The European and U.S. renewable power sectors are in the doldrums, and energy efficiency companies will be a better investment this year, Impax Asset Management Group Plc Chief Executive Officer Ian Simm said.
In Europe, concern that countries may have to cut renewables subsidies to restore confidence in their ability to repay sovereign debt weighs down sentiment, Simm said today in a phone interview. In the U.S., the absence of a federal renewable portfolio standard that would provide a long-term spur for wind and solar power hurts confidence in the industry, he said.
Impax, which invests in renewables, waste treatment and water, today said assets under management increased 44 percent to 1.8 billion pounds ($2.8 billion) in the year through September. The shares rose 5.2 percent to 71 pence in London. The year saw energy efficiency investments perform “very well” while alternative power did “relatively poorly,” Simm said.
“The experience in 2010 has set up our office for 2011 so we still see energy efficiency as benefitting significantly from high and probably rising oil prices around the world, and we still see a downside in renewable energy,” Simm said.
The executive declined to name specific stocks. The London-based company’s analyst presentation shows Impax looks at an “investment universe” of about 1,400 companies, including U.S. meter-maker Itron Inc., Dublin-based Kingspan Group Plc, which makes insulation panels, and renewable power companies such as Vestas Wind Systems A/S and Gamesa Corporacion Tecnologica SA.
Renewables flagged last year, with the FTSE Renewable and Alternative Energy Index declining 8 percent while the FTSE Energy Efficiency Index advanced 25 percent.
“Sentiment for European renewable energy is still in the doldrums, and probably the same can be said in the U.S., where power prices are low,” Simm said. “The renewable energy sector in the U.S. is at best stumbling forward.”
Between financial year-end in September and Dec. 21, Impax’s assets under management expanded further to 2.3 billion pounds, the company said.
Impax is “well-positioned” for further growth, and that areas of focus for renewables in Europe will be Germany, France and Italy, Simm said.
The company is “certainly not planning to deploy any more capital into Spanish renewables in the short term because the regulatory situation has been highly unpredictable,” he said, referring to changes in subsidies that have been announced though not yet approved by parliament.