For Immediate Release
Chicago, IL – June 29, 2012 – Today, Zacks Equity Research discusses the U.S. Alt-Energy, including Covanta Holding Corp. (CVA), Ormat Technologies Inc. (ORA), Juhl Wind, Inc. (JUHL) and Sino Clean Energy Inc. (SCEI).
A synopsis of today’s Industry Outlook is presented below. The full article can be read at
Environmental advantage: Solar power is the most benign electricity resource. Solar cells generate electricity without air or water emissions, noise, vibration, habitat impact or waste generation. Over time, rapid population growth, depletion of non-renewable conventional sources, and escalating pollution levels will help shape a much more pronounced global focus on renewable projects.
The long-term bullishness is shared even by oil behemoths who expect that by fiscal 2050 one-third of the global energy needs will come from renewable sources.
In this space we are bullish on waste management service provider, Covanta Holding Corp. (CVA), which has tied the majority of its service contracts under long-term agreements with inflation escalators.
Fuel risk advantage: Unlike fossil and nuclear fuels, alternative energy has no risk of fuel price volatility or delivery risk. Although there is variability in the amount and timing of sunlight in the day, season and year, a properly sized and configured system can be designed to ensure high reliability while providing a long-term, fixed-price electricity supply. In this context the one name we are bullish about is Ormat Technologies Inc. (ORA) which engages in the geothermal and recovered energy power business.
In light of the Fukushima Daichi episode in Japan, the global focus has tilted towards solar in a big way. Germany plans to phase out nuclear power plants by 2022. This move will definitely boost solar fortunes in one of its largest global markets.
Location advantage: Unlike other renewable resources such as hydroelectricity and wind power, solar power is generally located at a customer’s site due to the universal availability of sunlight. As a result, solar power limits the expense and losses associated with transmission and distribution from large-scale electric plants to the end-users. For most residential consumers seeking an environment-friendly power alternative, solar power is currently the only viable choice.
Environmental legislation: Alternative energy companies are increasingly benefiting from new legislation in the U.S. stipulating installation of renewable sources of electricity generation as mandated by Renewal Energy Standards (RES). As of now there are 29 states and the District of Columbia in the U.S. that have RES legislation in place. Another 8 states also have nonbinding goals for adoption of renewable energy sources.
At the federal level, Congress has extended the 30% federal investment tax credit (ITC) to both residential and commercial solar installations until December 31, 2016. Also, under the American Reinvestment and Recovery Act (:ARRA), the U.S. Treasury Department earlier implemented a program to issue cash grants in lieu of investment tax credit for renewable energy projects.
The wind sector has also benefited significantly from the production tax credit (:PTC) over the last few years. It was started in 1992 as a part of the Energy Policy Act of 1992. Subsequent to that it has received life extension of half a dozen times. In the first decade of a renewable energy facility’s lifespan the PTC provides a $0.022/ kilowatt-hour investment tax credit benefit. Our favorites in this space is Juhl Wind, Inc. (JUHL).
Subsidy programs: Governments, most notably in China, Japan, Canada, U.K., Australia, India and the Middle East, have increased their financial support for solar projects. In China, governmental authorities recently adopted a national feed-in tariff (FiT) policy for large scale alternative energy projects. China also expanded the Golden Sun Program, an upfront cost subsidy program, aimed primarily at distributed generation.
In addition, according to the current draft of the 12th 5-year plan for solar energy, the government intends to raise the 2015 goal for total cumulative solar energy capacity to 15 GW and 50 GW by 2020. Owing to its Chinese focus we are keeping a close watch on Sino Clean Energy Inc. (SCEI) which operates as a third party commercial producer and distributor of coal-water slurry fuel.
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