The current credit crisis could speed consolidation in the renewable energy sector, as utility companies use their cash supplies and access to secure financing to absorb numerous smaller companies that have thus far been individual players in the industry.
A clamp down on the credit market will make it difficult for renewable energy developers to finance new projects, putting utility companies in a strong position to increase their share of the renewables pie, according to a Reuters report.
Utilities have large supplies of cash, and even if they have to borrow, they can do so more cheaply as government-regulated businesses, an analyst at Raymond James & Associates notes.
"The big projects being built by big utilities don’t need to borrow from banks for short-term loans," said JP Morgan analyst Chris Rogers. "But if banks don’t lend to each other they certainly won’t lend to small project start-ups."
For example, Denmark’s BTM Consult estimates that utilities owned just 40% of global installed wind power capacity at the end of 2007, but says that number will likely increase to 80% within five years.
Morgan Stanley predicts that growth of global wind turbine installations will slow from 25% in the past two years to 15% in 2009.
Read the full report.
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