Thursday, December 8, 2011

NYSE Euronext and Bloomberg New Energy Finance partner on launch of family of clean energy indices
Today, NYSE Euronext in partnership with research company Bloomberg New Energy Finance will launch three regionally-focused clean energy stock indices, enabling the quoted companies most active in the world's historic shift to low-carbon energy to be tracked in unprecedented detail.

The indices, covering respectively the Americas, the Europe, Middle East and Africa region, and Asia and Oceania, are the first of a new family of clean energy indices that the partners will start publishing over the next few months. The next ones to emerge will be an index tracking shares of solar power companies; another tracking wind company stocks; one tracking equities of companies specializing in energy-smart technologies such as efficiency, storage and smart grid; and another tracking the shares of companies involved in electric vehicle development.

The three regional indices being launched today each presently follow a basket of between 125 and 325 companies with a moderate, or greater, exposure to renewable energy and energy-smart technologies. These sectors have seen rapid growth in capital spending - with global new investment in clean energy reaching a record $243bn in 2010, [a 30% increase over 2009], but also sharp shifts in market share and geographical profile. Even before launch, the three new indices cast intriguing light on the evolution of the sector. Following the boom in wind farm development in China, that country's export success in solar panels and other Asian countries' progress with battery technology, there are approximately as many equities that qualify for the ASOC regional index as there are in the EMEA and Americas regional indices combined.

“The new indices provide a solid foundation for tracking the regional exposures by domicile for clean energy initiatives while accurately weighting each company’s economic exposure to their respective sector,” said George Patterson, managing director European indices at NYSE Euronext Global Index Group, “NYSE Euronext is pleased to collaborate again with Bloomberg New Energy Finance in providing innovative products to the marketplace.”

Michael Liebreich, chief executive of Bloomberg New Energy Finance, commented: "There are several clean energy equity indices already available to investors - including the NEX index we helped launch in 2006 - and they have done a good job in informing the market about the overall trends. However there is a need for more detail, particularly about the differing growth prospects for clean energy companies in regions of the world. Asia for instance has taken over as the most dynamic area for clean energy investment, while the Americas are playing host to entrepreneurial effort in first- and second-generation biofuels and a take-off in wind development in Latin America."

Bloomberg New Energy Finance decided to partner with NYSE Euronext, to benefit from the latter's experience in indices and exchange-traded funds. NYSE Euronext has been involved in developing and calculating clean energy equity index products for the better part of a decade. Liebreich said: “By working with NYSE Euronext, we ensure that our family of indices will generally be tradable and innovative, and serve as extraordinary research tools."
The three NYSE-BNEF regional indices being launched today will be known officially as NYSE-BNEF Asia Oceania Clean Energy Index (ticker NBASCEUP); NYSE-BNEF Europe, Middle East and Africa Clean Energy Index (ticker NBEACEUP); and NYSE-BNEF Americas Clean Energy Index (ticker NBAMCEUP).

The new indices are based on Bloomberg New Energy Finance's database of organizations involved in clean energy and related sectors. This database has unique depth, incorporating the clean energy exposure of each company, ongoing expert analysis of sector definitions and boundaries, constancy of data upkeep and a true global approach to tracking all equities regardless of which exchange they are on. Bloomberg New Energy Finance analysts are presently tracking well over 1,000 non-OTC quoted organizations with a moderate (10% or greater) percentage of their activity in clean energy.

The table in the attached release shows that in the first 10 months of 2011, the performances of the three new indices varied widely, with the Asia-Oceania index down 33%, while the Americas and EMEA indices were 17% and 14% down. Figure 1 in the attached release shows that despite recent falls, all three indices remain above their lows of late 2008 and 2009.
In the US, where virtually all of $65 billion in funding for renewable energy has already been deployed, the "renewable energy sector must attract new investors and make use of unique tax-based financing structures in the next 18 months or risk a sharp drop in new project builds," according to a recently published white paper by BNEF.

"Since 1999," the report states, "The production tax credit has been allowed to lapse by Congress on three occasions, with each lapse resulting in a precipitous drop in new wind installations." The Treasury Department's cash grant program is due to expire at the end of this year.

However, the report continues, there remains a "vast pool" of potential tax equity supply in the US. The participation of even a small number of the nation's 500 largest companies "could narrow the gap between demand and supply."

Furthermore, rates of return for many renewable energy projects "can meet hurdle rates for both developers and investors," the report states. Analysis of wind power projects by BNEF reveals that developers can enjoy returns of as much as 19%, while returns for investors could reach 49%.

Bloomberg New Energy Finance
Press Release dated November 28, 2011
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