Plans to connect future offshore wind energy to the UK national grid are being firmed up with proposals to create new offshore transmission licences which will be competitively tendered from June 2009.

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Germany’s Enercon will supply turbines to two Scottish wind farms under development by RWE npower renewables, a subsidiary of Germany energy firm RWE.

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According to a Solarbuzz market report, solar investment in the Czech Republic increased 17 fold since 2007 due to the strong feed-in tariff there. Last year 50.8 megawatts of solar plant were installed in the Czech Republic compared to just 3 megawatts in 2007 representing a huge increase in solar investment. The Czech solar market, although still small compared to the European renewable giants Germany and Spain, has grown exponentially since the introduction of a feed-in tariff in 2005.

The Czech feed-in tariff has been extremely successful at attracting investment as it pays the highest rate for renewable electricity of any other European tariff. Currently set at 12.79Koruny per unit of energy fed-in to the grid (44p), the rate makes solar investment a very viable option for investors looking to diversify their portfolios by moving towards green shares. In the light of the recent economic downturn and the drawing in of purse strings in most sectors, solar offers investors a yield on their investment protected by government legislation. The Prague government has set itself the target of reducing its carbon emissions by producing 8 per cent of its energy by renewable means by 2010 and will therefore look to protect the solar industry within its borders.

While the Spanish solar market is still 48 times bigger than that of the Czech Republic, the Spanish sector has experienced a slowing due to the reduction of the rate of its feed-in tariff when the 500 megawatt cap was reached bring the rate paid down from 0.42 euros to 0.32 euros. This fall in the feed-in tariff rate was reflected by a marked reduction in Spanish solar plant and provides a warning to governments looking to sustain a boom over a long period. Jenny Chase of New Energy Finance commented that,

“I know some developers that were in Spain are now in business school because the market’s over, and some have moved to the Czech Republic”.

The Spanish example of the shrinkage after the initial 2007 boom will provide a warning to governments looking to implement their own feed-in tariffs in the near future. Certainly, the Department of Energy and Climate Change (DECC) will implement the feed-in tariff in the UK by the end of 2010 and are currently undergoing consultancy as to how to finance the tariff. Industry insiders have petitioned the government demanding at least a 40p/unit rate for electricity fed-in to the grid over a long term period of around 20 years. The Czech government have been extremely successful thus far and will continue to use their tariff system to attract investment in solar.

Fund manager Pascal Schuler of Swisscanto, the Swiss banking joint venture has asserted his belief that renewable stock will offer the best return for investors in the post financial crisis climate, certainly when compared against fossil fuel investments. Speaking specifically about the Swisscanto Fund Green Invest Equity, Schuler commented that portfolios based on traditional fossil fuel energy such as natural gas, coal and petro-chemicals would prove to be unsustainable within the next 20 years.

Schuler believes that the combination of fossil fuel degradation along with the global move towards renewable energy in light of international carbon reduction treaties will give green stocks a sustainability which will be robust against market fluctuations.

“Water, solar and wind energy are areas where we invest in the long-term, as there is an over-average growth potential when financing kicks off again. Banks will prefer them when they start lending,” commented Schuler who sees green stocks as a healthy, high yield option.

Investors will be attracted to renewable sectors in countries where there is comprehensive legislation in place to protect investment and ensure a long-term viability for capital injected into new, renewable technology. Many governments have introduced feed-in tariffs as a way of attracting investment by offering long-term contracts to renewable investors with a fixed, premium rate guaranteed for any megawatts fed-in to the national grid. Certainly in Germany, this particular system of tariffs has been an extremely successful way of offsetting the cost of generating electricity by renewable means rather than by traditional fossil fuel methods. Many inside the industry will be hoping for a similar system to be introduced in the UK in 2010 but until then Germany has proved to be a hotbed of green technology especially in regards to photovoltaic (PV) technology.

The Swisscanto green fund, worth around $205 million has already taken an interest in German renewable stock and is looking to build its portfolio in the German PV sector. The fund has plans to invest in German renewable sector companies SolarWorld, SMA and Wacker Chemie and will certainly look elsewhere once other countries have strong legislation in place to kick-start the renewable energy industry.

Schuler finished by saying, “We will continue to invest in this segment but focus on companies which have a strong balance sheet and are able to survive this crisis.”