Sector view: renewable energy

What Investment, June, 2007

In today's climate, renewable energy is surrounded by a halo of virtue, but investors in the sector have found its fortunes to be as varied as the activities it covers. China-based ReneSola, maker of silicon solar wafers--which lifted profits from 300,000 [pounds sterling] to 11.4 million [pounds sterling] last year and is expanding into the US--soared from last year's 75p float to more than 6 [pounds sterling], and at 495p looks well placed to resume momentum.

Iowa-based PowerFllm, whose solar panel technology can heat homes, track assets in railway wagons and help make fiat-screen computer monitors, increased pre-tax profits from 47,000 [pounds sterling] to 750,000 [pounds sterling] on turnover up 125 per cent to 3.1 million [pounds sterling]. Shares in the company, which has been winning contracts from the US army for soldiers' mobile communication equipment, have risen from last year's 120p float price to 287p and should go further.

That is in stark contrast to less favoured companies in the sector such as KP Renewables, formed to back renewable projects, which lost its way with the death of its founder, Dr James Watkins. Now languishing at 1.75p, the company has sought a company voluntary arrangement as it looks for a shell deal.

Ambitious Solar Integrated Technologies has provided a rollercoaster ride for investors, with the shares plunging from 365p to 17.5p last year. They have since rallied to 133.5p, as the company won a 6.5 million [pounds sterling] photovoltaic roofing order from Tesco USA.

More potential could be on offer soon when TMO Renewables comes to AIM later this year or early next. It recently raised 15 million [pounds sterling] at 69.5p privately to develop a demonstration unit for its technology. TMO's system uses basic heat-loving organisms to break down the hardest plant materials to produce bio-ethanol. This, it is hoped, should relieve the pressure on agricultural land.