The S&P 500 is up about 12% year to date. Not so renewable energy stocks.
“There is an exodus from ESG products that are suffering from outflows,” said Navellier.
The Global Clean Energy ETF (ICLN) is down about 30% year to date. The solar and wind energy benchmarks Invesco Solar ETF (TAN) and First Trust Global Wind Energy ETF (FAN) are down 35% and 32% during the same period, respectively…
NextEra Energy Partners is down 69.27% year to date, on pace for its worst year on record, while its parent company NextEra Energy hit a 52-week low on Friday, down 42% year to date.
…“the collapse in confidence in NextEra - the world’s largest renewable developer - has precipitated a draconian view for the outlook of renewables as an asset class, and the associated returns.”
I’ll rate this comment as worthless. Markets were up well early in the year but have been flat for abt 3 mo. How have you performed in the last 90 days?
All wind turbine manufacturers are reporting losses. They were impacted hard by inflation and “supply chain issues.” Their contracts often have long lead times–sometimes several years. Their contract cost escalators were inadequate. So they are forced to fill contracts at a loss.
Their cost escalators are much improved now but in a time of high inflation that means project cost can vary widely. Essentially a blank check. No idea if power produced will be profitable or even competitive. How do you get financing on that kind of risk? No wonder many projects are on hold or being reevaluated.
Yes, its a bad time to invest in renewable energy. Bottom fishers can do well if you manage to spot the real bottom. Falling knives anyone? Not for the timid? Or conservative? A high risk market. Best played by the pros.
As you know, it is fairly standard to use the S&P 500 as an investing benchmark. The 12% YTD figure was included for future reference as I like to revisit threads from time to time to see how things have changed.
At any rate, the renewables have been an out-and-out disaster for investors this year even with all the subsidies. Hopefully posters and readers on this board avoided the losses.
Forgive me. Talking heads are forever talking of the gain YTD. That was the market 6 mo ago. Today’s investors need to disregard those comments. They are ancient history.
Speaking from experience, renewable energy stocks are a good way to lose money. At the end of the day they are just fuel and compete with powerful legacy fuel makers like coal, nuclear, oil & gas with deep pockets who have politicians in their deep pockets.
One example from a decade ago. Tyson Foods (TSN) has lots of waste animal fat they though could be converted into bio-diesel and bio-jet fuel. They closed down the money losing enterprise despite the “free” raw materials.
Solar stocks tumbled on Friday after solar product manufacturer Solaredge warned that demand in Europe has significantly weakened, furthering battering sentiment on the renewable energy sector amid a difficult year.
The Invesco Solar ETF (TAN) tumbled 6.57% Friday and was last trading at $44.18, putting it at its lowest level since July 2020. Stocks in the solar sector fell broadly on the pessimistic outlook. Sunrun and Sunnova were down 5.7% and 8.9%, respectively, while Enphase Energy shed nearly 15%.
Forgive me, but lead time to build a coal plant or gas plant are roughly comparable, a nuke vastly longer. Except for “lack of history”, I don’t see why this should be an issue more so than for any other form of energy production. More to the point, the “raw energy” is pretty well fixed price, unlike coal, gas, or uranium.
Hi Goofy. I agree the large inflation effect is surprising for wind turbines, but that is what all major manufacturers continue to claim.
You might suspect that the equipment in a coal or gas power plant is fairly stable. Steel or copper prices may rise, labor costs can increase, but the numbers are likely to be modest. Wind turbines seem to be expecially vulnerable. Maybe that’s because those big blades are hard to ship and require special handling. Or maybe subcontractors involved in making it happen.
I’d like to know too. If you figure it out, please pass the word.
There was an article out today on the wind industry’s woes. Its primary focus was still on supply chain problems. Also mentioned were lower tax credits (fewer subsidies) and reliability/quality control issues (which have been mentioned in other threads on METAR).
After $280 Billion Wipeout, Green Stocks Confront Soaring Debt Costs https://www.bnnbloomberg.ca/after-280-billion-wipeout-green-stocks-confront-soaring-debt-costs-1.1987289
Now, with the yield on the 10-year US Treasury bond creeping toward 5%, their fortunes could be about to take another hit. Higher yields make it costlier to fund the huge investment that clean energy requires, giving investors reason to fret about returns…
“If companies are rolling out capacity and raising debt, but power prices and profitability are falling, that’s not a combination markets like,” said Sharon Bentley-Hamlyn, a fund manager at Aubrey Capital Management. “Our exposure to the renewables sector is considerably lower than at this time last year.”…
Renewable energy stocks are four times more sensitive to interest rates than traditional oil and gas companies, due to bigger debt levels and their long-duration nature, according to Evgenia Molotova, a senior investment manager at Pictet Asset Management. Constituents of the MSCI alternative energy index have a leverage ratio of 3.8, based on debt-to-12-month earnings, compared with just 1.1 for the five biggest energy producers by market capitalization, according to data from the index operator and figures compiled by Bloomberg.
Maybe this is exactly it? Gas plants, coal plants, nuclear plants have all been contracted/constructed during times of “normal” rate periods and during times of “zero” rate periods. But wind and solar plants have only been contracted/constructed during
“zero” rate periods. Maybe they haven’t adjusted to normal rate periods yet?
Maybe the problem is not “rate periods” but "subsidy periods.’ Subsidies distort economic reality and have consequences – not that I won’t take them but someone, somewhere will have to pay for it.
There can be no doubt that Green is the new State Religion. It has consequences. A few years ago Spain was a leader in solar energy, when money ran out it fell into a deep recession because solar was not based on economic reality but on the religious belief that the world needed saving.
The Spanish solar market
Spain was once the top solar market in Europe, but Germany has now taken that spot. This is due to strong political support and a big market for solar photovoltaic (PV) systems in Germany. Even though Spain is no longer the leader in Europe, its PV market has grown significantly in the last three years.
Unfortunately, I have two renewable ideas that have been a drag to the self-managed port.
Atlantica Sustainable Infrastructure (AY) started 2023 as my top holding, and has been pummeled for much of the year. AY has significant solar assets in Spain & USA, and other assets elsewhere.
The company’s problems seem to have occurred in two steps. First, their sponsor entity, Algonquin Power & Utilities (AQN), encountered some problems. AQN provides power and utilities to Canadian and US customers
I would have to drill down, but to my knowledge “and internationally” is primarily assets in Chile and Bermuda. I guess, indirectly, they could lay claim to the AY production assets via their significant stake in the company (AQN own over 40% of AY).
The second, and more severe whack, has occurred since mid-September 2023. Just noticing, some higher AY volume days this past month.
More data from Atlantica Yield Infrastructure (AY)–
Last week I posted on the problems encountered by NY State offshore wind projects. Unlike those projects, AY’s four wind projects in the US are all land based, and to my knowledge, all operational. AY paid a tad under $200M for the 49% stake in the assets. A Google search suggests EDP Resources is the majority owner. The other six North America projects are 1 Canada natural gas distribution project
2 cogeneration plants in Mexico
2 largish solar facilities in US - both 100% owned
1 geothermal plant in CA - 100% owned.
All six are operational. Barring any major maintenance activity, I don’t see any of the 10 North American projects having major supply side concerns in the near term.
The move at the biggest US rooftop solar company comes on the heels of a string of bad news across the sector. SunPower Corp. tumbled 5.6% Wednesday after cutting its full-year guidance due to weaker demand for its rooftop solar systems. SolarEdge Technologies Inc., which makes inverters that allow homes to use solar power, saw its stock plunge more than 20% in late trading Wednesday.
Companies have struggled over the past two quarters with higher interest rates that make consumers less willing to finance rooftop power systems. Moreover, California slashed incentives for panels earlier this year…
