First published in the Quoted Cleantech newsletter, January 2011. Copyright Cleantech Investor 2011

Nigel Hawkins describes 2010 as an “annus horribilis” for the cleantech sector, particularly from the point of view of investment into the industry. A cursory look at the cleantech indices that we follow shows that the past year was indeed not a good one for cleantech stock performance.

The hardest-hit cleantech sector was the solar industry.  Not only did the Ardour Solar Energy Index fall by 29.2% during the year, but the Deutsche Bourse’s ÖkoDAX index of the ten largest Germany-listed renewables companies fell even further, by 35.4%.

ÖkoDAX currently includes solar sector shares Centrotherm Photovoltaics, Phoenix Solar, Q-Cells, Roth & Rau, SMA Solar Technology and SolarWorld, all of which saw falls in the share price of between 24.6% and 77.7% last year.

That the solar component of the ÖkoDAX index fell by a larger amount than the more global Ardour Solar Energy Index suggests that European cleantech shares fared worse than their counterparts in other regions during 2010. This is supported by the fact that the NASDAQ Clean Edge Green Energy Index (CELS), which is primarily focused on US cleantech stocks, actually increased by 2.1% last year (the only one of our indices to do so). Meanwhile, the FTSE ET50 index, which tracks the largest 50 ‘pure-play’ environmental technology companies worldwide, lost only 6.3% of its value in 2010.

Cleantech Indices 

The disparity in performance between US renewable energy companies and those in the eurozone could be ascribed, in part, to the continuing beneficial effects that President Obama’s ‘StimPack’ measures have had on US cleantech projects and companies since it was introduced in early 2009. A more likely reason, though, has been the negative effect that the sovereign debt crises that plagued certain eurozone countries during 2010 have had on the appetite for cleantech investment. While a number of European governments have had to cut back on schemes designed to promote renewable energy investment, investors generally fled to the perceived safety of commodities like oil and gold during 2010.

Despite 2010 being a tough year generally for cleantech, the sector did benefit from the ‘Santa rally’ that occurred in December. While the month saw the FTSE100 and the Dow Jones get back to levels they last saw in the summer of 2008, all the indices that we track posted healthy gains during the period.

Ironically, it was the worst performer of the year, ÖkoDAX, that achieved the biggest increase (9%) in December, while the index that managed to achieve an overall gain for the whole of 2010, NASDAQ’s CELS index, achieved the smallest rise during the month (3.8%).

Could December have been the turning point? Perhaps, but don’t hold your breath!