Investors hate renewable energy, and no wonder. With a history of profit warnings, fierce competition, shifting regulation, ever tighter financing, and yet more profit warnings, the sector is not a screaming buy. The S&P Global Clean Energy index is nearly four-fifths below its 2007 high. So two cheers for Vestas. The world’s biggest wind turbine maker has managed to change the narrative a little: it turned in tidy second-quarter profits and reiterated full-year 2011 guidance. The Danish company’s shares climbed 25 per cent (before retreating in Thursday’s general market sell-off).

Although they are still 55 per cent below their 2011 high, the jump looks a shade overdone. Vestas cannot afford any setbacks if it is to meet its full-year revenue target of €7bn and profit margin before interest and tax of 7 per cent. The order book is solid, but everything depends on delivery, which is prey to factors outside its control, such as the weather and grid connections. There is scope for disappointment, especially since the 2011 earnings are skewed to the second half.

Of course, the issue for the renewable energy sector is not what happens in the next six months, but what might happen in the next six years. With Germany abandoning nuclear power and Italian voters rejecting it, as well as anxiety over a wider European reliance on Russian gas, alternative energy should be in demand. But subsidies are vulnerable to eurozone austerity, and the sector has yet to establish a strong foothold in the US. So the outlook is cloudy.

An investment case can be made, though, on the grounds that the sector is ripe for consolidation. As the wind turbine leader, Vestas could be an attractive target for companies with a growing interest in renewables technology, such as General Electric and Siemens. The company’s long-suffering investors deserve a bit of fair wind.

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