Solar and Wind Sectors Powering Alternative Energy Industry Going Forward

by Andy Golub | September 1, 2009 2:37 am

Solar and Wind will be driving the alternative energy sector[1] for the next 12-24 months, according to ChangeWave’s July survey of 200 industry respondents.

Hybrid/Electric Vehicles are also on the upswing, as are “Smart Grid” technologies, which are seen as a big beneficiary of new federal energy initiatives and private sector spending.

Here’s a look at key survey findings.

Industry Trends — Solar and Wind Continue to Lead

Wind sector projections have dropped a bit since our previous survey, although it was still considered the best performer of the past 12 months by our alternative energy industry respondents.

Looking at the next one-to-two years, industry respondents believe the Solar sector[2] (53%; up 5-pts) will achieve the most economic growth, with the Wind sector coming in second (36%; down 4-pts) and Hybrid/Electric Vehicles in third (34%; up 4-pts).

We also asked Alternative Energy industry respondents how they think their own company’s products and services will be doing in the marketplace going forward:

• Company Sales. 43% of respondents project an Increase in sales of their company’s products and services over the next 90 days, while just 4% project a Decrease. This is a big improvement over December 2008.
• Capital Budgets. Capital budgets have also seen a big improvement since December, although they remain below the levels of last summer. Nearly a third (29%) project their company’s cap budget will Increase over the next 90 days and 14% say it will Decrease.

High Hopes for the New Administration

More than half of industry respondents (54%; up 5-pts) think the Federal Government will be the biggest driver of Alternative Energy technologies going forward.

Another three-in-four (74%) see the Obama administration providing a Substantial or Moderate investment in energy infrastructure over the next 2 years — clear signs that there are still lofty industry expectations for the new Administration.

A Look at Solar Financing

We asked 90 respondents working in the solar industry a series of additional questions, and the biggest positive was that 86% believe U.S. government subsidies will accelerate demand for Solar Photovoltaic (PV) products over the next 12 months.

The companies expected to experience the highest rate of sales growth because of this are First Solar (FSLR[3]), LDK Solar (LDK[4]) and SunPower (SPWRA[5]):

But the bad news is that 44% of respondents now say it is Significantly Harder to get financing for solar projects than compared to 6 months ago, and 26% say it’s slightly harder.

Thus despite increased federal subsidies, continued weakness in the overall financing environment for solar projects remains the sector’s Achilles’ Heel. This issue needs to be watched closely by investors going forward.

“Smart Grids” Also Have Momentum

The “Smart Grid” sector is also expected to be a major beneficiary going forward, with 87% of respondents projecting a spending Increase on Smart Grid technologies over the next year.

Smart Meters (37%) are the technology respondents see experiencing the most growth in spending over the next 12 months, followed by Transmission Infrastructure (24%).

The Smart Grid and Energy Efficiency companies seen as having the best growth prospects are Itron (ITRI[6]), Johnson Controls (JCI[7]) and Echelon (ELON[8]).

Mike Wrobel co-wrote this article.

Related Articles:

• The Best Alternative Energy Stocks to Buy Now[9]
• Five Solar Stocks That Shine[10]
• Top 5 Stocks for September[11]

Source URL: http://www.investorplace.com/2009/09/hottest-alternative-energy-companies/
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