Investing in Emerging Markets

If anybody is looking anywhere other than at the emerging markets, please contact us at the usual address.

But seriously, take a snapshot of the biggest stories of the week. Enel is investing in Chile. Gamesa is expanding its footprint in India. And the German developer SüdWestStrom has pulled out of Bard Offshore 1, citing construction delays and shifting risk assessments in offshore wind.

In fact, many would argue that Areva and its plans for a manufacturing facility in Scotland provided the singular source of good news for the developed markets.

It’s not necessarily a surprise. In the UK, political infighting has left energy policy in a shambles, with the Government’s Energy Market Reform Bill delayed again. While all the while a vocal energy Minister with a firm anti-onshore wind agenda continues to stamp his foot.

In the US, the re-election of President Barack Obama has given hope to many that the Production Tax Credit (PTC) will be extended.

However, the President has yet to push legislation through Congress, and many in the industry anticipate that 2013 may be the last year for the initiative.

So for developers, financiers, investors, OEMs and consultants, the emerging markets offer a possibility and a scramble to preserve the balance sheet.

And whilst more mature markets find themselves in a state of flux, domestic independent power producers in these emerging geographies can start to take advantage of softer prices on equipment and the cost of capital.

As the turbine makers feel the squeeze from the reduction in large orders from big utilities in developed markets, so they must also accept reduced margins on the sale of stock if they wish to continue to win new orders.

Which, of course, isn’t a surprise. Particularly when you’re trying to build a project in a country that might not have adequate infrastructure (and where the cost of logistics are far higher) and that as a result, means that a cost saving on equipment offers a chance to free up capital for other more expensive overheads.

For the OEMs, struggling to get a foothold in these markets through some clever (and perhaps unavoidable) discounting at this stage could well pay dividends for the future.

It’s why Vestas is keen to maintain its market share in Australia and it’s why Siemens has been keen to announce its involvement in Mainstream Renewable Power’s forthcoming projects in South Africa.

Meanwhile, there seems to be little indication of how long the malaise in Western European and North American wind markets will continue. Certainly the ongoing austerity measures and shifting political sands don’t seem to offer any immediate prospects for a swift recovery.

However, if developers in emerging markets can prove not only to their own governments, but also to external investors, that they’re serious about making wind energy work, they should be able to take some very competitive first steps.

If anybody is looking anywhere other than at the emerging markets, please contact us at the usual address.

But seriously, take a snapshot of the biggest stories of the week. Enel is investing in Chile. Gamesa is expanding its footprint in India. And the German developer SüdWestStrom has pulled out of Bard Offshore 1, citing construction delays and shifting risk assessments in offshore wind.

In fact, many would argue that Areva and its plans for a manufacturing facility in Scotland provided the singular source of good news for the developed markets.

It’s not necessarily a surprise. In the UK, political infighting has left energy policy in a shambles, with the Government’s Energy Market Reform Bill delayed again. While all the while a vocal energy Minister with a firm anti-onshore wind agenda continues to stamp his foot.

In the US, the re-election of President Barack Obama has given hope to many that the Production Tax Credit (PTC) will be extended.

However, the President has yet to push legislation through Congress, and many in the industry anticipate that 2013 may be the last year for the initiative.

So for developers, financiers, investors, OEMs and consultants, the emerging markets offer a possibility and a scramble to preserve the balance sheet.

And whilst more mature markets find themselves in a state of flux, domestic independent power producers in these emerging geographies can start to take advantage of softer prices on equipment and the cost of capital.

As the turbine makers feel the squeeze from the reduction in large orders from big utilities in developed markets, so they must also accept reduced margins on the sale of stock if they wish to continue to win new orders.

Which, of course, isn’t a surprise. Particularly when you’re trying to build a project in a country that might not have adequate infrastructure (and where the cost of logistics are far higher) and that as a result, means that a cost saving on equipment offers a chance to free up capital for other more expensive overheads.

For the OEMs, struggling to get a foothold in these markets through some clever (and perhaps unavoidable) discounting at this stage could well pay dividends for the future.

It’s why Vestas is keen to maintain its market share in Australia and it’s why Siemens has been keen to announce its involvement in Mainstream Renewable Power’s forthcoming projects in South Africa.

Meanwhile, there seems to be little indication of how long the malaise in Western European and North American wind markets will continue. Certainly the ongoing austerity measures and shifting political sands don’t seem to offer any immediate prospects for a swift recovery.

However, if developers in emerging markets can prove not only to their own governments, but also to external investors, that they’re serious about making wind energy work, they should be able to take some very competitive first steps.

If anybody is looking anywhere other than at the emerging markets, please contact us at the usual address.

But seriously, take a snapshot of the biggest stories of the week. Enel is investing in Chile. Gamesa is expanding its footprint in India. And the German developer SüdWestStrom has pulled out of Bard Offshore 1, citing construction delays and shifting risk assessments in offshore wind.

In fact, many would argue that Areva and its plans for a manufacturing facility in Scotland provided the singular source of good news for the developed markets.

It’s not necessarily a surprise. In the UK, political infighting has left energy policy in a shambles, with the Government’s Energy Market Reform Bill delayed again. While all the while a vocal energy Minister with a firm anti-onshore wind agenda continues to stamp his foot.

In the US, the re-election of President Barack Obama has given hope to many that the Production Tax Credit (PTC) will be extended.

However, the President has yet to push legislation through Congress, and many in the industry anticipate that 2013 may be the last year for the initiative.

So for developers, financiers, investors, OEMs and consultants, the emerging markets offer a possibility and a scramble to preserve the balance sheet.

And whilst more mature markets find themselves in a state of flux, domestic independent power producers in these emerging geographies can start to take advantage of softer prices on equipment and the cost of capital.

As the turbine makers feel the squeeze from the reduction in large orders from big utilities in developed markets, so they must also accept reduced margins on the sale of stock if they wish to continue to win new orders.

Which, of course, isn’t a surprise. Particularly when you’re trying to build a project in a country that might not have adequate infrastructure (and where the cost of logistics are far higher) and that as a result, means that a cost saving on equipment offers a chance to free up capital for other more expensive overheads.

For the OEMs, struggling to get a foothold in these markets through some clever (and perhaps unavoidable) discounting at this stage could well pay dividends for the future.

It’s why Vestas is keen to maintain its market share in Australia and it’s why Siemens has been keen to announce its involvement in Mainstream Renewable Power’s forthcoming projects in South Africa.

Meanwhile, there seems to be little indication of how long the malaise in Western European and North American wind markets will continue. Certainly the ongoing austerity measures and shifting political sands don’t seem to offer any immediate prospects for a swift recovery.

However, if developers in emerging markets can prove not only to their own governments, but also to external investors, that they’re serious about making wind energy work, they should be able to take some very competitive first steps.