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The Great Bull Run of 1992 to 2008 spawned at least three significant investment bubbles: the rise of biotech in the mid-1990s, the dot-com boom and bust of the turn of the century, and then the indiscriminate speculation about oil and commodities explorers from around 2004 and which died last year.
With Barack Obama putting investment in renewable energy at the top of his agenda after 100 days in the White House, and our own Government, desperately belatedly, attempting to provide financial incentives for so-called clean technology (“clean-tech”), the City is readying green energy as the first investment boom of the next stock market bull run.
In the nether regions of the London stock markets, bumping along with market values counted in barely tens of millions, are a whole host of greener-than-thou companies waiting to save the world — and make a packet doing it. Windfarm developers and turbine makers; burners of woodchip and landfill gas; glass panel makers to harness the sun; sea-power buoys to harvest the tide; home energy generators; and even a City exchange that trades in the permits which allow companies to emit carbon dioxide. And these are just the London-listed firms with operations in the UK.
One of the disciples of this green revolution in the markets is Torben Sommer, analyst at tech house Piper Jaffray, who recently authored a major research note entitled Buy the Green Energy Economy!. Sommer's investment thesis centres on the US embrace of renewable energy and clean technology after years in the wastelands of the Bush administration. If the world's biggest and most advanced economy is embracing green energy, then maybe the revolution is nigh.
Yet Sommer is the first to concede the outlook in the near term for the nascent industry in Europe is anaemic and dependent on the resurrection of the financial system: that the banks start lending and financing projects again.
“And that's not what they are doing at the moment,” Sommer admits. “That is the Achilles heel to the argument of buying the green economy'. But the central thesis remains the same. Its time has come.”
The “clean-tech 10” will be used as the Evening Standard's Energy Analysis bellwether of the health of the green energy economy. By regular updates, we will track the fortunes of those renewables companies working in the UK green economy. Some may soar, some may die. Some may be taken over and they will be replaced by another clean-tech stock.
