Spread - the first three indicies (+INFIGEN)

I have created the three indexes discussed in the previous post - all in Google Finance, and you can immediately track back from today to see what happened to the index over time. It's not quite right to do, because the index should be updated each quarter or year, and looking backwards, we're not normalising for IPO or share splits.

The chart below shows the spread (by % of the total $ in the fund) of the sub-sectors in the three indexes, and there are some major differences: 

Geothermal takes over if you spend $1 on each company because there are lots of companies in that sector, they are all small companies with low share prices, which is why they drop back with the other techniques.

Solar is always important, but grows as you move to a by cap division, as does the storage sector.

Buying one share of each company biases biofuel because MBT has a share price of $4.42 each, but a size of $44million, i.e. only 10million shares are available. Just that example explains why this is not a sensible way of creating an index.

In either event, the wind sector (really just one company, Infigen) becomes much more important when you use a capitalisation methodology. This was a surprise to me - in the renewable energy sector, there is one company with a size in the share market equal to 10% of the entire sector - and it's a company I don't know anything about! At least that gives me something to look into.  (http://www.infigenenergy.com/)

I'm not sure if the Capitalisation method is really the way to go, but it does make the sectors look reasonably balanced. Perhaps wind is still a bit low when you see that Wind energy currently makes up 10x more of the Renewable energy generated in Australia than does solar.

(http://en.wikipedia.org/wiki/Renewable_energy_in_Australia). 

They're not here because the other companies are private or part of larger groups, see also:

Pac Hydro (part of IFS)

Wind Prospect

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The good thing about writing this blog is that it makes articles I see in the paper more relevant. For instance, having written the above sentence, in the last week, I saw an article in the business section about Infigen hoping to be profitable within two years. 

http://www.theage.com.au/business/infigen-in-the-black-in-two-years-20110830-1jk2u.html

But the interesting little snippet I got from that was this:

"

By around 2014, much of the present surfeit of renewable electricity certificates will have been absorbed

"

I found that an interesting snippet, but I'm not sure why - presumably because the MRET targets are not high enough to really push the energy providers into the renewable sector.
>>>>>>>>>>UPDATED 3/9/11

Infigen was in the news again today http://afr.com/p/opinion/infigen_blown_off_course_by_debt_6vfmg3oGqtyPaJUnYIWOFN
with the gist of the article being about the debt they cuurently have. The paper had created a nice graphic showing price projections over the next twelve months, but as far as I can tell, their only source of opinion was morgan stanley, and then they seem to have have reduced three years of growth into one and suggesting that the price in Aug 2012 could be up 150%.