Government plans to invest £100 billion into cleaner energy production have opened up opportunities for investors looking to profit from the green revolution, writes Ali Hussain.

Under the plans, an extra 4,000 onshore and 3,000 offshore wind turbines would be needed, prompting investors to look at the technology as a good bet for future returns.

Wind power is the preferred technology in the Black Rock New Energy investment trust, for example, making up nearly half of the portfolio.

Manager Sandy Christie said: “Much of the EU’s ambitious 2020 renewable energy and carbon reduction targets are based on wind power, providing companies with a strong framework upon which to build their business plans.”

The investment trust has significant holdings in Clipper Windpower in the US as well as Vestas Wind Systems in Denmark.

Simon Webber, manager of Schroders Global Climate Change Fund, also prefers wind over solar energy.

He said: “The wind industry has a relatively small number of players able to compete, whereas solar has had many more start-ups competing for market share and, therefore, could see over-supply problems develop.”

He likes the Spain-based company Gamesa, whose largest shareholder is Iberdrola, one of the biggest wind-power developers in the world.

Like Christie, he also thinks Vestas Wind Systems worth looking at. “We have been trimming it in favour of Gamesa due to the latter’s more attractive relative valuation,” he said.

Webber said one of the best British players in the wind industry is Hansen Transmissions, though he recently sold the stock after it performed extremely well and reached his price target.

“We would look again at buying into the stock if it were to come down to better levels. The company manufactures gearboxes for wind turbines, and there is a shortage of such specialized components, whereas making blades and other parts is relatively less complicated. With demand for building windfarms growing strongly, we expect companies such as Hansen to enjoy strong pricing power.”

Another interesting play on renewables, according to Webber, is Plum Creek Timber, one of the largest private landowners in North America.

He said the company should benefit from a move by certain utilities towards the burning of biomass, such as wood, as they strive to reduce carbon emissions.

UK company Drax, for example, recently announced plans to build a facility in a power plant in the north of England, reportedly capable of handling around 1.5m tons of biomass per year. Webber said it was likely that it would import wood from North America for fuel.

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