Tuesday, November 25, 2014

Wind Power: Novelty Becomes Norm

Long mocked as a marginal energy source, solar power is nearing 16 gigawatts of installed capacity in the U.S.  Importantly, 55% of total photovoltaic installations are owned by electric utilities.  The industry was recently valued at $15 billion annually by Solar Energy Industries Association.  Analysts have predicted that solar will reach grid parity all fifty states by 2016 even without tax credits.  Solar is well on its way to dominating the U.S. electricity market.

It appears wind energy is well on its way to reaching the same sort of inflection point as solar.  Thirty-nine states have wind power generation installations.  By the end of June 2014, total wind power installations in the U.S. reached 61,946 megawatts.  These wind power generating facilities provided an equivalent to 14 nuclear power plants or 52 coal-fired power plants.   Wind advocates also tout the benefits of wind in terms of emissions reduction and reduced water usage.  Carbon dioxide emissions are reduced by approximately 4.2%, which is about the same as taking 17.5 million cars of the road.  The power generated by wind reduces the consumption of 36.6 billion gallons of water annually.

Corporate adoption of wind power has been particularly impressive.  Recently, the Swedish home furnishings retailer IKEA acquired its second wind farm in the U.S.  IKEA purchases the 165 megawatt wind farm in Cameron County, Texas from Apex Clean Energy.  IKEA had previously purchased 110 megawatt wind power plant near Hoopeston, Illinois.  The two U.S. investments bring IKEA’s wind power ownership to 104 wind turbines.  Another 165 wind turbines are installed at locations around the world. 

IKEA’s undertaking is impressive.  This bodes well for companies like Apex Clean Energy, which will build and operate the wind power plants in Hoopeston and Cameron.  Apex has power projects in twenty-one states.  For corporate customers like IKEA, the company recommends either a traditional power purchase agreement or some sort of structured agreement. 

Apex is a private company and does not disclose its financial performance.  It is likely a company to watch as wind power develops.  In my view, wind power is more likely than not to reach wide scale usage in the U.S. just like solar has reach that point where the renewable energy source has become the norm and not just a novelty.


Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.


1 comment:

Pradeep Singh said...

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