Nanuk fund manager, Binya Even, stated in a recent webinar that: “solar gets the headlines, wind gets the profits.”
Investors are increasingly aware of sustainable technologies, as solar panels on roofs and electric cars on roads become commonplace. One sustainable industry that has remained out of sight and out of mind is wind power. This belies its importance. Wind power today generates more than twice as much electricity as solar, and by 2040 wind is forecast to overtake coal to as the world’s #1 electricity source, providing over one fifth of the world’s power.
Wind’s growth is built on economic competitiveness. The cost of wind power has dropped by roughly 40 per cent in the last three years. Governments around the world replaced fixed subsidies with competitive auctions, forcing the industry to deliver the lowest cost of power it possibly can. As prices fell, leading corporations including Amazon, Apple, Google and Microsoft all increased procurement of Wind power, as did many governments around the world. In fact, Wind has got so cheap that in 2019 the Netherlands plans the first auction where a fee will be charged for the right to build a Wind farm.
For investors, it’s critical that companies can convert volume growth into profits and shareholder returns. Leading wind turbine manufacturers have done so.
Wind turbines are among the most sophisticated pieces of machinery in the world: standing 150 metres tall, with blades moving at up to 200km/h, and utilising sensors, drones and predictive analytics to ensure smooth operations. This means it’s extremely hard to develop a top-quality wind turbine, and this has enabled the market leaders to achieve a scale and product quality that competitors are struggling to match. This in turn means they are enjoying strong profitability while smaller rivals are struggling to break even.
Ultimately, this means that the leading wind turbine manufacturer, Vestas Wind Systems, has a market value over 30 times that of the leading Solar panel manufacturer, Jinko Solar.
Binya Even is based in London – his email address is: binya.even@nanukasset.com
Eric Siegloff in the Sydney office can also respond to media requests directly.
Eric Siegloff
CEO
Nanuk Asset Management
Tel: 02 9258 1600
Mob: 0481 751 615
eric.siegloff@nanukasset.com
www.nanukasset.com