Reuters- An Internet-style bubble is looming in renewable energy stocks with valuations reaching the ozone layer and businesses managing to secure flotations with little or no turnover, a Frenchinvestment fund has warned.
With raw material prices showing no sign of abating, companies that supply renewable energy or equipment such as wind turbines and solar panels could see their margins suffer, Matteo Novelli of Star Innovation at CFD Capital Management said.
“There is clearly a bubble forming in the eco-energy market and there could be a hefty correction at some point,” Novelli told Reuters in an interview on Thursday.
European Union leaders have pledged to get a fifth of the bloc’s energy from renewable fuels like wind, solar and biofuels by 2020, three times the current level.
Political pressure for a cleaner environment and high oil prices have sparked an investment rush into alternative energy.
But Novelli said such businesses were so fashionable that valuations could not be sustained in the short to medium term.
