Green is What Future Looks Like

published: 2011-09-02 9:04 | editor: | category: Analysis

The Japanese nuclear power crisis has made countries around the world begin to adjust their nuclear policies, which will in turn help and stimulate the development of renewable energy.

Investment experts are optimistic about the prospects of several relevant industries such as solar energy, electrical equipment, gas, battery and LED, whose stocks are worth purchasing when their prices are low and are good for long-term investment.

Back in 2008, New York crude oil futures hit a record high of $ 147 per barrel, raising awareness of the importance of the renewable energy market. As a result, clean energy development has become the new battlefield that countries are scrambling to compete on for energy security.
A SAM Smart Energy Fund manager indicates that global electric equipment and renewable energy investments reached US$140 billion for 2008, exceeding the US$110 billion of traditional energy sources for the first time.

China is one of the countries that are keen to develop their own sources of renewable energy. The nation consumes the most fuel energy among rapidly rising countries and is showing its determination to develop alternative energy in their 12th Five-Year Plan.

Energy conservation and carbon reduction are a key focus of China’s 12th Five-Year Plan. Of the seven industries identified as Strategic Emerging Industries, three are related to alternative energy: environmental conservation, alternative energy, and alternative energy cars. Jih Sun Anti-Global Warming Fund manager Cheng Hui-wen indicates that in the next ten years, China will surpass most G20 countries, including Europe and the United States, in the area of alternative energy development. In the long run, there is enormous potential for the alternative energy industry in China.

In terms of industrial projects, many believe that in the realm of clean energy, solar energy, power infrastructure, natural gas, battery, and LED will be the five most noteworthy industries in the future.

Global Solar Markets Shifting Demand

In regard to solar energy, the global solar power generation capacity in 2010 reached 37GW, only 0.2% of the global power consumption. However, after the Japan Fukushima nuclear crisis broke out, the percentage will likely further increase. Many countries, including a number of countries of Central America and Europe, have adjusted their nuclear policy. Such an adjustment will particularly benefit and stimulate the development of the solar industry.

The drop of solar system price in 1H11 propelled companies to advance solar installment. However, Germany and Italy were the world's two major sources of solar installment in 2010. Their policy changes have affected the demand in the global solar industry. Although EnergyTrend conservatively predicts the global total solar installation will slightly decrease to 15.5GW from the estimated 17~18GW last year, the good news is that shifting demand from the European region to U.S., China and Japan has strengthen these domestic solar developments which will help diversify the global solar distribution and alleviate negative impact from European country's subsidy cut.

Currently, countries such as the United States and China have high demands for electricity. In the United States, 70% of electricity grid equipment has been used for more than 25 years, and over 10% of electricity lost during the transmission. On the other hand, China’s electricity grid has yet to make its way out of major cities due to high maintenance and expansion costs; the electricity lost during transmission is up to 20%.

In addition, renewable energies, such as solar, wind, geothermal power, entail a well-functioning electricity grid in order to efficiently transmit electricity to service areas.

The market expects that from 2008 to 2030, global investment opportunities in electricity infrastructure will total USD 1 trillion, with a focus on the downstream industry chain. The distribution equipment is expected to account for 70% of the total investment fund by 2030.

EnergyTrend believes that while we strive to develop renewable energies, we should also pursue the electricity transmission efficiency.

From an investment perspective, energy-related stocks are not immue to price fluctuations, while prices of infrastructure stocks are relatively stable with lower risk. Presently, investment trust corporations that have entered the Chinese stock market see great investment return from stocks of smart grid and related equipment.

Car Battery Industry Shows Great Promise

The battery industry, whose market opportunities are mainly propelled by the utilization of renewable energies, is another area that will prosper in the future.

Investments are put into developing more stable power supplies because renewable energy supplies are staggered. A number of industries, such as telecommunications, information industry, hospitals..etc., require such an energy storage system to assure absolute stability of the power supplies.

However, in the battery sector, electric vehicles, hybrid vehicles and other related industries show the most promise and their market values are expected to total at least 10 billion.

According to the analysis conducted by ITIS, the technology division of the Ministry of Economic Affairs, the main obstacles of the popularization of electric vehicles is their high prices and low mileage on one charge. Car battery not only accounts for the biggest portion of the car’s total cost, but also largely affects the mileage on one charge.

Hence, energy storage technology and the development of the battery industry are the pressing issues currently facing electric vehicles. In regard to Taiwanese manufacturers, electronic equipment, semiconductor, electronic component for cars are the sectors worth investing.

In light of global electric vehicles development, China has become the world's largest auto market and has regarded electric car as one of the seven target industries, in the hope of increasing the domestic demand for electric cars to 5 million by 2020.

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