Energy and Capital's Weekend Edition
Make no mistake, I'm as ardent a supporter of a clean energy future as anyone else.
But fact are facts. And the industry as a whole isn't doing so good right now.
There are and will be individual winners to be sure.
On a broader scale, though, there are some issues. Here's what I'm seeing...
Hen in the Henhouse
Normally the grim green news comes from an oil money-backed think tank or other organization that stands to benefit from a delayed cleantech revolution.
But these days even renewable energy's own industry rags don't have much good news to report, only ambitions.
Here's a piece of a recent update from Bloomberg New Energy Finance, which has been one of the biggest renewable energy trumpet blowers for years:
Solar manufacturing companies in the US and Europe have been hit by the oversupply in the market - and the consequent drop in prices. Germany's Solarworld for instance reported a loss of EUR 299m for 2011, and said that it could not forecast 2012 sales due to uncertain solar market conditions. Other manufacturers in the country, like Q-Cells and Conergy, are also struggling.
Germany's solar manufacturing industry will disappear within five years because of competition from Chinese companies, said Klaus-Dieter Maubach, a member of E.ON's management board. Norway's Renewable Energy Corporation announced that it would permanently close its 300MW mono-crystalline wafer plant in Norway after failing to cut costs enough to make it profitable.
Solar companies in China also have their share of troubles. LDK Solar reported fourth-quarter sales at the bottom end of its forecast and less than half the USD 921m reported the year earlier. It is slated to announce its audited earnings next month and may post a negative gross margin.
The publication went so far as to call it a period of “gloom.”
That was three weeks ago.
Last week, the update from Bloomberg New Energy Finance was entitled, “Search for Silver Linings.” But it reported the clouds first:
The WilderHill New Energy Global Innovation Index, or NEX, which tracks the fortunes of 97 clean energy stocks worldwide, slipped to 135.55 at the close on Monday 2 April, from 140.1 a week earlier. Its latest level was just a dozen or so points above its eight-year low of 122.57 reached last December.
In the first quarter of 2012, the NEX gained 4.2% - but this compared to a much more impressive 11.8% surge for the broad-based US S&P 500 index.
Worse, there continue to be casualties among quoted clean energy stocks. On Monday this week, US units of Solar Millennium, the German solar thermal electricity generation specialist, filed for bankruptcy protection. The parent company is already in insolvency proceedings in its home country. Also on Monday, Q-Cells, one of the pioneering German PV manufacturers, saw its shares plunge 41% after it said that it was "legally bound to file for insolvency".
Q-Cells was once the largest solar manufacturer in the world. Now it's insolvent.
Here's what a one-year chart of that clean energy index looks like next to the Dow:
And what of the silver linings?
The journal reported Japan is “looking to speed up solar, wind, and geothermal deployment.” The World Bank “is studying renewable energy project funding for Morocco and Jordan.”
And in a statement of lukewarm confidence, World Bank investment officer Adam Schwartzman said, “These are countries with strong renewables potential where the sector could potentially be a competitor with industrial sources of generation.”
To summarize the current silver lining for renewables...
Japan is looking to do something. The World Bank is studying something. And those things being studied could “potentially be a competitor.”
Forgive my cynicism.
Clean energy is the future.
But the real profits won't come until they are unequivocally competitive, not potentially.
We'll be bringing the investments that make that a reality.
Call it like you see it,
Editor, Energy and Capital
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