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IT IS a good bet that in the coming weeks we may grow sick of the word Copenhagen. But it is little wonder that ahead of December's world-changing summit of global leaders to decide how best to halt climate change, the Evening Standard's CleanTech-10 Index of green energy companies is riding at a 12-month high.
The United Nations Climate Change summit in Copenhagen will thrash out plans to take the groundbreaking emissions-cutting 1997 Kyoto Protocol on for the world post-2012 with the hope that Barack Obama will this time sign up the Americans. And though the prospects for Copenhagen are undoubtedly having a beneficial effect on companies hoping to attract investors into so-called clean technology, our CleanTech-10 is being fired by both dealmaking in this fledgling industry and green businesses beginning to deliver on their game plans.
During 2009, the CleanTech-10 — Aa basket of 10 UK-listed firms — has recovered from its dip in the late winter to record a rally of more than 40% over the past six months and an overall rise of 33% from 1 January.
Buoying the market has not only been general investor appetite for clean technology stocks but also the first fruits of the Government investments and grants promised in Alistair Darling's Budget for the Green Economy in April.
As in previous investment bubbles over the last dozen years — think biotech, dot-com, mining minnows and energy explorers — stocks that have yet to turn a profit are showing the biggest gains. Ceres Power's 155% nine-month gain comes as the day when it goes into full-scale production in 2011 draws nearer. And Clipper Windpower is still resolutely lossmaking despite more than doubling production of its turbines. However, for its shares the prime driver has been the news that it is in potential takeover talks.
The worst performers show the flipside to the green energy boom.
Ocean Power Technologies is down 35% because of uncertainties over whether its wave energy technology can ever be truly commercially viable.
At Renewable Energy Holdings, a fall in revenues because the wind has not been blowing hard enough to turn its turbines in Germany is manna for all those who believe windpower to be an overrated energy source because of its intermittent nature.
“Clean technology sits at an interesting crossroads,” says Michael McNamara, stock market analyst at specialist green energy research house Jefferies International.
“Global pro-renewable energy policies have never been more favourable. The clean technology sector is receiving unprecedented support from governments worldwide who are looking to renewable energy as a means of both stimulating job creation and combatting global warming.
“However, limited credit availability and low appetite for risk overhang the sector. Clean Technology, along with the rest of the global economy, has suffered from the widespread withdrawal of credit from weakened financial institutions. The often capital-intensive and high beta nature [volatility] of clean technology has not helped.”
Yet McNamara remains bullish for the sector: “We believe clean technology shares will perform strongly as credit loosens and economic recovery begins.”
Time — and Copenhagen — will tell.
Reader views (1)
The latest Money Week reports that every Mw of wind generating capacity requires 1 tonne of 'rare earth' minerals for the magnets, which are extracted under foully polluting conditions in countries with little environmental protection. Green technology? Nope!
- Mdj E10, london uk, 01/10/2009 23:45
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