Wind Energy Investing: What You Need to Know

You may not notice it, but wind is everywhere.

It’s a fact of life that at the most inconvenient times, a strong breeze can and will blow away that important paper, your well-composed hairdo, or your lunch.

But surely you also know that power can be used for good.

With enough power behind it, wind can provide energy for your home, your car, your office.

And wind, like solar and hydropower, is completely clean energy.

That’s why it’s fast become one of the biggest sources of clean energy all around the world! In fact, as popular as portable panels and solar roof tiles are, the U.S. currently has over 3.5X more wind capacity than it does solar.

us renewable energy supply

Both wind and solar have made up the majority of the country’s clean energy growth for years. Even without the Clean Power Plan or the Paris Agreement in effect, there’s no stopping the spread of renewables across the U.S. and, indeed, all over the world!

Investors in the space may have noticed that wind stocks aren’t exactly flying sky high.

Ever-changing regulations, as well as the question of whether or not climate change is a real thing, have put a damper on much of the hype that once surrounded this energy source.

How Wind Power Works

Wind is one of the oldest forms of energy we have.

old windmill

Thousands of years before electricity was even a concept, people were using windmills to harvest the power of this natural energy source.

As the name implies, these early wind-harvesting mechanisms were used to mill corn and grain. The wings of the windmill would spin, turning a set of grinders below.

Today, they’re a little more complicated.

Rather than attaching to a grinding mechanism, today’s wind turbines are attached to generators.

When the wings of the turbine are turned, they spin a large shaft, which moves through the generator to produce the energy. The larger the turbine, the more energy is produced.

Still, it’s rare to see just one turbine by itself. Usually a fleet of several is needed to create a significant amount of energy.

That’s due to two points that are imperative to how we approach wind power:

  • Turbines still run at comparatively low efficiency
  • Wind is everywhere, but not constant

In other words, wind power, while clean and free, is still highly variable and often inconsistent.

Energy storage solutions are being deployed to help cover demand when the wind isn’t blowing, but improvements in turbine efficiency are also going to be essential to the expansion of the world’s wind energy infrastructure.

Right now, the best wind turbines we have can run at about 45% efficiency in perfect conditions.

It’s that bit at the end that makes wind so questionable: conditions aren’t always perfect, and traditional fossil fuel and nuclear plants run no matter what the weather looks like.

Still, the move toward clean energy has made wind energy technology an attractive investment for years.

You might not know it to look at the stocks today, but many of the best companies in the field are simply suffering from poor investor sentiment.

The industry took its biggest hit in 2015 when it was announced that the investment tax credit (ITC) and the production tax credit (PTC) that offered tax rebates to installers of solar and wind power would be phased out by the end the end of 2023.

For wind installers, time is of the essence, as these tax credits are being phased out even faster.

As of 2016, the credits were cut to only 30% of their original offering.

In 2017, that number will drop to 26%.

In 2018, it will be just 18%, followed by a drop to 12% in 2019 before being phased out entirely.

Does that mean there are no benefits to wind installers?

Of course not! Many state-level mandates still offer clean energy installers benefits, and reduced subsidies have not stopped the growth of wind energy.

The world is still pushing for cleaner energy at (almost) any cost.

Here’s where wind power is thriving the most…

Who Has the Most Wind Power?

As of the end of 2016, the world had 486,749 megawatts of installed wind energy capacity, according to the Global Wind Energy Council (GWEC).

In GWEC’s latest Global Wind Energy Outlook report, the organization estimated that wind could be supplying as much as 20% of the world’s energy needs by 2030. By then, GWEC explains, the world’s capacity could reach 2,110 gigawatts, attracting investments of more than $235 (€200) billion per year.

The only caveat to these estimates is that they were made just as the global Paris Agreement was going into force and before President Trump pulled the U.S. out of it.

Of course, given how much wind is still growing in the U.S., that may not be as big a factor as some made it out to be.

In fact, throughout 2016, growth in solar and wind capacity outpaced growth of natural gas, accounting for nearly 60% of all new utility-scale energy installations.

Natural gas has long been touted as the bridge between fossil fuels and renewable energy, as it’s cleaner than traditional coal power and currently very cheap.

If renewables are outpacing it already, we may yet see clean energy take over.

The U.S. Energy Information Administration estimates that renewables will be producing more energy for the country than coal by 2040, and gas wouldn’t be far behind.

As for the rest of the world, wind has already made a major impact.

By a wide margin, the largest installer of wind energy as of 2016 was China, with 168,690 MW installed at the end of the year. It also had the highest growth, with 23,328 MW installed for the year.

China is one of the largest energy markets in the world. The country consumes more than 5,920 terawatt-hours of energy per year.

It’s a major energy importer and one of the largest consumers of coal power in the world.

Coal, dirty though it’s been proven to be, is cheap, abundant, and reliable. Its energy can be produced at any time of day in any weather — which is why it still covers a large portion of the world’s energy needs.

However, China is a prime example of why countries are turning to renewables to replace it.

China Sinking Smog

That’s not a fog rolling in.

It’s smog choking Beijing, caused by high volumes of fossil fuel cars and energy production. In and around cities, medical facemasks have become essential to Chinese citizens wishing to go outside. Thousands of deaths per year are attributed to the polluted air.

Wind provides China with a strong, smog-free alternative. The country continues to be the largest installer of the technology and plans to grow its wind capacity by 403 GW within the decade.

As of 2016, the U.S. was second place in wind power, with the installation of 8,203 MW bringing the country’s total up to 82,184 MW.

According to the American Wind Energy Association (AWEA), the biggest states for wind energy as of early 2017 were Texas with 20,321 MW, Iowa with 6,917 MW, Oklahoma with 6,645 MW, California with 5,662 MW, and Kansas with 4,451 MW.

The most growth in wind is expected in several of these states, too:

wind vision

You’ll notice that many of the coastal states are taking advantage of offshore wind as well as onshore. Offshore wind farms are more expensive to build but offer states the opportunity to build more capacity without taking up valuable land resources.

Keep in mind that the larger the turbine, the more room it needs, which can restrict where farms can be erected. Offshore wind is often a useful alternative.

The next biggest country behind the U.S. is Germany, which notably was powered entirely by renewable energy for a day in 2016.

The country installed 5,443 MW of wind capacity that year, bringing its total up to 50,018 MW.

These are just the biggest places wind energy can be found. Countries all over the world are increasing investments into wind and planning for a cleaner energy future.

That said, here are just a few wind energy stocks that will be valuable investments as this clean power source really takes off.

General Electric (NYSE: GE)

GE chart

GE has long been a household name in energy and devices of all kinds that run on it. You’ve probably seen its logo on things like refrigerators, washers and dryers, and light bulbs.

However, you may not be as aware of the massive clean energy branch of its business.

GE is a leader in solar and wind energy solutions, and it even produces the technology itself.

The company offers a range of wind turbine designs, from onshore turbines made to handle low- to high-wind environments and everything in between, to offshore turbines that can be deployed more affordably than many of its competitor’s designs.

The company has sent wind turbines and the technologies to sustain it across the U.S. and overseas to China, India, Brazil, France, and Germany.

GE provided all 240 wind turbines that make up the largest onshore wind farm in Europe, the Fântânele-Cogealac in Romania. The farm has a nameplate capacity of 600 MW and was brought online in 2012.

This company is also responsible for the first offshore U.S. wind farm, which came online in May of 2017. It was built off the coast of Rhode Island and has a nameplate capacity of 30 MW.

And just to solidify its place in the wind energy space, GE completed its acquisition of LM Wind in 2017. LM Wind is a European wind turbine blade maker that’s been in operation since the 1970s. It expands GE’s production assets and business reach all over the world, with production facilities in China, India, Canada, Brazil, the U.S., Poland, Turkey, and Spain.

Vestas Wind Systems (OTCMKT: VWDRY)

vestas chart

Vestas is a dedicated wind energy company headquartered in Denmark. Much like GE, it operates all over the world.

The company develops, manufactures, and offers maintenance for wind farms of all sizes. It has turbine production facilities all over Europe in Denmark, Spain, Germany, and Italy, in both China and India, in Brazil, and in Colorado in the U.S.

Vestas’ farms can be found in Kenya, Australia, Sweden, Finland, all across the U.S. and Denmark, and more!

These projects can vary wildly in size. In 2017 alone, the company has taken orders for wind turbine energy plants from as small as 31 MW to as large as 348 MW, from countries all over the world including China, Mexico, Ukraine, Austria, and Norway.

The company is also making its first foray into the Russian wind energy market and will be supplying Russia’s Fortum Energy with onshore turbines. Vestas will be building production facilities in Russia to “comply with the local content requirements.”

NRG Energy Inc. (NYSE: NRG)

NRG chart

NRG Energy is a fully integrated U.S. energy company headquartered in Houston, Texas.

The company has a number of clean energy subsidiaries, several of which deal directly with wind power.

NRG as a whole provides equipment and services to both utility-scale and distributed wind power farms. It claims ownership of 32 wind farms located in 12 states across the U.S. that, combined, produce about 3,000 MW of electricity.

Its wind assets include seven wind farms in Texas alone and the largest wind farm in California. If you remember the map above, you’ll see that the fast-paced growth of wind in these states has been in large part due to NRG’s technology.

These companies are just a few examples of what you can expect from wind energy moving forward.

Countries all over the world, whether they are part of the Paris Agreement or not, are pulling back on coal use in order to reduce pollution and slow climate change.

At this point, it doesn’t matter if you believe in climate change or simply want to see coal out the door for good. Renewables are looking to be a bigger part of our energy mix than ever before, and now’s the time to start buying in.

Angel Publishing Investor Club Discord - Chat Now

Hydrogen Fuel Cells: The Downfall of Tesla?

Lithium has been the front-runner in the battery technology market for years, but that is all coming to an end. Elon Musk is against them, but Jeff Bezos is investing heavily in them. Hydrogen Fuel Cells will turn the battery market upside down and we've discovered a tiny company that is going to make it happen...

Sign up to receive your free report. After signing up, you'll begin receiving the Energy and Capital e-letter daily.