When most of us think cleantech, our minds immediately leap to how cyclical the respective businesses that comprise it can be. On a given day we might see a solar venture go bust, wind energy that is too expensive to use, or even nuclear power that leads to the tragedy that was Japan last year.
What we’re not often exposed to is the incremental improvement that various forms of cleantech, such as wind and solar, have made. In 2009, Tempe-based First Solar became the first solar company in the world to lower its manufacturing cost to $1 per watt. They have since reduced that cost to $.73 a watt.
Many are unaware that hydroelectricity now supplies 75% of New Zealands’s power needs and 99% of Norway’s. And waste biomass, a relatively new entry into the cleantech lexicon, has been described as “the new coal”.
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A little more than two years ago, Standard & Poor’s and the TMX Group, which operates the TSX, announced the launch of a new investment index to track cleantech companies. The performance of these companies would seem to suggest that the training wheels are finally off the cleantech sector. Those investing in the twenty component companies would have beat the overall TSX performance handily at any point since the index was launched. The S&P/TSX Clean Technology is currently up 9.73% since it was launched in March, 2010, while the TSX is down 2.25% over the same period.
With commodities slumping, is it time for investors to look at some of the outperforming Canadian cleantechs right under their nose? Perhaps they should. Led by Westport Innovations (TSX:WPT), the S&P/TSX Clean Technology contains some of the biggest individual successes in the recent history of the entire exchange.
Vancouver’s Westport has taken its lumps of late, falling from a high of more than $48 in March to close at $27.31 today, but the company has paced the gains of the index for much of its existence. Formed out of a research project by Professor Philip Hill at the University of British Columbia’s Mechanical Engineering Department., Westport has become a world leader in natural gas engines, and has created valuable strategic partnerships with some of the world’s largest engine and vehicle manufacturers, such as Volvo, Kenworth, and Cummins. T
Meanwhile the chart of Oakville-based Algonquin Power (TSX:AQN) has gone nowhere but up. Algonquin was formed as an income fund in September, 1997 to buy hydro facilities in Ontario, Québec, New Hampshire and New York. After the Canadian government decided to change the favourable tax laws for income trusts in 2009, it converted to a corporation. The company now generates about 165 megawatts of hydro, 210 megawatts of thermal energy and more than 120 megawatts of wind power in Manitoba and Saskatchewan.
Another component of the index that recently converted from income trust to equity is Northland Power (TSX:NPI). Northland’s solar, wind biomass and run-of-river projects concern, generate near a thousand megawatts of generating capacity, or enough to power all but the largest of cities in Canada. Northland currently has more than a dozen solar projects in Ontario in advanced development
And Longueuil, Quebec’s Innergex Renewable (TSX:INE) began to hit its stride shortly before being included in the index. Innergex ramped its operations up to today’s level of nearly two-dozen hydro projects, several wind farms, even a solar project in Ontario. With a focus on carefully choosing the right projects, Innergex has grown its revenue from $6 million in 2007 to more than $91 million in fiscal 2010. (For Cantech Letter’s recent interview with Innergex CEO Michel Letellier, click here)
Another winner for the index has been NewAlta (TSX:NAL). Newalta is basically is a one stop industrial waste shop, offering best of breed solutions in everything from soil remediation, hazardous waste management and water well assessments. With its size, NewAlta has network of 85 facilities from coast to coast, scope and unparalleled connections to the patch, NewAlta may ultimately act as a liaison between the brightest new technologies and Fort McMurray.
For a complete list of the component companies of The S&P/TSX Clean Technology index, click here.