Giant Total)

Hanwha Solar One (HSOL) ( Earlier known as Solarfun,bought by South Korean Conglomerate Hanwha)

Sharp ( Biggest Japanese Solar Compan)

Sanyo Panasonic( Sanyo plans to invest more than 70% of its total investment over the next 3 years in its renewable energy and energy storage segment)

Kyocera(Kyocera is Japan’s second largest solar panel producing company)

Mitsubishi( Mistubishi is another old time Japanese solar company which has a low profile solar module and system business)

LG (It is selling solar modules in the South Korean and European markets and has 240 MW capacity)

Samsung ( The company makes silicon solar cells and panels,will start making poly with MEMC)

Hyundai ( The first South Korean company to move int solar panel production)

Solarworld (SWV.DE)– Solarworld is the Biggest German producer of solar panels,the company is one of the few to still have operations in Europe and USA)

Bosch (Automotive company,made expensive acquisitions,now moving production to Malaysia)

Shanghai Chaori Solar Energy (Listed in China,integrated producer of solar panels)

AUO ( AUO has a JV with SunPower’s to build 1.4 gigawatt third solar cell fabrication facility in Malaysia)

China Sunenergy(CSUN) (A Small China Solar Energy Cell and Panel Supplier)

Arise Technologies (Canadian small suppliers of solar panels)

BP (Outsources production of solar panels,sells under brandname )

GE View

General Electric Co. expects increased competition and a reduction in subsidies by cash-strapped governments to lead to more companies exiting the wind and solar power businesses, but the industrial behemoth still sees growing long-term demand.”There’s going to be a lot of casualties in the wind and solar businesses, there already are in solar,” John Krenicki, who leads GE’s energy division, told Reuters in an interview on Monday.

Wind Industry Oversupply , Sinovel Profits to Halve in 2012

Sinovel Wind Group Co., China’s biggest wind-turbine maker, expects its 2011 earnings to fall by more than 50 percent as heightened competition at home and abroad dragged down prices.

Rivalry within the market depressed prices, trimming revenue and profit margins, the Beijing-based company said yesterday in a statement. “Cyclical fluctuations” in the world economy also delayed some projects, curbing income, it said.

“It’s difficult for these guys to drive costs down at the same pace as revenue, so margins are getting squeezed,” Aaron Chew, an analyst with Maxim Group LLC in New York, said by telephone. Sinovel may still fare better than European counterparts such as Vestas because of lower labor expenses and more advantageous government subsidies in China, he said.

Lower Support

Vestas has cut sales forecasts twice since October after Asian competitors grabbed market share and U.S. and European governments reined in support for renewable power to curb budget deficits.

A tighter government approval process for projects in China has intensified competition further, spurring domestic companies to study expansion elsewhere. “We do not expect growth in wind installations in China in 2012 to 2014,” so growth abroad would allow the main Chinese players to boost sales, McLoughlin said.

How to Play 25 GW Chinese Annual Wind Capacity Increase for 38 Years – Sinovel and Goldwind

6 Jan, 2012 by Sneha Shah

China,Wind Energy

China adds around 100 GW of Electric Power Capacity each year to meet the growing energy demands of its population. Most of it is thermal power which is becoming costlier besides the dangerous disadvantages of coal. China has been trying to increase its hydro and nuclear power capacity, but nuclear energy has received a setback with Fukushima. Solar Power in China is also increasing but it will take time as well to satisfy the electricity deficit. China is already the largest wind power market in the world installing almost 50% of the wind capacity in 2010.I t intends to keep up the furious pace of wind turbine installations at around 25 GW per year for the next 35 years to reach 1000 GW by 2050. China already has around 7 of the top 15 wind turbine producers. However a vicious price war has thrown a lot of the wind producers into bankruptcy.

The large ones like Sinovel, Goldwind and possibly Ming Yang power will benefit from this purge.With plans for offshore wind power and increasing the wind farm capacity of its western provinces,wind turbine markers in China stand to benefit for a long time. Note Goldwind and Sinovel are listed on HK and Shanghai while Ming Yang is the only Chinese wind company listed in the USA. I don’t think foreign wind turbine producers would benefit too much as Chisese state owned companies like Datang prefer domestic wind makers. Though GE,Vestas,Suzlon and other are trying to expand in China ,don’t think their efforts would lead to too much in revenues.

Offshore Wind Power in China

China is now planning to set a target of 30 GW of Offshore Wind Energy by 2020 which means a 300x growth from its current installed base of only 100 MW.This will make it rival United Kingdom which aims to harvest massive amounts of electricity from its North Sea wind resource.Top Chinese Wind Energy Companies like Sinovel, Goldwind, Ming Yang have already developed or/are in the process of developing wind turbines of 5 MW capacity or more to target this fastest growing wind segment. Sinovel the largest wind energy company in the world has already supplied the wind turbine for the Shanghai farm. Note top offshore wind companies like Siemens,Vestas are already jostling to take a first mover advantage in this technologically complex segment.Even non traditional players like the Korean shipmakers Daewoo,Samsung,Hyundai as well as US Defence Major Northrup Gruman are also preparing to take a slice of this upcoming multi billion industry.

List of Global Wind Turbine Companies

1) Vestas – Vestas the largest Wind Turbine Company in the World has been facing one setback after another.The Danish Company which used to be a Green Investor Favorite till a couple of years can’t seem to find a buyer these days.Stiff competition from China,Slowdown in Wind Energy Farms in the West and now Wind Blade Problems have formed a perfect storm for this company.

2) General Electric (USA) – General Electric is looking to Invest Heavily in the new Age Green Industry like other Industrial Giants like Siemens,ABB etc.General Electric or GE as it is popularly known is one of the biggest players in the Green Industry globally.It generated $18 billion in Ecomagination revenues in 2009 with $1.5 Billion in Investment.General Electric like other industrial conglomerates like Siemens,Areva and others are in fact low risk plays in the Green Investing sector.GE is strong across most of the Green Sectors today particularly in the area of Smart Grid and Energy Efficiency.GE has a 40-50% marketshare of the US market which is the 2nd largest in the world.Due to its vertical integration,it has one of the highest margins in the industry and remains a formidable player with its acquisition Enron’s Wind Turbine arm proving to be a masterstroke.

3) Gamesa (Spain) – Gamesa the Spanish Wind Turbine Producer and Wind Farm Operator has faced the worst year of its history in 2010.Like Vestas and Suzlon,2010 has been a cruel year for the Wind Industry in the Western Markets and the WTG Players dependent on those markets.Gamesa is one of the worst performing Wind Energy Stocks in 2010.Gamesa is looking to restructure its operations and concentrating on the offshore wind market by focusing on higher megawatt turbines.Gamesa is leading a massive Spanish Research Effort to develop a colossal 15 MW Turbine meant for the fast growing offshore wind sector.But this is a long term plan with 2020 set as the target for the complete development of this new Turbine.Meanwhile Gamesa has become the target of takeover speculation by one of the bigger Chinese Wind Turbine players like Sinovel,Goldwind etc.Gamesa has seen its revenue fall by 28% and profits by 71% with Operating Margins of 4-5%.Things don’t look too good for 2011 either though Orders have started ticking up

4) Suzlon Energy is the biggest Indian Wind Energy Company by far with 4-5 Gigawatts of WTG Capacity per year.However Suzlon has languished in red ink since the beginning of the Global Financial Crisis in 2008.The company started by Tulsi Tanti in 1995 was a shining example of Asian CleanTech with a 10% global marketshare and ranking amongst the top 5 Wind Turbine Makers .Suzlon buoyed by its success had bought controlling equity stakes in Turbine Gears producer Hansen Transmission and European Wind Turbine producer Repower.Suzlon seems to be recovering with increase in orders particularly at its German subsidiary RePower,however a huge debt burden poses problems.

5) Siemens – The largest Green Company in the world,Siemens has a strong presence in the Wind Turbine Segment.The company is strong in Europe and is now expanding to emerging markets like Asia.Given its huge technological strengths in electrical equipment,power transmission and large project construction,Siemens is looking for a dominant role in the growing offshore wind market as well.

6) Goldwind – The Wind Energy Market in China has witnessed the growth of almost 90 companies with little differentiation competing fiercely on prices.This has led to low to zero margins for most of these companies.Goldwind has managed to rise above the competition by becoming the single largest Chinese player and looks to takeover the No.1 position in the world in the next few years.By taking bold risks and with the support of the government,Goldwind has become a threat to the established Wind Turbine Order

7) Sinovel – The 2nd largest Chinese Wind Power Company managed to do a successful IPO in Hong Kong last year despite long delays.The company is looking to expand in the foreign markets particularly the US market and has gotten a local management to help it penetrate the newer market.

Dongfang Electric – Dongfang Electric Corporation,China’s largest power equipment producer is also the 3rd biggest Wind Turbine Producer in China as well .The company has managed to grow impressively like the rest of the Chinese and is looking to expand in foreign markets as well.Recently bagged a 276 MW $203 million WTG supply contract with Abhijeet Group.

9) Ming Yang Power- Ming Yang is the only significant non-state owned Chinese Wind Energy Company with a 2009 marketshare of around 4%.The Company has a very short history installing its first Wind Turbine just 2 years ago and has seen an exponential growth riding on the incredible Wind Industry Growth in China.

10) Mitsubishi Heavy Industries , the massive Japanese Conglomerate is looking to overseas market for growing its Wind Energy Division.Mitsubishi like other Japanese companies are looking towards Green Industry for growth.Japan already possesses solid strengths in this area with its traditional focus on resource efficiency.While companies like Panansonic and Toyota looks towards Electric Vehicles and Batteries,Sharp and Kyocera towards Wind Energy,Mitsubishi is focusing its energy on the Wind Sector.

11) Enercon – Enercon is a privately listed German company which has almost 22 GW of Wind Turbine Installations in the world.Enercon was the first company to build a gearless Wind Turbine which is one of the biggest innovation in the Wind Energy Industry in recent times.

12) Nordex – Nordex is another German company in the Wind Turbine Industry which was the first one to build a 1 MW Turbine.The company has not managed to grow fast as the other German companies like Enercon,RePower and Siemens.

13) United Technologies Corporation (UTC) – This US Giant Technology Conglomerate is still a small player in the World Wind Power Market.However it has increased its footprint by acquiring struggling independent US Wind Power company Clipper.

Wind Power ETFs (PWND,FAN) Buying Guide – Top Ideas in Wind Energy Investment ,Types of Wind Stocks

5 Jul, 2011 by Abhishek Shah

Wind Energy

Investing in Wind Energy is not easy with hundreds of companies involved in different parts of the Wind Supply Chain spread around the globe.Many of these companies are not listed on the US Stock Exchanges and for many retail investors (even larger investors) Wind ETFs are the only cost effective way to get exposure to foreign wind power stocks.So you may miss out on best wind energy investment idea if you just look at the mainstream ideas in Wind Energy in the US.Also US with the exception of General Electric has no company in the top 10 global Wind Turbine rankings making things even more difficult.This article exhaustively looks at the Wind Energy ETFs and top Wind Energy stocks in the world.

Two Types of Wind Power Stocks

1) Wind Supply Chain Manufacturing Stocks – These companies are involved in the supply chain of manufacture of wind turbines and their logistics.A Wind Turbine consists of many parts like nacelles,gearboxes,towers etc.With Offshore Wind Energy becoming the fastest growing part of Wind Energy,moving these giant turbines over the water has become big business as well

2) Wind Utilities – These are companies which do not make wind power equipment rather they use it for generating power.The expertise of these companies lies in the development of Wind Farms and selling the electricity.There are some companies which are exclusively devoted to Wind Energy Development like First Wind,however most utilities in the world are now using Wind Power to some extent

Wind Power ETFs

The USA has only 2 listed pure play Wind ETFs FAN and PWND both of which have seen sharp declines in the last 2 years as Green Company stocks have faced a tough time with the indifference towards global warming and rising competition from low cost Chinese companies (not unlike the Solar Industry).Both the ETFs are analyzed below.Note for most investors who don’t follow Green Energy Investing full time,a Wind Energy ETF may be the only option though risker than buying a general broad Green ETF like PZD or PUW

1) First Trust Global Wind Energy (ETF)(NYSE:FAN)

a) Index – FirstTrust Global Wind Energy ETF (the Fund) is designed to track the performance of the ISE Global Wind Energy Index.

b) Style Allocation and Valuation

Number of Holdings 58
Median Market Cap. $2.44 Billion
Price/Earnings 16.13
Price/Book 1.04
Price/Cash Flow 7.46
Price/Sales 0.90

c) Country Allocation (in Percentage)

Spain 25.70%
United States 15.79%
Germany 15.46%
China 6.98%
Denmark 6.92%
Hong Kong 4.92%
Australia 4.04%
Belgium 3.95%
Sweden 3.34%
Japan 2.25%
Other 10.65%

d) Top Holdings(in Percentage)

EDP Renovaveis SA 8.18

Hansen Transmissions 8.16

REpower Systems AG 7.29

Iberdrola S.A. 7.19

China Longyuan Power Group-H 6.19

Vestas Wind Systems 5.76

Gamesa Corporacion Tecnologica, S.A. (Gamesa) 3.91

China WindPower Group Limited 3.45

Nordex AG 3.37

Arise Windpower AB 2.67

e) Performance

2009 26.01%
2010 -31.42%
6/30/11 2.32%

You can see the latest performance and charts of FAN over here

f) Expense Ratio

The Net Expense Ratio of this ETF is 0.6%

ANALYSIS

FAN is the biggest Wind ETF with $32 million corpus however like other Wind Stock Investments it has taken a massive beating in 2010 and 2011 after doing a par 2009.This Wind ETF however suffers from a 2 year old mindset in the sense that it has not given enough weightage to China which is the dominant power in Wind Energy today.It has still got holdings of mostly European Wind Energy Companies and Utilities like Enel Green Power which are not the driving forces of growth.It has got too many stocks in the portfolio though the expense ratio is okay at 0.6%.This ETF has lower volatility than PWND but does not get high marks from me.With 25% weighting towards Spain which has passed over the hill in Wind Power Maturity it hardly looks like a Growth ETF which a Wind ETF should be.FAN is not a good Wind ETF to invest because of the old nature of its holdings which do not reflect the Wind Energy Industry of 2011.

2) Power Shares Global Wind Energy (ETF)(NYSE:PWND)

a) Index The PowerShares Global Wind Energy Portfolio PWND (Fund) is based on the NASDAQ OMX Clean EdgeGlobal Wind Energy Index

b) Style Allocation(in Percentage) and Valuation

Large-Cap Growth 33.62
Large-Cap Value 5.75
Mid-Cap Growth 37.44
Mid-Cap Value 1.36
Small-Cap Growth 12.93
Small-Cap Value 8.90

Number of Holdings 30
PE Ratio 17.10
PB Ratio 0.86

c) Country Allocation (in Percentage)

China 14.69
France 12.54
Germany 12.37
United States 12.32
Italy 10.59
Denmark 8.84
Canada 4.55
Cayman Islands 4.41
Switzerland 4.09
Spain 4.06

d) Top Holdings(in Percentage)

EDP Renovaveis S/A 10.64
Enel Green Power S.p.A. 10.59
China Longyuan Power Group Corp. Ltd. 10.35
Vestas Wind Systems A/S 8.84
Innergex Renewable Energy Inc. 4.55
China Ming Yang
Wind Power Group Ltd. ADS 4.41
China High Speed Transmission
Equipment Group Co. Ltd. 4.35
American Superconductor Corp. 4.14
Nordex SE 4.12
China WindPower Group Ltd. 4.02

e) Performance

2009 39.13%
2010 -34.62%
2011 YTD -0.97%

You can see the latest performance and charts of PWND over here

f) Expense Ratio

The Net Expense Ratio of this ETF is 0.75%

ANALYSIS

PWND is a good Wind ETF with strong weighting on China and Wind Utilities.Note the center of Wind Energy Manufacturing and Development has shifted towards China from the Western world with almost 50% of the world’s wind power installations happening in China in 2010.7 out of the top 15 Wind Turbine Manufacturers are now from China which makes it very important that Top Wind Energy Investments have a substantial weighting on Chinese Wind stocks.PWND has a good combination of Wind Utilties and Wind Turbine Stocks from China which gives exposure to the biggest wind power market in the world.It has also got a decent investment in top Wind Utilities in Europe which still have the biggest wind farm portfolios in the world.With 30 stocks,it has not over diversified as well with good concentrated holdings in top wind power stocks.While 0.75% expense ratio is slightly high it is not a deal killer.The 2010 and 2011 performance of Wind Energy has been dismal to say the least with the Copenhagen Global Climate Change Meeting going to the dogs in 2009 end.However there remains little alternative to Wind Energy as Coal,Gas and Oil get increasingly scarce,costly and are continuing to pollute the environment.With only $19 million left as the corpus PWND may not continue long,however if it does it might be the best time to invest in a good WInd Energy ETF when the sector is so unloved.PWND is the best Wind Energy ETF and probably the best wind stock investment out there

You can also read about Solar Energy ETFs for ideas on how to invest in the Solar Power space.

Wind Turbine Stocks

Here is a list of the top Wind Turbine Manufacturing Stocks in the world.While Wind Turbines are not the only Wind Energy Investment Ideas,they form an important chunk.

1) Vestas – Vestas the largest Wind Turbine Company in the World has been facing one setback after another.The Danish Company which used to be a Green Investor Favorite till a couple of years can’t seem to find a buyer these days.Stiff competition from China,Slowdown in Wind Energy Farms in the West and now Wind Blade Problems have formed a perfect storm for this company.

2) General Electric (USA) – General Electric is looking to Invest Heavily in the new Age Green Industry like other Industrial Giants like Siemens,ABB etc.General Electric or GE as it is popularly known is one of the biggest players in the Green Industry globally.It generated $18 billion in Ecomagination revenues in 2009 with $1.5 Billion in Investment.General Electric like other industrial conglomerates like Siemens,Areva and others are in fact low risk plays in the Green Investing sector.GE is strong across most of the Green Sectors today particularly in the area of Smart Grid and Energy Efficiency.GE has a 40-50% marketshare of the US market which is the 2nd largest in the world.Due to its vertical integration,it has one of the highest margins in the industry and remains a formidable player with its acquisition Enron’s Wind Turbine arm proving to be a masterstroke.

3) Gamesa (Spain) – Gamesa the Spanish Wind Turbine Producer and Wind Farm Operator has faced the worst year of its history in 2010.Like Vestas and Suzlon,2010 has been a cruel year for the Wind Industry in the Western Markets and the WTG Players dependent on those markets.Gamesa is one of the worst performing Wind Energy Stocks in 2010.Gamesa is looking to restructure its operations and concentrating on the offshore wind market by focusing on higher megawatt turbines.Gamesa is leading a massive Spanish Research Effort to develop a colossal 15 MW Turbine meant for the fast growing offshore wind sector.But this is a long term plan with 2020 set as the target for the complete development of this new Turbine.Meanwhile Gamesa has become the target of takeover speculation by one of the bigger Chinese Wind Turbine players like Sinovel,Goldwind etc.Gamesa has seen its revenue fall by 28% and profits by 71% with Operating Margins of 4-5%.Things don’t look too good for 2011 either though Orders have started ticking up

4) Suzlon Energy is the biggest Indian Wind Energy Company by far with 4-5 Gigawatts of WTG Capacity per year.However Suzlon has languished in red ink since the beginning of the Global Financial Crisis in 2008.The company started by Tulsi Tanti in 1995 was a shining example of Asian CleanTech with a 10% global marketshare and ranking amongst the top 5 Wind Turbine Makers .Suzlon buoyed by its success had bought controlling equity stakes in Turbine Gears producer Hansen Transmission and European Wind Turbine producer Repower.Suzlon seems to be recovering with increase in orders particularly at its German subsidiary RePower,however a huge debt burden poses problems.

5) Siemens – The largest Green Company in the world,Siemens has a strong presence in the Wind Turbine Segment.The company is strong in Europe and is now expanding to emerging markets like Asia.Given its huge technological strengths in electrical equipment,power transmission and large project construction,Siemens is looking for a dominant role in the growing offshore wind market as well.

6) Goldwind – The Wind Energy Market in China has witnessed the growth of almost 90 companies with little differentiation competing fiercely on prices.This has led to low to zero margins for most of these companies.Goldwind has managed to rise above the competition by becoming the single largest Chinese player and looks to takeover the No.1 position in the world in the next few years.By taking bold risks and with the support of the government,Goldwind has become a threat to the established Wind Turbine Order

7) Sinovel – The 2nd largest Chinese Wind Power Company managed to do a successful IPO in Hong Kong last year despite long delays.The company is looking to expand in the foreign markets particularly the US market and has gotten a local management to help it penetrate the newer market.

8 Dongfang Electric – Dongfang Electric Corporation,China’s largest power equipment producer is also the 3rd biggest Wind Turbine Producer in China as well .The company has managed to grow impressively like the rest of the Chinese and is looking to expand in foreign markets as well.Recently bagged a 276 MW $203 million WTG supply contract with Abhijeet Group.

9) Ming Yang Power- Ming Yang is the only significant non-state owned Chinese Wind Energy Company with a 2009 marketshare of around 4%.The Company has a very short history installing its first Wind Turbine just 2 years ago and has seen an exponential growth riding on the incredible Wind Industry Growth in China.

10) Mitsubishi Heavy Industries , the massive Japanese Conglomerate is looking to overseas market for growing its Wind Energy Division.Mitsubishi like other Japanese companies are looking towards Green Industry for growth.Japan already possesses solid strengths in this area with its traditional focus on resource efficiency.While companies like Panansonic and Toyota looks towards Electric Vehicles and Batteries,Sharp and Kyocera towards Wind Energy,Mitsubishi is focusing its energy on the Wind Sector.

11) Enercon – Enercon is a privately listed German company which has almost 22 GW of Wind Turbine Installations in the world.Enercon was the first company to build a gearless Wind Turbine which is one of the biggest innovation in the Wind Energy Industry in recent times.

12) Nordex – Nordex is another German company in the Wind Turbine Industry which was the first one to build a 1 MW Turbine.The company has not managed to grow fast as the other German companies like Enercon,RePower and Siemens.

13) United Technologies Corporation (UTC) – This US Giant Technology Conglomerate is still a small player in the World Wind Power Market.However it has increased its footprint by acquiring struggling independent US Wind Power company Clipper.

The list of the top Wind Turbine Companies in the world is changing rapidly with the entry of the Chinese companies such as Goldwind and Sinovel.Though it will take time for these companies to penetrate the foreign markets,their low cost has made the formidable rivals though quality remains suspect.On the other hand foreign WTG Leaders like Gamesa,GE,Suzlon are rapidly expanding in China and other emerging markets to lower their costs and gain access to these fast expanding markets.Newer companies like Samsung,Hyundai,Northrop Grumman are also entering the Wind Power field as Offshore Wind Energy becomes a multi-billion dollar industry

Pros and Cons of Wind Power,Turbines and Farms – The Advantages outweighs the Disadvantages

13 Mar, 2011 by Abhishek Shah

Climate Change,Fossil Fuels,Offshore Wind,Wind Energy

Wind Power has become the biggest source of renewable energy in the world after Nuclear Energy (if you consider Nuclear to be renewable energy that is). The reason for the huge increase in wind energy has been the sharply falling costs which have roughly become equivalent to Gas fired Energy. While Solar Energy costs are still falling, they are still way above the costs of fossil fuel energy. Geothermal Energy is facing tough times and Geothermal Companies are looking to diversify into other lines of business. While Wind Power Energy has many advantages and it is seeing around 35 GW of capacity built each year, there are some disadvantages like persistently low volume noise and loss of scenery that has made its growth restrained.

Here are Pros and Cons of Wind Energy.

Pros Of Wind Energy

1) No Pollution and Global Warming Effects – Wind Turbines does not lead to pollution which is one of the biggest advantages of Wind Energy. Note there are costs associated with the equipment used to build and transport Wind Equipment but the running of Wind Energy leads to no pollution.

2) Low Costs – The Costs of Wind Energy has reached the level of Gas powered Energy and can be generated at extremely low rates of around 7-8c/KwH in favorable conditions.

3) Big Industrial Base – Wind Energy has become a mainstream source of energy and a large industrial base already exists. This allows a rapid deployment of Wind Power in most places in the world. The number of Wind Turbine Producers is increasing with a number of Asian firms entering the industry.

4) No Fuel Cost – Wind Energy does not require any fuel like most other sources of renewable energy. This is a huge advantage over other fossil fuels whose costs are increasing at a drastic rate every year. Electricity prices are increasingly rapidly in most parts of the world much faster than general inflation. Price shocks due to high fuel costs are a big risk with fossil fuel energy these days.

5) Offshore Advantage – The next big growth spurt in Wind Energy is coming from the offshore Wind Energy sector. Huge Wind Turbines of 5 MW and above are being built around 30-40 kms from the coasts. This has the advantage of no land usage, no noise problems and the wind is much better leading to higher load factors. The costs are currently higher but in the future are expected to come rapidly come down. USA has enough offshore wind potential to replace the whole fossil fuel electricity being consumed right now.

6) Small Wind Turbines gaining some traction – While Wind Turbines are not generally used in distributed form, it is possible to now use small wind turbines being built by a number of companies to power small establishments.

Cons Of Wind Energy

1) Low Persistent Noise – There have been a large number of complaints about the persistent level of low level noise from the whirring of the blades of a wind turbine. There have been cases reported about animals on farms getting affected by wind turbine noise.

2) Loss of Scenery – The sight of giant 200 meters tall towers has drawn objections from neighbors about wind power leading to loss of scenery and beauty. The Cape Wind Energy project off the shore of Massachusetts has been delayed by over 10 years as it has drawn serious objections from the owners of coastal homes about loss in their property values.

3) Land usage – Wind Turbines can sometimes use large amounts of land if not properly planned and built. The construction of roads to access the wind farms etc also takes up some land.

4) Intermittent Nature – Wind Power is intermittent in nature as it generates energy only when the wind blows. This problem can be solved with energy storage however this leads to additional costs.

Summary

The Pros of Wind Energy far outweighs the Cons of Wind Power leading to massive amounts of wind power capacity being installed in almost every part of the world. Wind Power already generates majority of the electricity in countries like Denmark and almost 1/5th in countries with proactive renewable energy policies such as Spain, Germany and Portugal. Wind Power has great potential in USA,China and India which are driving the growth of Wind Power in the world. South America particularly Brazil are also showing strong interests in building up wind farms in the country. The recent increase in the price of oil and the dangers of Nuclear Energy further emphasize the importance of Wind Power Energy.

Greenworldinvestor Articles that expand on this one

List of Top Wind Power/Turbine Companies/Stocks – Chinese Rising

10 Mar, 2011 by Abhishek Shah

China,GE,Germany,Offshore Wind,USA,Vestas

Wind Turbine (WTG) Companies are increasingly facing competition from a host of new entrants into the industry.The dominants firms like Vestas,Gamesa,GE,Siemens and Suzlon have seen their stock prices fall steeply due to declining revenues and margins.A number of Giant Industrial Firms have entered the Wind Energy Industry to diversify from the slow growth in their own sectors.Korean Shipbuilders have invested heavily in the Wind Turbine Manufacturing en masse to take advantage of the secular growth of Wind Energy.Chinese companies have risen from virtually nothing 5 years ago to become Top 5 Global Wind Energy Players.The Chinese companies have seen massive growth on the back of a strongly growing domestic market.China which now accounts of 50% of the world Wind Turbine market in 2010 is expected to see continued strong growth with the Chinese government setting a target of more than 100 GW by 2015.Here is a list of the major Wind Power Companies in the World.

1) Vestas – Vestas the largest Wind Turbine Company in the World has been facing one setback after another.The Danish Company which used to be a Green Investor Favorite till a couple of years can’t seem to find a buyer these days.Stiff competition from China,Slowdown in Wind Energy Farms in the West and now Wind Blade Problems have formed a perfect storm for this company.

2) General Electric (USA) – General Electric is looking to Invest Heavily in the new Age Green Industry like other Industrial Giants like Siemens,ABB etc.General Electric or GE as it is popularly known is one of the biggest players in the Green Industry globally.It generated $18 billion in Ecomagination revenues in 2009 with $1.5 Billion in Investment.General Electric like other industrial conglomerates like Siemens,Areva and others are in fact low risk plays in the Green Investing sector.GE is strong across most of the Green Sectors today particularly in the area of Smart Grid and Energy Efficiency.GE has a 40-50% marketshare of the US market which is the 2nd largest in the world.Due to its vertical integration,it has one of the highest margins in the industry and remains a formidable player with its acquisition Enron’s Wind Turbine arm proving to be a masterstroke.

3) Gamesa (Spain) – Gamesa the Spanish Wind Turbine Producer and Wind Farm Operator has faced the worst year of its history in 2010.Like Vestas and Suzlon,2010 has been a cruel year for the Wind Industry in the Western Markets and the WTG Players dependent on those markets.Gamesa is one of the worst performing Wind Energy Stocks in 2010.Gamesa is looking to restructure its operations and concentrating on the offshore wind market by focusing on higher megawatt turbines.Gamesa is leading a massive Spanish Research Effort to develop a colossal 15 MW Turbine meant for the fast growing offshore wind sector.But this is a long term plan with 2020 set as the target for the complete development of this new Turbine.Meanwhile Gamesa has become the target of takeover speculation by one of the bigger Chinese Wind Turbine players like Sinovel,Goldwind etc.Gamesa has seen its revenue fall by 28% and profits by 71% with Operating Margins of 4-5%.Things don’t look too good for 2011 either though Orders have started ticking up

4) Suzlon Energy is the biggest Indian Wind Energy Company by far with 4-5 Gigawatts of WTG Capacity per year.However Suzlon has languished in red ink since the beginning of the Global Financial Crisis in 2008.The company started by Tulsi Tanti in 1995 was a shining example of Asian CleanTech with a 10% global marketshare and ranking amongst the top 5 Wind Turbine Makers .Suzlon buoyed by its success had bought controlling equity stakes in Turbine Gears producer Hansen Transmission and European Wind Turbine producer Repower.Suzlon seems to be recovering with increase in orders particularly at its German subsidiary RePower,however a huge debt burden poses problems.

5) Siemens – The largest Green Company in the world,Siemens has a strong presence in the Wind Turbine Segment.The company is strong in Europe and is now expanding to emerging markets like Asia.Given its huge technological strengths in electrical equipment,power transmission and large project construction,Siemens is looking for a dominant role in the growing offshore wind market as well.

6) Goldwind – The Wind Energy Market in China has witnessed the growth of almost 90 companies with little differentiation competing fiercely on prices.This has led to low to zero margins for most of these companies.Goldwind has managed to rise above the competition by becoming the single largest Chinese player and looks to takeover the No.1 position in the world in the next few years.By taking bold risks and with the support of the government,Goldwind has become a threat to the established Wind Turbine Order

7) Sinovel – The 2nd largest Chinese Wind Power Company managed to do a successful IPO in Hong Kong last year despite long delays.The company is looking to expand in the foreign markets particularly the US market and has gotten a local management to help it penetrate the newer market.

8) Dongfang Electric – Dongfang Electric Corporation,China’s largest power equipment producer is also the 3rd biggest Wind Turbine Producer in China as well .The company has managed to grow impressively like the rest of the Chinese and is looking to expand in foreign markets as well.Recently bagged a 276 MW $203 million WTG supply contract with Abhijeet Group.

9) Ming Yang Power- Ming Yang is the only significant non-state owned Chinese Wind Energy Company with a 2009 marketshare of around 4%.The Company has a very short history installing its first Wind Turbine just 2 years ago and has seen an exponential growth riding on the incredible Wind Industry Growth in China.

10) Mitsubishi Heavy Industries , the massive Japanese Conglomerate is looking to overseas market for growing its Wind Energy Division.Mitsubishi like other Japanese companies are looking towards Green Industry for growth.Japan already possesses solid strengths in this area with its traditional focus on resource efficiency.While companies like Panansonic and Toyota looks towards Electric Vehicles and Batteries,Sharp and Kyocera towards Wind Energy,Mitsubishi is focusing its energy on the Wind Sector.

11) Enercon – Enercon is a privately listed German company which has almost 22 GW of Wind Turbine Installations in the world.Enercon was the first company to build a gearless Wind Turbine which is one of the biggest innovation in the Wind Energy Industry in recent times.

12) Nordex – Nordex is another German company in the Wind Turbine Industry which was the first one to build a 1 MW Turbine.The company has not managed to grow fast as the other German companies like Enercon,RePower and Siemens.

13) United Technologies Corporation (UTC) – This US Giant Technology Conglomerate is still a small player in the World Wind Power Market.However it has increased its footprint by acquiring struggling independent US Wind Power company Clipper.