Alternative Energy Watch: Renewable Investment; No Vermont Yankee Buyer; Cloudy Days for Solar (RDS-A, CZZ, EXC, DE, SI, ETR)

Here’s our daily report on developments in solar and wind power, alternative fuels, and other news related to the alternative energy sector. PricewaterhouseCoopers has released a report on M&A activity in renewable energy for 2010, and the results are mixed. The number of investment deals grew from 319 in 2009 to 530 in 2010, a jump of 66%. But the dollar value of the deals fell, from $48.8 billion in 2009 to just $33.4 billion in 2010, a drop of -32%.

Included in the 2010 total are some pretty large deals, including Royal Dutch Shell plc’s (NYSE: RDS-A) $1.6 billion merger of ethanol assets with Brazil’s Cosan SA (NYSE: CZZ), Exelon Corp.’s (NYSE: EXC) $900 million acquisition of the wind-power assets of Deere & Co. (NYSE: DE), and Areva’s acquisition of US solar thermal company Ausra for $200 million. Globally, Bloomberg New Energy Finance calculates that $243 billion in new investments from share offerings, financing, and venture capital made its way into renewables.

Of that $243 billion, China accounts for $51.1 billion, or a whopping 21%, of the global total. The head of the financial services division of Siemens AG (NYSE: SI) has noted that renewables investment in the BRIC countries will be led by the urbanization of these countries’ populations.  By 2030, China is expected to have 44 cities with a population of 4 million or more each, while India is forecast to have 11 such metropolises. In Brazil, some 91% of the population will live in cities, and in Russia, 77% of the population will live in metro areas. This trend points to increasing demand for electricity generation in the developing world and more investment in clean energy in these countries.

One acquisition that did not happen in 2010 and is not likely to happen in 2011 is the sale of the Vermont Yankee nuclear generating plant owned by Entergy Corp. (NYSE: ETR). The plant has received a 20-year extension for its operating license from the federal Nuclear Regulatory Commission, but the state of Vermont must also approve the license extension and that is questionable at best. Entergy has announced that it will halt its efforts to sell the plant due to the “uncertain” political climate in Vermont. Vermont Yankee provides about a third of the state’s electricity, and if it is not re-licensed by 2012, the state of Vermont could will have to find a replacement for that power.

Yesterday we noted the announcement by Vestas Wind Systems A/S of its plans to develop a 7-megawatt wind turbine. Today, another Danish company, Dong Energy, has said that it has signed a letter of intent with Vestas to test the new turbine’s design and, perhaps, to install one at Dong’s onshore facility when the prototypes are available in the fourth quarter of 2012.

Plans for another wind farm planned in Wisconsin have been suspended as a result of the uncertainty around siting regulations currently under review in the state legislature. Midwest Wind Energy has backed off development of a 98-megawatt wind farm in Calumet County, after the scuttling of plans by Invenergy for a 150-megawatt wind farm in Brown County, Wisconsin, last week for the same reason.

In solar energy, Axiom Capital Management has said that “a number of solar companies are currently experiencing order cancellations” for product shipments in the first half of 2011.  The order cancellations are coming from Germany, where one distributor has purchased just one quarter of the megawatts it had planned to purchase just two months ago. Axiom also warns that the recent boost in solar stocks due to the nuclear accident in Japan will have no long-term effect on solar stock prices. As the Axiom analyst puts it, “[W]e see an acute correction lower directly ahead.”

Paul Ausick