Sunday, July 01, 2007

Renewable Energy Investors Looking to the Skies

New investment in renewable energy companies continues to grow solidly, but with a new direction. While ethanol markets seem to be cooling, solar cell markets – particularly those in China – are picking up steam.

A sharp increase in the price of corn and concerns about market saturation have threatened ethanol producers’ profits. The market has seen fewer ethanol companies go public this year and more investors shying away from the volatility. Instead, capitalists have turned an eye towards solar power, promising perhaps a brighter, more stable future.

Initial Public Offerings (IPOs) in the solar sector have been dominated by China. Four Chinese solar power companies have debuted in 2007, garnering $1.11 billion, and three solar companies went public in the last two months of 2006, raising $508.8 million. JA Solar went public this year and was one of the biggest winners with a return on the IPO price of more than 100 percent. Investors are attracted to the low manufacturing costs, compared to U.S. and European solar-sell producers. But unlike ethanol, Jefferies & Co. analyst Jeffrey Bencik told the Associated Press that this solar investment boom isn’t likely to bust anytime soon:

"Solar companies, once they're ramped up, they're solidly profitable. This is not the Internet bubble. These companies have real products and real profits."

In the U.S., there continues to be a strong, steady stream of renewable energy IPOs. Of the 115 companies that went public during the first half of 2007, eight of them were in the renewable energy sector. That’s compared to just nine offerings in all of 2006.

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