Friday, September 24, 2010

Windfarms: The South (East) Sea Bubble

Following the opening of the world's largest windfarm we have some interesting financial commentary on the Wind farm issue from the Free Trade League's latest edition of it's September Bulletin (subscription only)
The Great Windfarm Collapse could be the 21st century equivalent of the South Sea Bubble. We doubt if any of the planned giant 150- metre turbines (as high as the London Eye) will ever be economic except with government subsidies. And those are going to become scarcer. Already President Obama’s lack of enthusiasm for windpower is being blamed for a two-thirds fall in new orders received by Tyneside turbine builder Clipper. The shares of this AIM-listed company peaked at 880p in 2007, had fallen to 180p within the past year and this week collapsed 13p to 31p on the latest update regarding sales. Last year United Technologies (the Pratt & Whitney jet engine maker) spent £126m on taking a 49.5% stake and it may now bid for the rest. So there is hope for shareholders. But we wonder if time will show that the £11bn Scottish & Southern power giant was ill-advised to become the country’s biggest builder of windfarms on the basis of government pledges of favourable prices for “renewable” energy.

HT Derek Bennet

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