Green energy investments few and far between

Green energy investments few and far between, despite politicians' promises

By CRAIG WONG

2004-06-10 14:41:00

TORONTO (CP) - Federal politicians looking to show their "green" credentials are promising government money for alternative energy sources like wind power, but investors who want to convert election campaign pledges into profits may have a tough time.

"There are limited plays that are exclusively focused on the alternative energy space, hence the need potentially for there to be the encouragement of the sector," says Paul Taylor, chief investment officer at BMO Harris Private Banking. When evaluating companies, investors need to focus on the technology the companies are developing, in addition to the financial state of the company," Taylor said in an interview.

"Ultimately, you're assessing the technological potential of what it is they're developing."

Taylor identified Vancouver-based Ballard Power Systems as one of the key players in Canada in the alternative energy sector.

"It's a question of, within the next decade, to what extent will they have a commercially viable fuel cell that is used extensively in cars?"

Investors could also go for established companies aggressively pursuing renewable energy sources, such as conglomerate General Electric, whose GE Wind Energy has more than 6,100 wind turbine installations around the world.

Companies in Canada making large-scale investments in wind power include TransAlta, Enbridge and Suncor.

Stephen Probyn, CEO of the Clean Power Income Fund, said there has been a shift in the public's perception of renewable energy since he started his fund in 2001.

"People have got much more comfortable. They know that wind energy is a viable technology and other renewable technologies provide power to the grid," he said.

Probyn, whose fund invests in a basket of wind, hydroelectric, wood waste and landfill gas power generation plants, said renewable energy has benefited from the rising price of natural gas.

"Obviously, the issue of the environment is critical, but we're also seeing green power resources such as the ones that we have produce power more economically than conventional power, and that's the big shift in markets today."

That doesn't mean profits are flowing for environmentally friendly firms. On Thursday, shares of hydrogen fuel station specialist Stuart Energy Systems gained almost nine per cent after the firm reported annual sales of $17.9 million, more than double the previous year - but the company still lost $37.4 million, compared with a loss of $34.1 million a year earlier.

Investment in wind power has become an issue in the federal election campaign, with the NDP promising to use the money from the sale of the government's 19 per cent stake in Petro-Canada to establish a Crown corporation focusing on conservation and renewable energy.

But it isn't just the NDP making promises of more green power.

The incumbent Liberals have said they want to quadruple the objective of the existing wind power production incentive, from its current 1,000 megawatts target to 4,000 megawatts. And the Tories have said they will work with the provinces to develop a national strategy for alternative energy and conservation.

The Green party says it will develop renewable and alternative energy sources to phase out fossil fuel and nuclear power within 50 years, and it promises to promote investments in renewable and alternative energy.

The provinces have climbed on the bandwagon.

Ontario has called on private energy producers to put forward bids to build a renewable energy supply as the province has set a goal to have 2,700 megawatts of energy from renewable sources by 2010. And Atlantic Canada's premiers have said wind energy will play an increasingly important role in the region's energy future.

John Keating, CEO of Canadian Hydro Developers, welcomes government investment in renewable energy but he wants to see a broader vision.

"The wind power incentives that the Liberal government has graciously provided should be offered on a similar basis to any certified renewable source, not just one particular renewable source because that's like picking winners and losers," Keating said.

"If there's other alternative renewable sources like wood or water in other parts of Canada where there aren't wind resources, then that's not really fair. We really should provide the same incentives to all certified renewables, such that the market can then choose what's good for this particular region."