Ernst & Young recently released its Q2 2007 Renewable Energy Country Attractiveness Indices . As part of this initiative, E&Y typically publishes three forward-looking indices that rank countries based on their alternative energy investment friendliness. The indices are: the All-renewable Index, the Long-term Wind Index and the Near-term Wind Index (2-year time horizon). This edition of the Renewable Energy Country Attractiveness Indices report also contains a short discussion on supply-chain gluts in the alternative energy space. We have already discussed some of the potential investment opportunities related to this in the wind sector. The authors note: “Given current rates of industry growth of 20% to 30% and manufacturers’ focus on profitability, supply chain constraints are likely to continue in the medium term notwithstanding new future entrants from China, South Korea, India, and possibly Japan.” The report discusses some of the biggest deals to have taken place in the past few months (e.g. Suzlon’s acquisition of REpower in June 2007 valued at €1.35b) and opines that “mergers and acquisition (M&A) activity is likely to filter down the supply chain, placing a premium for key players such as gearbox and bearing manufacturers.” Industry consolidation clearly is, at this stage in the game, the 500-lb pound gorilla in the alternative energy room. Watch for consolidation plays not only in gearbox manufacturers but also in the North American Independent Power Producers sector. Happy reading!
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