Obama Renewables Plan More Ambitious
Jan 12, 2009 - Nicola Groom - Reuters
Barack Obama makes a speech on the economy at
George Mason University in Fairfax, Virginia,
January 8, 2009. Photo: Jim Young
LOS ANGELES - President-elect Barack
Obama's call for an ambitious renewable energy plan
underscores just how bad things have gotten for makers
of solar panels and wind turbines.
The goal to double alternative energy
production in three years will effectively maintain
the high-flying industry's recent growth rates rather
than targeting sharper increases, reflecting the harsh
new reality facing green power.
"Doubling over that period is a little
more ambitious than one would have thought six months
ago," said Banc of America Securities-Merrill Lynch
analyst Steven Milunovich. "It's not a huge stretch
goal but given what growth rates probably are now
it's realistic and may even be a little bit of a push."
Obama asked Congress on Thursday "to
act without delay" to pass legislation that included
doubling alternative energy production in the next
three years and building a new electricity "smart
In his speech, Obama gave few specifics
on how he would enact those plans, but wind and solar
companies who have seen investment in new projects
grind to a virtual halt in recent weeks applauded
the move as a major step forward for the United States,
which trails nations such as Germany in its use of
Peter Brun, head of government relations
at Denmark's Vestas, the world's biggest maker of
wind turbines, said the move was a clear "signal"
to the markets of Obama's support for renewables.
A spokesman for top solar panel maker Q-Cells said
"more could be done, but the main point is that renewable
energy is now really taking off in the U.S."
An Obama aide on Friday said the administration
would seek to add 20 gigawatts (GW) or more of wind
power and 4 GW of geothermal and solar power in the
next three years, doubling the nation's current renewable
power base of 24 GW through loan guarantees and, eventually,
national renewable energy requirements.
U.S. wind and solar trade groups welcomed
the news, saying maintaining recent growth rates was
aggressive considering the current economic environment.
"This is a bold statement by (Obama),
although in the last three years we have doubled,"
said Denise Bode, Chief Executive of U.S. wind industry
trade group the American Wind Energy Association.
"After years of dramatic growth the turmoil in the
financial markets are at last reaching our industry."
In the United States, both solar and
wind generation grew well over 40 percent in 2007,
the last year for which figures are available, according
to the AWEA and the Solar Energy Industries Association.
Without help from the federal government
to restart investment, Bode said the wind industry
could see new projects drop as much as 50 percent
next year from 2008 levels.
Despite thin details, shares of renewable
energy companies soared following the announcement,
with the rally continuing into Friday. The move was
an about-face for many of those stocks, which have
been battered by a string of recent earnings warnings
from solar companies including Germany's Q-Cells,
U.S.-based MEMC Electronic Materials Inc, and China's
LDK Solar Co Ltd.
Given the small contribution wind and
solar make to the United States' electricity supply
-- just above 1 percent for wind and less than 1 percent
for solar -- one investor said Obama's plan would
be meaningful to the fledgling industry.
"Solar is less than half a percent
of electrical generation in this country right now.
That is nothing," said Kevin Landis, manager of the
Silicon Valley-based Firsthand Alternative Energy
Fund. "So if the federal government decides they want
to turn the dial hard, even if they only want to bump
it up by one percent, that's big. That could help
quite a bit."
Analysts cautioned, however, that investors
should not expect to see an overnight recovery in
shares of renewable energy companies as the weak economy
is expected to weigh on them for at least the next
"We expect shares to continue to remain
volatile, moving upward in response to positive headlines
surrounding favorable long-term industry prospects
and downward in response to short-term negative data
points," Wedbush Morgan analyst Al Kaschalk said in
a client note this week.
(Additional reporting by Jeff Mason
in Washington, Karin Jensen in Copenhagen, Gerard
Wynn in London and Christoph Steitz in Frankfurt)
(Editing by Bernard Orr)
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