Renewables still have a highly favourable outlook, although the market shows significant fluctuations and subsidy cuts are expected. Renewable energy technologies still have a highly favourable outlook, although this market shows remarkable fluctuations and stock performances of companies still depend on decisions to be taken on subsidies.
The latter was emphasized in a recent report by Credit Suisse, which points out that costs are constantly diminishing (for instance, the average price of photovoltaic solar energy is 75% less now than it was in 2008), while those of fossil fuels keep growing.
Nevertheless, the Swiss institute specifies that «renewable technologies are becoming less dependent on subsidies, however most of them, particularly solar, will still rely on subsidies for a few years».
Also Eurelectric (the association that reunites European electricity companies) agrees that renewables are now ready for free competition. For this reason Eurelectric calls for more coordinated national energy policies and more harmonized market rules, but also asks the European Union to reduce possible subsidies, in order to promote the development of more efficient and more cost-effective technologies.
What is certain, Credit Suisse rightly asserts, is that present market conditions offer interesting opportunities for investors. Particularly for companies like Enel Green Power, with the right geographic diversification (producing the overall effect of mitigating country and regulatory risks) and a well-balanced technology mix, with high capacity usage and limited energy generation depending on incentives. In particular, the latter allows EGP to suffer less than other competitors from possible negative trends of regulatory systems.