Wind power shares fall on policy risk-HSBC

Thursday, as the risk of further fiscal tightening weighed on a 

sector which depends on government support. 

All renewable energy sectors have lagged fossil fuel energy 

and wider global stocks over the past month and the year to 

date, data show, underperforming even as world shares slide on 

concerns about sluggish global growth. 

Alternative energy is vulnerable in a downturn for a range 

of reasons, including technology risk, a lower ranking of green 

concerns, dependence on subsidies from cash-strapped governments 

and falling prices for competing fossil fuels. 

After sharp share price falls wind stocks were now 

undervalued, said HSBC analysts, given rising order inflow and 

order backlogs, but further drops could be expected. 

'We believe the debt crises in the EU/US have heightened 

as-yet unfounded prospects of further regulatory uncertainty and 

possible credit tightening,' said the bank's Global Wind report. 

'While we feel these stocks are undervalued, we expect 

continued flat or underperformance, while macro concerns 

persist, with investor appetite poor for what is considered a 

risky sector in weak markets.' 

The global wind market fell last year, meaning fewer 

turbines were installed than in 2009 reversing a 20-year trend 

after the financial crisis slowed demand and froze capital. 

But order inflow for major wind turbines in the first half 

of 2011 was up a fifth on the same period last year, while the 

combined order backlogs had roughly doubled for major 

manufacturers Vestas, Gamesa, REpower 

and Suzlon, HSBC said. 

Wind power still struggles to compete with cheaper natural 

gas, and depends on government support in the form of a price 

premium called a feed-in tariff. 

Solar power is far more expensive than fossil fuel 

alternatives. Italy was the world's second biggest solar power 

market last year and in May capped solar subsidies at 6-7 

billion euros annually by 2016.. But Rome is 

currently in the throes of market doubts over the size of its 

sovereign debt. 

Click here for a factbox of green energy support: 

The table below shows that wind and solar have 

under-performed other energy and wider stocks in the past month 

and in the year to date, compared with Thursday's prices. 



ASSET PCT CHANGE 



LAST MONTH YTD 

European coal 

S&P Global Nuclear -7.53 -13.90 

DJ Global oil & gas -8.42 -1.09 

MSCI World -8.83 -4.01 

HSBC Climate Change -10.28 -9.64 

NASDAQ Global Wind -12.30 -12.99 

HSBC Energy Efficiency -13.12 -8.60 

FTSE Env Opportunities -14.92 -7.35 

MAC Solar -17.87 -19.95 

S&P Clean Energy -18.34 -16.09 





(Reporting by Gerard Wynn)