Impact of Renewable Energy Directive on companies
Charlie Thomas, fund manager of the Jupiter Ecology Fund, comments on the impact of the European Commission's Renewable Energy Directive on companies."The European Commission's announcement on renewable energy targets last week is yet another example of the way in which the forces for change are now being driven by an active and ambitious national and international government agenda.
This, combined with the consumer and corporate pressure on environmental and ethical issues, creates a strong argument for green investing.
"The Commission has set some stretching targets for the EU to generate 20% of energy from renewable sources, although the UK has been given a lower target of 15% as it lags behind other member states with only 2% currently coming from renewable sources. The mandatory greenhouse gas reduction targets set out in the Directive for each country are also very relevant to the issue of energy efficiency.
"While general market sentiment has created some volatility for the sector, the long-term fundamentals behind green investment remain well supported by emerging environmental trends. We would expect these proposals to provide a strong backdrop for growth in renewable electricity generation and for companies involved in the development and supply of renewable energies."
Some of the companies with potential to benefit include;
RENEWABLES
Vestas is a leading player in the wind energy sector. It supplies products from individual turbines to the delivery of turnkey wind power systems. It also provides guidance to customers in connection with the financing and ownership of wind turbine projects. The company should continue to benefit from government incentives aimed at increasing the proportion of energy generated by renewable sources.
Nordex is a leading global supplier of wind turbines. Nordex produces large commercially manufactured wind turbines in the 1.5-2 MW range that are suitable for use onshore, offshore, in permafrost and desert. The company is well positioned to take advantage of government policies aiming to increase the proportion of electricity generated from renewable sources.
Spanish based Gamesa is one of the top five manufacturers of wind turbine generators with an interest in the development of wind parks across Europe. The company stands to benefit from the growing demand for renewable energy sources across the world in response to energy security concerns and attempts to reduce industrial carbon emissions.
ENERGY EFFICIENCY
Itron makes radio- and telephone-based automatic meter reading (AMR) systems for the gas, water and electric markets. This technology can dramatically reduce the need for utilities to carry out drive through data-collections. The market for these products is robust as they not only allow utilities to achieve efficiencies and improve demand response, but can also help consumers manage their domestic energy consumption more efficiently.
Schneider Electric is a global manufacturer of equipment for electrical distribution and automation management. All of Schneider's new products use eco-design techniques to eliminate hazardous substances, reduce resources through miniaturisation, cut energy use and enhance recycling. The company has strategically positioned itself to take advantage of the opportunities that climate change and escalating energy prices represent.
SIG is a leading international supplier to the construction, building and diverse industrials markets. Products include: insulation, roofing, commercial interiors and specialist construction & safety products. It is likely to benefit from the UK Government's Zero Carbon Homes initiative launched recently.
Owens Corning is a world leader in building materials and composite solutions. Its products range from insulation, roofing and siding to glass fibre reinforced composite materials used in transportation, electronics and wind energy. Demand is being driven by energy efficiency for buildings and regulation mandating higher fuel standards for cars and other transportation.