Concerns are mounting that the renewable energy market in America may be close to its peak after Goldman Sachs, a barometer of the industry, put its Horizon Wind Energy business up for sale for an estimated $1.5 billion (£760 million).
The reasons for the proposed sale, after just 18 months of ownership, were not clear, although many analysts said that it could be in response to huge uncertainty surrounding the wind power industry.
Will Ainger, co-editor of SparkSpread, the online US power industry resource, said: “Lots of bankers look at Goldman Sachs as the weathercock of the energy industry and so many are assuming that it is now calling the top of the market.”
Rudolf StÃ¼tzle, director of project finance at HypoVereinsbank in New York, said: “There is a large amount of uncertainty surrounding the industry . . . and this is causing a good deal of concern among its leading players.”
The uncertainty stems from a production tax credit, worth about 1.8 cents per kilowatt-hour of energy produced, which will lapse at the end of next year.
In many cases, the tax credit can be the deciding factor in whether or not a new plant is set up. Although the Congress extended the provision, contained in the Energy Policy Act of 1992, as recently as July 2005, analysts say that there is no guarantee that it will be extended again. At the same time, there is a huge shortage of turbines as blade manufacturers have failed to keep up with the phenomenal growth of the wind-farm industry.
Although the acquisition price of Horizon, formerly known as Zilkha Renewable Energy, has never been revealed, analysts expect Goldman to have made a hefty profit on its investment.
They speculate that the bank has decided to take a good profit now, rather than risk losing money if the tax credits do not get extended or the shortage of blades curtails the company’s growth prospects.
Horizon presently has 1,324 megawatts of projects in operation or under construction.
Goldman Sachs declined to comment on the sale.
By Tom Bawden
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