Green Energy Gets a Boost, But Where Is the Growth?

As any investor knows, these past eight months have been very unkind to investment portfolios. Of all of the sectors that have been hit hard, the renewable energy (like wind, solar, geothermal, biomass, wave and tidal) sector has been really hard hit. Over the 2008 calendar year, for example, PowerShares WilderHill Clean Energy (PBW) lost 69% while PowerShares Global Clean Energy (PBD) lost 60%. First Trust Nasdaq Clean Edge U.S. Liquid Series (QCLN) and Market Vectors Global Alternative Energy (GEX) each lost 66% and 61% respectively. By comparison, the Energy Select Sector SPDR (XLE) lost only 39% over the same time period. While alternative energy ETFs with an international exposure fared slightly better than domestically focused ones, the losses were still huge.

President Obama’s recent fiscal stimulus package has a number of green energy initiatives like $2 billion for advanced clean battery systems, $4.5 billion for upgrading power transmission networks, and $4.2 billion for energy efficiency projects, and this should give the U.S. green economy a much needed boost (see Senate Passes Stimulus Package: Boon for Renewable, Energy Efficiency).

This brings up a more general question. As government spending packages start to stimulate economies around the world, where is the future brightest for renewable energy companies? One approach to answering this question is to look at the growth rates of renewable energy consumption in different countries.

One way to compare how growth rates in renewable energy consumption vary across countries is to compare annual average growth rates of per capita renewable energy consumption. Data on per capita renewable energy consumption used in electric power generation is available from the U.S. Energy Information Agency. Average annual growth rates computed over the five year period 2002 to 2006 for the G7 developed countries Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States are 4.6 %, 9.1 %, 17.1 %, 11.5 %, 6.3 %, 29.4 %, and 4.9 % respectively. By comparison, average annual growth rates computed over the ten year period 1987 to 2006 for Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States are 8.0 %, 7.6 %, 12.3 %, 7.3 %, 2.9 %, 47.9 %, and 10.2 % respectively.

When average annual growth rates computed over a five year period are higher than average annual growth rates computed over a ten year period this is usually indicative of an upward trend. This means that for countries like France, Germany, Italy, and Japan, the trend in per capita renewable energy consumption is upward. For countries like Canada, the United Kingdom, and the United States, the trend is downward.

The future for renewable energy looks bright in a number of countries, but it looks especially bright in France, Germany, Italy, and Japan and this suggests that renewable energy companies with exposure to these markets will do well.

Disclosure: Author is long PBW.

Comments

[it-trade:]

Interesting to see those long term figures, Thanks. Would you be able to post link to the information you got from the U.S. Energy Information Agency

Feb 16 10:15 AM

[Ferdinand E...:]

The situation for Green energy is simple: some voters want it and so in order to satisfy the small or perhaps not so small percent of voters who put green energy at the top of their preference ladder, some billions have got to be spent on it, regardless of how much or how little sense it makes. Those of us who have looked at it as a long run prospect however are not optimistic. Sweden is a wonderful example here. There is a lot of talk about the Russian gas pipeline at the bottom of the Baltic, which is strongly opposed by the 'greens'. They dont want gas, coal, or nuclear, which means that they want green electricity. Unfortunately the voters don't, although they (the voters) don't know it yet.

Feb 16 10:25 AM

[dan-d:]

This article is inane. The U.S alt energy industry is in its' infancy barely registering on the american psyche. It still has to get traction and show meaningfull benefit in the form of ultimate cost reduction and energy availability stablization. The stimulus monies will help provide traction and reassure potential investors that it has a long term future. I think the numbers put forth in this article are meaningless in regards to future performance.

Feb 16 11:29 AM

[Alphameister:]

Interesting stats, but the argument seems much too simiplistic. Where is the info on existing market penetration versus goals of current political powers (this stimulus bill is just the opening salvo by Obama's crew re clean energy), available economic resources, etc. I'd not be surprised to see Asia become the source of fastest growing demand for clean energy as the capital-rich Chinese especially seek to provide domestic demand for their domestic clean-energy industry while also placating world opinion in regard to their "dirty" economic model.

Feb 16 12:18 PM

[Dr. Walid A...:]

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Regards,

Dr. Walid Amin Ruwayha

_


Ruwayha Tourism Village





LOCATION :

Ruwayha TOURISM VILLAGE (R.T.V.) is a, privately owned (RUWAYHA FAMILY), multi-million U.S.D project located in the heart of Al-Matin mountains, known as VALLEY LAMARTINE, at a distance of (23) Km from Beirut, with easy access from all direction and extensive parking space.

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DESCRIPTION :

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PLEASE NOTE THAT NOTHING IS FOR SALE.



HISTORY :

Ruwayha TOURISM VILLAGE (R.T.V.) is a complete Tourist & Business Services Village. It also offers you, at the same time, THE only SUMMER OUT-DOOR EXHIBITION & LEISURE CENTRE for different products and/or services.

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SUMMER OUT-DOOR EXHIBITION & LEISURE CENTRE :

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OBJECTIVES :

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We are looking for representatives in the different Arabian Gulf countries.
We are also interested in serious joint-venture(s).

We are looking for representatives in the different Arabian Gulf countries.
We are also interested in serious joint-venture(s).

LEBANON :

Lebanon is recognized as being an international hub for trade, finance, investment, services and tourism. Free enterprise and private initiative are the drivers of the Lebanese economy, based on a long tradition of liberal investment policies. Trading facilities, banking and financial services make Lebanon the commercial center of the region.

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Please consult our website. Thank you.

Dr. Walid Amin RUWAYHA

E-mail : [e-mail] Website : ruwayha.com

Apr 30 07:23 AM