Solar, Wind Power Going Strong

Wind power also catching strong gust of momentum

By Paul Carton and Jim Woods

ChangeWave's latest survey of the alternative energy industry shows that solar power has experienced the most-rapid economic growth during the past 12 months, echoing the findings of our December 2007 survey. But, wind power is also surging and has the most momentum going forward.

The survey, which focused on industry trends and opportunities, was completed Aug. 4 and a total of 196 respondents working in alternative energy sectors participated.

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Rise and Shine

Looking ahead, solar energy is expected to achieve the most-rapid growth for the next 12 to 24 months, but wind power is also showing strength going forward.

In addition, the rapid rise of gasoline prices this year has led to significant gains in the hybrid/electric vehicles sector.

Biomass energy has fallen in terms of industry sentiment due in large part to the impact of rising raw material costs. Thirty-three percent of industry respondents pointed to biomass energy as the sector most negatively affected by the high cost of raw materials, and 51% of those respondents pointed to ethanol production in particular.

As one respondent commented, "Corn ethanol producers have cut back their expansion plans because of the high cost of steel for construction, and the high cost of corn for feedstock. The companies that built facilities years ago have the advantage on capital costs, but they are suffering from high feedstock costs and the uncertainties of market conditions."

Customer Demand for Alternative Energy

The survey also focused on customer demand for alternative energy products, and hybrid/electric vehicles (net score = +86) were viewed as having the biggest demand increase in the next year. Solar (+79) and wind (+78) products also gained big jumps in customer interest.

But the most telling findings were uncovered when we asked industry respondents to rate the demand for their own company's alternative energy products and services.

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Here's what we found:

• There's an upswing in sales. Business is booming, according to our alternative energy industry respondents -- of which 45% projected their company's sales will increase during the next 90 days. Just 4% projected their company's sales are decreasing.
• Capital budgets are adjusting higher. In another positive finding, 38% of respondents projected that their overall capital budgets will increase during the next 90 days -- more than triple the percentage who reported that they will decrease (11%).
• Inflation is spurring demand. Fifty-six percent of respondents said inflationary pressures in the rest of the economy are causing increased demand for their alternative energy products and services. And 77% of those respondents cited the rising price of traditional energy sources as the main reason for the demand growth.

As one Alliance member put it, "Inflation is putting more pressure on energy prices than it is on the raw material costs for alternative energy technologies. Thus, alternative energy is becoming more affordable relative to conventional energy."

Leading Companies

We also asked industry respondents to tell us which alternative energy companies they believe are at the forefront of the respective market sectors. Here's what they told us:

Solar: First Solar (FSLR) and SunPower (SPWR)

Wind: General Electric (GE) and Vestas

Hybrid/electric vehicles: Tesla Motors and Energy Conversion Devices (ENER)

In sum, solar energy continues to burn up the charts and the momentum behind wind power is now stronger than ever.

Investors should take note that, in the midst of a severely worsening U.S. economy, the alternative energy sector continues to ride high.

Paul Carton is the Director of Research for the ChangeWave Alliance. Jim Woods is ChangeWave's Senior Editor. The Alliance is a network of 15,000 highly qualified business, technology and medical professionals in leading companies of select industries. The Alliance is surveyed weekly on a wide range of business and investment research and intelligence topics.

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