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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From Bayonne, NJ comes the story of the little turbine that couldn’t. It started out as a “shovel ready” project back in 2009 (part of the ARRA) that started generating electricity for the city in 2012.
The turbine broke down in 2015 when it was no longer under warranty. The Italian parts (wasn’t there an American manufactured clause in ARRA?) took a long time to arrive and insurance only covered half the expenses. It started up in March, but in a few months there were other problems. Fortunately they were fixed more promptly.
This 2019 article mentions that things have been going smoothly:
But wait. There’s more!
Things stopped spinning again in 2020 and an article from 2023 says it hasn’t worked since. It may have to be moved.
DB2
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GE Vernova recently discontinued their largest turbine due to reliability problems. The Bayonne wind turbine could probably be rebuilt with much improved technology.
This is junk news about one little wind turbine. I could start posting about many coal and natural gas fired plants that have failed. It woulld not be interesting. But you keep on posting about the failures of some wind and solar projects with lots of glee. Solar and wind energy are making great strides in overtaking coal fired power plants and nuclear power plants. Why do you ignore those achievemments?
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It is just about one turbine. And as noted earlier in this thread and others, the industry has reliability/quality control issues. From a few months ago:
“Those [senior personnel at 40 wind companies] surveyed by ONYX also expressed reliability concerns, with 69% expecting more reliability issues due to aging assets and 56% seeing problems associated with new turbine technology. Just 22% expected fewer reliability issues due to new turbine technology improvements.”
DB2
Atlantica Yield (AY) has significant recovered in price since I mentioned it earlier in the thread. In 2024, the company bought a pair of wind assets in the UK. Paid about $66M for the assets.
Meanwhile, their major shareholder, Algonquin Power (AQN) continue their plans to focus on being a regulated utility, by selling their renewables segment. But, with a new twist. AQN has both developed and under-development projects in renewables- across wind, solar and hydro. There was also a thermal energy effort in CT, but that has recently been sold. Ok, back to the twist. AQN plan on selling the renewables in stages. First, the solar & wind assets, then the hydro assets. AQN has suggested the timeline to complete the sale of some (maybe all) the renewables business is end of 2024. Does this mean, the whole renewables unit has been marketed together, and the approach had some reservations from buyers? Don’t know the answer. I do know AQN sold some smaller solar projects to AY this year.
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I can not find your source for the above. Please post it.
See post #11 of this thread.
DB2
As for insurance for offshore wind:
Cost of insuring offshore wind ‘doubled’ amid heavy losses
https://www.rechargenews.com/wind/cost-of-insuring-offshore-wind-doubled-amid-heavy-losses-leading-broker/2-1-1568387
Insurance providers have doubled the price of covering offshore wind projects after taking heavy losses in recent years, according to one broker, who set out what developers and the industry can do to bring costs back down.
Insurance has become “more expensive and difficult to procure” in offshore wind, said Robert Bates, head of claims at energy and infrastructure broker NARDAC.
But failure of these cables is all too common, to the point that the cost of insuring them is becoming prohibitive.
DB2
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The solution is to make better quality cables, do a better installation of cables, and perform better O&M of cables.
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I think we can under stand cable failures from ships dragging anchors and maybe from some fishing. Usually in shallow waters. Protecting those must be a constant challenge.
Deep water cables should be safer. Damage by earthquakes tsunamis and other natural events. But difficult to protect from sabatoge.
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Apparently a lot of the damage happens when the cables are being laid.
"A recurring problem for the Offshore Wind industry is damage caused to the submarine power cables during the installation process – nine out of ten insurance claims on cables are due to installation damage, and the Offshore Renewable Energy Catapult in the UK estimates that damage incurred during installation contributed to 46% of all power cable failures. At the point at which cables leave the laying vessel and meet the seabed, they are frequently subject to damage caused by over-bending, cable-pulling, and inadequate design of lead into the monopile…
“In a study carried out in 2019 by the University of Strathclyde, the average rate of power cable failure is approximately 0.003 failures/km/year for European wind farms. This means that a wind farm with 100km of power cable has a 30% chance of cable failure in any given year. The average downtime for an inter-array cable repair is around 40 days, and 60 days for an export cable.”
DB2
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The job cuts, mainly in Europe, are expected to commence within months…
The company, which had invested significantly in offshore wind to capitalize on its marine oil and gas extraction expertise, is now prioritising shareholder returns. This strategic pivot comes amidst rising costs in the renewable sector and Sawan’s emphasis on business performance after becoming CEO…
In March 2024, Shell New Energies US sold its 50% interest in SouthCoast Wind Energy to Ocean Winds North America, its joint venture partner. SouthCoast Wind was established to develop offshore wind projects in Massachusetts with a potential of 2.4GW.
DB2
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