Gediminas Jasionis

Wind Power and Gamesa Corporation: 2007 in Review, 2008 in Expectations

by Gediminas Jasionis Jan 21, 2008

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Gamesa, a renewable energy company specializing in wind generators and solar power, blew through its old records with its recent announcement of its 2007 performance. In 2007 alone, Gamesa Corporación Tecnológica (GAM.MC), achieved in-site installations of wind generators worldwide amounting to over 3,000 MW, of which 1,350 MW were in Spain. All is not rosy, however, as the performance figures fell short of forecasts, resulting in a 20% stock price drop in November, and as yet the stock has shown little sign of recovering.
Gamesa wind generators
Over half of the installed wind power capacity in Spain is thanks to Gamesa wind generators, making Gamesa the largest contributor to Spain's renewable energy development. Gamesa leads the wind power industry with respect to job creation, employing a 4,500-strong workforce in Spain, with another 2,300 employees internationally. Gamesa is also the largest Spanish exporter of wind generators.

Whether in Spain or elsewhere, many wind generators carry the mark "Made in Spain," with Gamesa holding an estimated 16% of market share worldwide. The company has a substantial international industrial presence, with seven production facilities in the United States and China. These facilities produced 1,000 MW of generator capacity in 2007, direct to these major markets. Strategic customers have committed to purchasing 8,000 MW from Gamesa, 2.5 times its production in 2007. The company's performance in 2008 will depend on whether it can gear up to meet the escalating demand for its wind generators. In the first nine months of 2007, Gamesa boosted production capacity by 36% to 3000 MW per year, which may be some indication of what kind of production increase is achievable in 2008. Shortfalls in deliveries were in part responsible for the plunge of Gamesa stock back in November.

The European Union is united in the desire to place more emphasis on clean, renewable energy sources in an effort to reduce dependence on foreign oil and help curb global warming by reducing CO2 emissions. Gamesa is already ahead of the game, having installed over 10,000 MW of wind generating capacity in 20 countries on four continents. This would be enough to power a large city like Madrid for six years and would save 7.5 million tons of petroleum and reduce CO2 emissions by 51.9 tons per year. Care must be taken in interpreting such figures, as wind generators seldom come close to reaching full capacity, since the wind does not always blow.

However, the European Union is not united on the precise path forward. Controversy surrounds the pending January 23 release of the European Union's package on renewable and clean energy, such as wind and solar power. According to Reuters, Spain and Germany filed a formal protest letter to energy commissioner Andris Piebalgs, alleging that the pending EU policies would undermine existing policies in these two countries. Whereas the EU commission seeks to encourage trade in renewable energy by privatewind_gamesa.JPG companies, Spain favors its government-regulated system already in place. Spain allows utility companies to buy renewable energy from clean sources at government-set prices above market rates. The changing European market and regulations may directly impact Gamesa's performance in the near future.

The winds of change are blowing. For better or worse for Gamesa? That is the question.

http://www.gamesa.es/index.php/en

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