So, How’s Your Green Energy Stock Doing?
Guest post By Steve Goreham Originally published in The Washington Times
Is green energy a fad that has run its course? The investment community seems to think so. RENIXX® World, the Renewable Energy Industrial Index of the world’s top green energy companies, hit an all-time low below 146 on November 21, down more than 90 percent from the December 2007 peak.
The RENIXXindex was established in 2006. It’s composed of the world’s 30 largest renewable energy companies with more than 50 percent of revenues coming from wind, solar, biofuel, or geothermal energy, or the hydropower or fuel cell sector. The index includes equipment producers, such wind turbine companies Vestas (Denmark), Gamesa (Spain), and Suzlon (India), solar equipment companies such as First Solar (USA), Suntech Power (China), and Sun Power (USA), and also utilities such as Enel Green Power (Italy) and China Longyuan Power Group. Of the 30 companies, 10 are headquartered in China, 10 in Europe, and 7 in the US.
During the heydays of 2007 and 2008, the RENIXX index was on a roll. Former Vice President Al Gore’s book An Inconvenient Truth reached number one on The New York Times best seller list in July, 2006. His documentary movie by the same name became a worldwide hit the same year. In December 2007, Mr. Gore shared the Nobel Peace Prize with the Intergovernmental Panel on Climate Change. The world was whipped into global warming frenzy.
Subsidies and mandates for green energy existed for many years, but during 2006—2008 governments redoubled the emphasis on renewables. California enacted the Global Warming Solutions Act in 2006, establishing greenhouse gas emissions targets and renewable mandates. Illinois, Michigan, and other states passed or strengthened Renewable Portfolio Standards, requiring electrical utilities to buy an increasing percentage of renewables or pay fines. The European Union approved the Climate Action and Renewable Energy package in 2008, requiring increased renewable energy and biofuel use and tighter emissions restrictions.
Money poured into green energy stocks. Kevin Parker, Director of Global Asset Management at Deutsche Bank, talked about Mr. Gore and a green investment fund that the company created: “He [Al Gore] impressed us all at Deutsche Bank Asset Management. We invited him to an internal meeting in April, 2007 during which we discussed the issue of climate change extensively. A few months later, he received the Nobel Peace Prize for his commitment. We then created a fund that invests in companies that position themselves as climate-neutral. Within two months almost 10 billion dollars flowed into this fund. Can you imagine? 10 billion! There has never been such an overwhelming success.” The RENIXX index rocketed to over 1,900 in December of 2007.
But the subsidy-driven green energy wave soon hit a brick wall of fiscal reality. Spain paid solar operators up to ten times the rate for conventional electricity with a 20-year subsidy guarantee. With a guaranteed annual return of 17 percent, every hombre entered the solar business, making Spain the largest solar cell market in 2008. But the nation’s subsidy obligation soon mounted to $36 billion dollars. In 2009, Spain cut the subsidies and its solar market dropped by 80%.
In Germany, feed-in tariffs of eight times the market rate resulted in the installation of over one million roof-top solar systems by 2010. But the 20-year guarantee also produced a subsidy obligation of over $140 billion. German electricity rates climbed to the second highest in the world and continue to climb to pay for green energy. To stop the bleeding, Germany cut feed-in subsidies three times in 2011 and announced a complete phase-out by 2017. Spain, Germany, Italy, Netherlands, the United Kingdom, the United States, and other nations cut subsidies for wind, solar, and biofuels during the last three years.
At the same time, solar manufacturers built huge capacity to meet expected demand for green energy. But with cuts in subsidies, demand crashed and so did solar cell prices. Dozens of companies went bankrupt, such as German companies Solon and Solar Millennium, and US-based Solyndra.
The failure of global climate negotiations also drove the RENIXXindex down. Investors expected a binding agreement from negotiations, but no pact could be reached at the 2009 Copenhagen, the 2010 Cancun, or the 2011 Durban conferences. The current climate conference in Doha, Qatar is also unlikely to produce a binding agreement.
It’s interesting to note that a single oil company, Exxon Mobil, has a market capitalization of over $400 billion, or about 40 times the capitalization of the RENIXX index of the world’s top 30 renewable companies. It looks like investors are betting on oil and not green energy.
Steve Goreham is Executive Director of the Climate Science Coalition of America and author of the new book The Mad, Mad, Mad World of Climatism: Mankind and Climate Change Mania.
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Green energy being a valuable commodity was always a bit like saying one tulip bulb was worth 5 million dollars.** It works, the same as any Ponzie scheme, as long as idiots are piling in down below with more cash to support the scam.
But Ponzie schemes always eventually fail, when they get impailed upon the spike of reality.
** The Dutch tulip bubble.
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Financially its bubble burst a while back. As to “green energy” I really hate that term and always have. First you need to separate out the good, the bad and the ugly. Basic efficiency has been a proven approach since the 1970s. A classic example is to insulate more to keep out the cold/heat and have a payback in 5-7 years. That is good. Claiming that having one piece of the energy puzzle makes it all good is bad. Yes we can produce electricity from wind and sun but how to store it and what is the total cost system wide? A billion+ of our money lost by the government making stupid bets and trying to play venture capitalist is just plain ugly.
The whole CF/LENR/Cavitation field is fascinating and we are past the point of “is some excess heat being produced”. Yes it is. We are now on to “can we use it” and “what is really causing it”. Some theories about it (I lean towards the cavitation explanation myself but that is just my SWAG).
blacklightpower.com – hydrino (electrons going to a lower state than thought possible)
nanospireinc.com – cavitation (controlled and useful for more than energy)
brillouinenergy.com – cecr (quantum fussion)
I don’t know if any will work or be practical as there are lots of hurdles to over come but it would be nice to see lots of cheap electricity hit the market world wide. The rise in the standard of living for billions of people would have massive positive effects.
Does anyone remember TV ads from a few years ago for a solar generator it said could be used in Hurricanes or black outs? It showed raging storms or dark streets, perfect conditions for a solar generator ;>
” David says: December 7, 2012 at 7:05 am
Slightly off-topic but relevant. I read in (I think) The SundayTimes (UK) a couple of figures which could explain why there’s so much angst in the UK government’s schizophrenic stance on energy:
North Sea gas – original reserves: 4 Tn cu ft, Shale gas estimated reserves: 161 Tn cu ft (of which at least 20% is recoverable using existing technolgy) Don’t you just hate it when someone rains on your parade..? ”
If even 5% were economically recoverable they would have double. Technology has really done an end around play on the whole “must have carbon tax” crowd. I hope we see more tech doing this.
richard verney says:
December 7, 2012 at 6:21 am
“Unless Germany does something about its rising energy costs, even German industry will struggle and will no doubt relocate to areas where labour is cheaper, energy costs are cheaper, and land is cheaper. Heck, if they relocate it to China or Indonesia, they will even save the shipping costs incurred in shipping all their luxury cars to the biggest and growing market place.”
German companies can get an excemption from the FIT cross subsidy contribution which will starting in 2013 be at > 5 Eurocents. As their base tariff without that is about 10 Eurocents, this reduces their electricity cost by 33%. To get the exemption they have to show that they compete in international markets. Merkel hands out the exemptions liberally.
Re relocating to China etc. – guess what all big German manufacturers have been doing over the past decades. Lots of factories in China, Korea, Rumania, Mexico, Brazil, you name it. Lots of developers in those countries as well.
Shipping costs play more of a role for mass market models, not so much for luxury cars. Shipping a fridge from China to Germany costs half a buck, you get the idea. It’s easier to ship a Mercedes to China than to create a factory in China that is as good as the one her. You’d also like to keep a few secrets, so build only the cheap stuff in China.
tallbloke says:
December 6, 2012 at 3:00 pm
” We should never stop researching and developing clean and renewable power sources.
Rolling them out on an industrial scale was utter folly.”
Amen, and very costly.
Having consulted for a few failed cellulosic fuel attempts, it was clear to me from the beginning that the government encouraged companies to spent fortunes to commercialize plants that were doing the same thing before the basic research was completed. In each case it was clear from the beginning that significant problems still needed to be resolved, but the lure of $$$ let the developers to somehow believe these problems could be worked out on a commercial size plant. The list of failures is unending!!
It’s like the electric car folly of actually building autos for which the power source is totally inadequate. See below:
http://www.altenergystocks.com/archives/2011/11/electric_vehicles_ineptitude_apathy_and_piles_of_taxpayer_money_1.html
DirkH says:
December 7, 2012 at 12:44 pm
////////////////////////////////////////////////////////////////////////////
I heard that they plan to something similar in the UK. There is a proposal that the domestic energy consumer should subsidise the industrial consumer by paying a greater share of the additional green levies that are imposed on the energy bill. Thus industry will get a cheaper gross tariff.
Some people object to that proposal, but they fail to appreciate that either way, it is always the consumer (or tax payer) who pays. If industry is not subsidised the costs of goods produced increases and therefore the consumer has to pay more for the goods they want. If industry is subsidised, it is the consumer (or tax payer) who pays the subsidy.
The issue is why are we needlessly escalating energy prices? It hikes the cost of living for all, and subsidies may partially assist inductry but do not always create an even playing field to the detriment of small to medium sized manufacturers (who are often the life blood of a country).
http://opinion.financialpost.com/2012/12/06/peter-foster-doha-is-dead-on-to-cop-19/
Mike says:
December 6, 2012 at 9:10 pm
I would love to rebut your post in detail, and there is a lot to rebut, but as I only have my iPad on me today I won’t.
>>>>>>>>>>>>>>
Well Mike, it has been very nearly an entire day since you wrote this. I returned to this thread thinking surely you’d found a keyboard by now and would have posted the rebuttal you seem so confident that you can write. But alas, nothing.
Is it the keyboard that remains missing? Or the rebuttal?
When I was setting that up I considered offering to categorize all the old posts. So far, I haven’t had time to do that. Still mean to some day. There’s some good stuff out there.
Things are kind of weird right now. Rossi is still doing the interesting stuff (scam or world changing), but instead of pursuing the low temperature devices from last year, he has a much hotter device that will be capable of driving a steam turbine. Unfortunately, between being busy and the partner’s not wanting to talking about their progress, not much information is coming out. I won’t talk to Anthony about something new until there’s more information available.
@davidmhoffer, On December 6, 2012 at 5:54 pm (you said regarding Mike):
“Can you do that? It would help us out a lot here. Can you provide factual data and reasoned argument to support your position? Provide evidence based science to substantiate your claims and perhaps change our minds on one issue or another?”
I like that you put it on Mike to provide evidence. And I agree with you by the way. One of the problems with people like Mike is that they do not understand the underlying science, and so they get frustrated and sarcastic, actually believing that:
1) Because ice melts, it’s proof that CO2 caused it.
2) That there was a drought with high temperatures, it’s do to AGW. Of course he does not understand that cool water off the west coast causes less moisture and cooler weather in CA, which leaves arid air for the rest of the midwest which naturally warms faster due to less moisture. He does not understand this. He doesn’t understand that it gets hotter in Chico in northern CA even though it gets far less solar energy than on the equator.
3) He believes that the media accurately report science.
It’s Mike fault and problem that he doesn’t bother to understand the science, He does not have the basic understanding of physics and logic and this makes him unable to discern what is true.
This is sad, so sad because so many people are like Mike… it’s that he is outspoken in a forum that for the most part, knows better.
Mario
Mario,
Yes, you’ve identified the problem. Itz now been 1.5 days and Mike still hasn’t been able to muster up either a keyboard or a rebuttal. Which? His explanation of the ghe was reasonably detailed, so the lack of a keyboard excuse rings kinda hollow.
I think a lot of people are like Mike. They are overconfident in their own science knowledge, certain that their simplistic understanding is correct. They assume further that any skeptic blog is inhabited by morons. If he’d stick around and be part of the discussion, he’d discover otherwise.
Confronted by facts which falsify an argument, a fool argues anyway. A man admits his mistake. A coward runs away.
Sadly, we have many of the first and third category, not nearly enough of the 2nd.
davidmhoffer: Well put.
It’s part of the human condition to view issues in much the same was as a two teams hashing it out. People want their side to win, irrespective of logical thinking. Their side of preference is emotionally based. The other motivating factor is $$. I am not sure there is a short term way to expect change unless it hits their wallets directly. Unfortunately, the AGW side has the ill understood motivation of $$. They don’t understand they are killing the goose that lays golden eggs. I digress.
Mario, re: subsidies, here’s a good link from congressional testimony.
http://www.finance.senate.gov/imo/media/doc/Zycher%20Senate%20Finance%20renewables%20incentives%20testimony%203-27-12.pdf
Thank you for the link. It also shows close to $1 per kW solar subsidy… and the article/statement(s) was well written, I believe.
Mario
German solar energy can be monitored online, maybe the germans should wipe the snow from their solar panels:
http://www.sma.de/en/company/pv-electricity-produced-in-germany.html
Green energy, like the spins being put on so called ‘climate change’ (note the change from ‘global warming’) has been, and is, a huge scam by power generators, power distributers and governments to generate more revenue for them. Here in Australia power suppliers tried to con people into paying extra dollars for green energy when in fact there was no such thing on the power grid (when asked about that, the answer was that the extra revenue raised would be used to DEVELOP green energy – yea, and pigs do fly).
It is all well and good to talk about installing solar panels on houses and the so called rewards reaped by pumping your excess energy into the power grid. But what they dont tell you is that the down side for people who cannot afford to install solar panels on their houses and for those people who rent/lease their homes (and thus cannot install solar panels even if they wanted to) is a constant increase in power prices. (you dont think that the power generators and power suppliers are going to take a cut in profits for the sake of green energy, do you? Really?)
Add to this the fact that the whole energy system here has been totally privatised in most states, it does not matter what you do save energy, because there is only one thing that these scum bags are after – thats your money.
As an example, we have so called power saving globes, we have power saving power boards on our tvs (switches the tvs off after an hour), we have changed our power guzzling CRT monitors on our computers to LCD monitors, but have WE had any savings on our power bills? HA, HA, HA, our power bills have gone UP because the scum bags who have gotten their claws into OUR energy system have only one aim – profit, profit, profit.
So here’s a couple of equations:
1: you try to save energy by using energy saving devices and equipment = lowering of profits for the power generators and power suppliers = increased power prices at your meter.
2: you install solar panels and/or gas fed power generators (such as trialed by the CSIRO in Queensland not so long ago – if you could afford one) = payment to you from the power distributers/power generators for your excess generated power = less profit for the power generators/power suppliers = increased power prices at your meter.
Now, if you have your personal green power generation plugged into the main power grid and governments/power generators/power suppliers take away any payments for your excess power generation,here is a final equation:
3: your excess generated power @ur momisugly$0 reward fed into the main power grid = free power to the suppliers/distributers + constantly increasing power prices = more profit for the power generators and power suppliers.
What a money making scam!
@Longjohn Silver
I don’t know about you, but energy costs would be much lower without the green mandates. That’s where the problems are for me. Green mandates indirectly increase cost of energy. Fracking has tended to lower costs of energy which offset much of the increases in cost due to Green initiatives. The huge subsidies paid for the PV solar panels do not all end up raising our energy prices directly however, since they raise the deficit and we will need to pay this back with interest!
You mentioned profit as if it were a bad thing. Here’s where I disagree with you. I have NO Problem with someone selling something and profiting for it. Without the lure of profit, productivity goes down. I do have a problem paying people to not do something –except when I volunteer or donate to causes where people have needs they can not satisfy. I just don’t want the government stealing from me and giving it to people who vote for them in return.
Coming in for a wheels-up, nose-first landing. Watch the pretty fireball-works display!