Maybe.

According to a report issued by KPMG (download pdf), a bubble may be developing globally in the renewable energy sector as bidders compete for assets and send prices up.

Oil and gas companies are buying in the hunt for cleaner fuels and financial buyers are searching for stable long-term cash flow - the overall effect has been to push valuations up to record levels. The report indicates that 50 % of respondents, and nearly two-thirds in Europe, agreed that there is a real risk of a bubble in the renewable energy sector.

The KPMG press release also reported:

While I agree that investors should be cautious, I think that is always good advice. Although the KPMG report has raised some important questions about supply chain bottlenecks, and uncertainty in government incentives, I would argue that the renewable energy and cleantech sectors are relatively robust, despite the fact that many companies have yet to turn a profit.

In the U.S., a lot depends on what (if anything) comes out of Capitol Hill to stabilize the incentive structure for investment in clean energy technologies. I will argue, as I have before, that even if this current Congress does not pass meaningful extensions this year, some sort of tax credit will be passed early next year, and there is a good chance they could extend it retroactively.

Photo: Limbo Poet via flickr under a Creative Commons License

Obscured by all of the buzz about the opening of wind energy giant Vestas’ first North American blade plant, a delegation of about 30 renewable energy executives and government officials from Spain recently visited Colorado to learn about investment and expansion opportunities in the region. Some of the visitors were already in the US for the dedication of Acciona’s new concentrating solar power plant outside of Las Vegas. The Spanish delegation met with state and local public officials, including Gov. Ritter, and toured a number of sites including the National Renewable Energy Lab (NREL) in Golden and Colorado State University in Fort Collins. Others involved in the visit include the US Department of Commerce, Metro Denver Economic Development Corp. and the Northern Colorado Economic Development Corp.

It is no secret that Spanish renewable energy companies like Acciona, Iberdola, and Finavera are aggressively positioning themselves to be major manufacturers in the in the American renewable energy industry. The Spanish delegation is not visiting Colorado on a whim. The state has recently shown with the opening of the new Vestas plant, that it is willing to give cash incentives and employment bonuses to clean energy businesses who want to set up shop in the Centennial State.

Photo Credit: TheFriendlyFiend via flickr

[The following article was originally published at CleanTechnica on February 15, 2008]

Nearly 50 leading U.S. and European institutional investors managing over $1.75 trillion in assets released a climate change action plan at the United Nations that calls on Congress to introduce national policy to reduce greenhouse gas emissions by up to 90% below 1990 levels by 2050. U.S. institutional investors also pledged $10 billion dollars over two years in renewable energy technologies and project development, energy efficiency, green building and clean technologies. The group of investors also wants the US Securities and Exchange Commission (SEC), to insist that companies listed in New York and elsewhere disclose their exposure to climate change risk. The plan aims for a 20% reduction in energy used in core land and building investments over a three-year period.

The two largest pension funds in the US, the California Public Employees’ Retirement System, with some $246.7 billion under its management, and the California State Teachers’ Retirement System, $168.8 billion strong, were both on board with the institutional investor coalition. These two large and incredibly wealthy pension funds tend to be leaders in the institutional investor arena. George McPherson, senior managing director of the DC-based private equity firm Global Environment Fund said he expects other pension funds to create more programs geared towards clean technology over the next year.

The initiative was unveiled at the Investor Summit on Climate Risk hosted in New York by the United Nations Foundation and Ceres’ Investor Network on Climate Risk. Ceres is a national network of investors, environmental organizations and other public interest groups working with companies and investors to address sustainability challenges such as global climate change.

John Sweeney, the president of the AFL-CIO, a federation of unions, told the summit that some of the $5 trillion of union workers’ retirement funds should be invested in ways that help fight climate change. “These deferred wages of working people are the capital that can fuel the energy economy of the future,” he said.

Summit attendees were also given information from a new report, which concluded that major investments in energy productivity over the next 10 years could bring in double-digit rates of return.

1. Institutional investors are one of the most important macro-economic drivers in this economy. Many of the assets that the large institutional investment funds have to invest, are collections of people’s retirement funds and 401Ks. People often do not worry a whole lot about their pension funds, and how they are invested, as long as they see a return on their investment. With that said, it is good to see institutional investors combine their tremendous economic clout to put pressure on the federal government while taking some social responsibility themselves.

2. The record-breaking profits of the big oil companies like Exxon Mobil and Chevron over the last few years was made possible, in part, by the large amount of broad-based investment from large institutional investors. People may talk out of one side of their mouth about the evils of big oil without even knowing that their retirement nesteggs are being lined with the profits of those same companies. Institutional transparency and accountability are important to socially-conscious investors, and I see this as a step in the right direction.

3. Clean tech investors (both large and small) want long term security and stability before they are willing to invest significant capital. Investors and industry need certainty over what the regulatory regime will be over the next two to three decades before they release the billions of investment capital that will finance the shift we need to make to a low-carbon economy.

ClimateBiz

Earth Times

Reuters

LiveMint (India)

International Herald Tribune

Photo Credit: chatirygirl via flickr

Strong third quarter profits have enabled Danish wind energy giant Vestas to announce the planned expansion of their first and only North American blade plant. The Danish company made the announcement on Tuesday despite the fact that the Windsor, CO facility has yet to produce a single turbine blade. Construction of the plant began in June and Vestas officials say it will be online by early 2008.

Vestas originally planned to hire about 400 full-time employees to operate four production lines, producing 1,200 blades per year. The ramped-up plan would add another 250 full time employees and produce 1800 blades per year; an increase that represents a roughly 50 percent expansion of its production capacity.

Vestas is not waiting for an extension of the federal production tax credit, which is set to expire at the end of this year. Or perhaps they know something we don’t. According to the report,

The report also states:

Vestas is no stranger to even the most casual observer of the renewable energy business and anyone who invested in the company (listed on the Copenhagen OMX exchange) should be smiling broadly as the value of the stock has more than tripled in the last year. I am no Jim Cramer, but it is my guess this stock is not done climbing. I will be following Vestas closely as they move into the broadening North American market.