News report today says Shell will pay cancellation charges to end wind contract south of Mass. Rising costs made investment unattractive.
Shell is also partnering with EDF on a project off New Jersey (Atlantic Shores). We’ll see if they soldier on.
DB2
The damage continues…
Renewable energy funds see outflows on concerns over growth, policies
https://www.reuters.com/business/energy/renewable-energy-funds-see-outflows-concerns-over-growth-policies-2024-04-10/
LSEG Lipper data shows funds that invest in renewable energy stocks had an outflow of $4.8 billion in the first quarter of the year, marking the largest quarterly withdrawal to date…
The S&P Global Clean Energy index, comprised of major solar and wind power companies and other renewables-related businesses, is down nearly 10% this year, while the oil and gas-heavy S&P 500 Energy Index is up 16.3%.
DB2
Renewable energy should have much growth potential. But China dominates solar. Wind has problems with inflation. Tesla is probably best opportunity but now hybrids are leading.
GEs new Vernova spinoff claims grid expansion potential. But i’m not betting on it.
Where is the growth potential? Yes, for now oil is a better choice. Coal? Nuclear?
Hybrids are a good solution for the charging challenged.
The Captain
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Renewable energy is very risky due to high capex and variable pricing of output product. And the output is a commodity, so competition drives price down to the lowest it can go. This applies to nearly all forms of renewable.
And I don’t like heavy capex, commodity businesses, so I mostly avoid them (except perhaps a few traditional energy companies that have scale already). But, renewable energy will happen, slowly over time it will increase while fossil fuel use decreases. But that will take many decades. However, electrification is almost a no-brainer, so it’ll happen more quickly. A heat-pump hot water heater is more efficient than a traditional water heater (electric or gas) so those will become more popular. An EV is more efficient than an ICE, so more of those will appear with time. Etc. What does electrification of stuff always have in common? The use of copper! So I’ve been investing in copper over the last few years (mentioned it here when I started, and a few times since). Originally I tried picking stocks, but I’m not good at that, so I switched to the COPX copper ETF, despite the higher than I like expense ratio attached to it. So far the thesis has been good and has provided a 20.9% IRR (with many small purchases throughout 2022 and early 2023).
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Renewable energy stocks are a great opportunity for value investors with lots of patience. Definitely NOT my kind of investment.
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Many, many moons ago there was a good thread discussing who the greatest beneficiaries of technology innovation were, users or producers. This still is an important distinction to keep in mind when investing and in threads like this one.
Electricity is a commodity. Solar panels are commodities dropping in price under Wright’s Law on steroids to the point that Spain’s highly subsidised industry went bankrupt. Wind farms are a handful of trouble. Going back to the dot-com bubble, Global Crossing, which criss crossed the world with optic fibers, went belly up because prices dropped so steeply that they could not amortise their cost. But the fibers kept on making money for their users!!!
Is Tesla a user or a producer? No wind or solar farms but battery makers, EV makers, storage makers, VPPs, huge compute centers, AI. Where on the user-producer spectrum does Tesla exists?
If nothing else, this is fodder for mental exercise. BTW, same applies to AI stocks, Tesla user or producer?
The Captain
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