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2005-10-04
In this market distributed energy stocks rise
Restructuring Today, October 4, 2005
Hurricanes Katrina and Rita have been good news for distributed energy and alternative energy technology companies.
Distributed Energy Financial Group's (DEFG) four-month-old Distributed Energy Stock Index (DESI) rose 15.4% in the third quarter, outperforming all major benchmark indices like the Russell 2000 (up 4.4%), Dow Jones Industrial Average (up 2.9%) and S&P 500 (up 3.1%).
DESI is a market basket of stock prices including companies that build or sell DG, power quality and storage; renewable generation; demand management, metering and control systems and the technologies that enable them.
Some of the companies included in the index have recorded astonishing gains, including Beacon Power, Capstone and Energy Conversion Devices.
It's not just the hurricanes' destruction that is feeding the rise, said Jamie Wimberly, CEO at DEFG, since many of the companies were "performing well" already.
He sees five "deeper" trends driving the sector:
- Higher energy prices that make new technologies more competitive;
- More frequent power outages as the grid ages and is stressed;
- More government incentives, subsidies and resource portfolio standards;
- New interest by investors; and
- "Growing realization that many energy technologies are actually platforms" with applications in the communications and transportation sectors."
Is it sustainable?
The sector is very volatile, said Tom Brunetto, DEFG managing director, but with so many contracts being signed, he sees the quarter as the long-awaited tipping point for distributed energy. |
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