- We see a rebound in clean energy investment in 2010F …• "Of the total US$177bn pledged towards investment in renewable energy and energy-efficiency measures by governments worldwide, only 14% was utilised in 2009. According to New Energy inance (NEF), nearly 68% of the clean energy stimulus spending will be in 2010 (35%) and 2011 (33%)."• "We expect government support for clean energy to continue in 2010F and 2011F."• "Total new financial investment in clean energy grew 31% y-y to US$27.3bn in 1Q10 from US$20.8bn in 1Q09, according to New Energy Finance."
- … but performance of clean energy stocks has been divergent…• "performance of clean energy stocks, especially solar, has been lacklustre YTD, owing to several factors"
1) "Uncertainties over government subsidy plans"
1) "Uncertainties over government subsidy plans"
2) "Looming cuts in feed-in tariffs (FIT)"
3) "Difficulties in raising funds for renewable energy projects"
3) "Difficulties in raising funds for renewable energy projects"
- … nevertheless, countries across the world remain committed to clean energy technologies.• "G-20 countries account for more than 90% of total clean energy investment"• "Over the past five years, their investments in clean energy have grown more than 5x"
- Latest industry trends and key investment themes• Market:
1) "Global new energy end-market demand growth is shifting from Europe to Asia and the US, with wind power continuing to be the technology of choice, followed by nuclear, biomass and solar."
2) "We believe the changing nature of Europe and Japan as a manufacturing and technology location in the broader global sector context, while outsourcing to lower-cost Chinese manufacturers, should increase, owing to pressure on ASPs and margins along the value chain."
3) "Renewable energy as a challenge and opportunity for other sectors."• Policies
1) Short term — "FIT or other financial incentives are critical to trigger demand growth."
2) Long term — "National portfolio standards play a significant role in promoting renewable energy, sustaining its growth and attracting investments."
3) "China, Germany and the US have a higher probability of emerging as market leaders in clean energy technology."
1) "Global new energy end-market demand growth is shifting from Europe to Asia and the US, with wind power continuing to be the technology of choice, followed by nuclear, biomass and solar."
2) "We believe the changing nature of Europe and Japan as a manufacturing and technology location in the broader global sector context, while outsourcing to lower-cost Chinese manufacturers, should increase, owing to pressure on ASPs and margins along the value chain."
3) "Renewable energy as a challenge and opportunity for other sectors."• Policies
1) Short term — "FIT or other financial incentives are critical to trigger demand growth."
2) Long term — "National portfolio standards play a significant role in promoting renewable energy, sustaining its growth and attracting investments."
3) "China, Germany and the US have a higher probability of emerging as market leaders in clean energy technology."
• Solar:
1) "Subsidy cuts in European countries should lead to increased outsourcing to China; this should benefit Chinese solar players such as JA Solar, LDK and Renesola, which have exposure to non-brand OEM businesses."
2) "Strong growth in solar end demand, along with solar companies’ focus on cost leadership and efficiency to maintain profitability amidst falling ASPs, should lead to strong order inflows for European solar equipment manufacturers, such as SMA Solar and Centrotherm."• Wind:
1) "We find Chinese wind turbines component manufacturer CHST in a sweet spot, as it should benefit from the company’s strong position in China, as we expect China to remain one of the top wind countries, and have great export potential due to its impressive cost competitiveness."
2) "European wind turbine players, such Vestas and Gamesa, should benefit from their diversification of manufacturing base outside of Europe as it would help them to meet customers’ demands more effectively."
3) "Europe will be the main growth driver of the offshore wind market and we expect the global offshore market to grow 113% y-y in 2010F and 111% in 2011F. The offshore wind segment will be the next growth driver for the Chinese WTG market as attractive locations for onshore wind farm development have already been exploited. Potential beneficiaries are Vestas and Repower in Europe and Sinovel, China High Speed and Goldwind in China, in our view."
• Nuclear:1) "Subsidy cuts in European countries should lead to increased outsourcing to China; this should benefit Chinese solar players such as JA Solar, LDK and Renesola, which have exposure to non-brand OEM businesses."
2) "Strong growth in solar end demand, along with solar companies’ focus on cost leadership and efficiency to maintain profitability amidst falling ASPs, should lead to strong order inflows for European solar equipment manufacturers, such as SMA Solar and Centrotherm."• Wind:
1) "We find Chinese wind turbines component manufacturer CHST in a sweet spot, as it should benefit from the company’s strong position in China, as we expect China to remain one of the top wind countries, and have great export potential due to its impressive cost competitiveness."
2) "European wind turbine players, such Vestas and Gamesa, should benefit from their diversification of manufacturing base outside of Europe as it would help them to meet customers’ demands more effectively."
3) "Europe will be the main growth driver of the offshore wind market and we expect the global offshore market to grow 113% y-y in 2010F and 111% in 2011F. The offshore wind segment will be the next growth driver for the Chinese WTG market as attractive locations for onshore wind farm development have already been exploited. Potential beneficiaries are Vestas and Repower in Europe and Sinovel, China High Speed and Goldwind in China, in our view."
1) "New build in Asia is set to be dominated by China, India, Japan and Korea, while that in the rest of the world is likely to be more widely spread."
2) "However, ex Asia, three countries stand out as having significant new build aspirations over the next 15 years. They are Russia, where we see 16 GW of capacity additions, the US (12GW) and the UK (10GW)."
• Key beneficiaries:
1) Solar: JA Solar, Yingli, Wacker Chemie, SMA Solar, Centrotherm and Ulvac;
2) Wind: China High Speed, Vestas and Gamesa;
3) Nuclear: KEPCO, EDF, GDF Suez, E.ON, Toshiba Plant Systems & Services, Hitachi, Toshiba Corp, Tokyo Electric and Kansai Electric;
4) Geothermal: Energy Development Corp.
Nomura Global Alternative Energy Sep2010
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