Alternative Energy

Last year many alternative energy investors suffered huge losses when several prominent stocks fell by 70% or more. But they have not lost hope in alternative energy stocks and their future. According to a new survey investors are pinning their hopes on alternative energy industry this year. Waggener Edstrom Worldwide report states that investors and analysts participating in the survey anticipate alternative energy stocks to surpass the broader markets. “Despite a deeply challenging business climate, the financial community continues to view alternative energy stocks with measured optimism,” Lev Janashvili, vice president of Waggener Edstrom’s global corporate communications practice, said.

Participants in the survey have faith in Barack Obama’s administration and its alternative energy policies. They think that expected increase in oil prices will also help alternative energy stocks. 82% are viewing Obama’s election as “positive” or “very positive” for the industry. 76% are of the view that oil prices—which have crashed down amidst the current economic crisis—will either become constant or bounce back this year. This will ignite the belief of investors in alternative energy sources once again.

Storage and wind energy have caught the imagination of the investors and industry players. 43% of the participants anticipate an above-average year for energy storage. 21% are skeptical about a below-average year as far as storage devices are concerned. 43% suppose an above-average year for wind energy against 24% laying a bet on not-so-hopeful year.

But respondents didn’t show the same enthusiasm for several other energy sectors, for example biofuels, hydrogen and fuel cells. 62% investors and analysts were definitely negative about biofuels, only 17% are anticipating an above average year for this sector. Participants are not overly excited about hydrogen and fuel cells, with 53% of respondents expecting a below-average year against 24% expecting an above-average performance.

But all is not hunky-dory for alternative energy in 2009: 77% of respondents expressed that access to capital will be a big problem this year. Another 43% say oil and gas prices will have a depressing effect on the sector.

Still, almost all respondents expect gas prices to rise over the next three years, an important factor, as 53% also say that public interest and commercial investment in alternative energy will also decline alongside gas prices.

The survey throws interesting light on another aspect. The alternative energy industry is not happy with the media coverage. 76% think that media people are under-informed about important aspects of this particular industry. Only 57% agree that media behave similarly as far as conventional energy industry is concerned.

“The survey reveals a tension between the financial community’s optimism about the long-term potential of alternative energy and the difficulty of identifying future leaders and survivors,” Janashvili said. “It is interesting, for example, that performance expectations for the broad category of alternative energy stocks are measurably higher than for any of the specific subcategories such as wind or solar.”

The company surveyed 81 current or prospective institutional investors in alternative energy, including brokerage analysts covering the sector and other industry participants, such as private equity firms, direct investors and independent research firms. Most of the respondents are based in the U.S., with 29% based in Europe and 19% based elsewhere.

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