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Solar, Wind, and Water
from ltds to 501cs . . . maybe
It is hard to second guess the powers that be. And although ours is a free market economy, renewable energy is a field that requires consensus of opinion and government intervention if it is going to succeed. Just about everybody wants clean energy to come in and coal, oil, and nuclear to go out. But the fact is, solar stocks, as well as those having to do with water and wind, are not, as a general rule, high flyers, though several have held their own. In a multi-trillion dollar financial community, renewable energy occupies not much more than a presence. It cannot compete effectively against fossils fuels, despite all the premonitions and credible predictions concerning dwindling supplies and strengthening demands. If non-renewable resources are relied upon exclusively, then there will likely be more of the same: international friction and intrigue, feast and famine, outbreaks of violence, environmental catastrophes, serious crises, such as Darfur, and war.
Americans like to feel that they are doing the right thing. So they have done all that is humanly possible in this impure world to pressure Congress, quit smoking, and bring their own bags to the supermarket. They are recycling, saving trees, and cutting down on personal pollution. Solar, wind, and water power follows along this same line of thinking. But to encourage investors to pour their hard-earned savings into green companies is only for those already willing to add the constraints of conscience into an investment strategy, which is far from the norm. Further, a more conventional financial analysis of listed companies in the field of renewable energy yields encouragement, but not much more. A passing glance at such equities shows that the clean energy picture, right now, is unclear. A handful of companies are on a more or less solid footing, while others flounder. A few years ago, many of these companies were garnering a great deal of interest, a lot of which has gradually frittered away.
First Solar is just inches below its fifty-two week high of $46.25. It has a market cap of $3.86 billion and a recent volume figure of 7.31m shares. It is traded at respectable levels. But many of its competitors lag far behind. LDK Solar Co. sells for $1.26, Trina Solar $5.12, and Yingli Green at $2.52. Suntech is priced at less than a dollar. Maxwell Technologies, Inc., electricity storage, sells at $5.60. Capstone Turbine Corporation, micro turbines, is 85 cents. Acorn Energy, Inc., pollution control, is just over seven dollars. China Hydroelectric Corporation is under three dollars. But Waste Management, as well as several other big name stocks, many not known for renewable energy, maintains $40+. But for the most part, these stocks are not stellar performers. In fact, with numbers so pitiful, they run great risks. Several might get bought up, merge, or go out of business altogether. And yet, solar has at least accomplished this much: it is permanent. It is no longer a novelty, science fiction, or a matter of faith.
Wind is also at the moment up for grabs. Investors might make money, might not. First Trust ISE Global Wind Energy, an ETF, at $7.92, having risen this past year from $5.45, shows a mathematically good percentage gain, but not enough to win confidence. China Ming Yang Wind Power Group, a holding company, languishes at $1.24. A twenty-ounce Coca-Cola is costlier. On the other hand, Zoltek, carbon and technical fibers, has impressive stats with a healthier price per share of $13 and change. It is a relatively small company, employing 530, and producing a net income of less than $23m. However, for an industry still starting out that has not yet caught on on a massive scale, there is nothing wrong with modest returns. It is just that without policy changes, run-of-the-mill, lukewarm returns might continue interminably for who knows how long.
An April 17, 2013 Wall Street Journal article, entitled, "The Experts: What Renewable Energy Source Has the Most Promise," contains a number of concise but informative articles from contributors that will probably not make anybody reach for his or her wallet. Nothing contradicts the fact, it seems, that renewable energy cannot thrive and command more of the energy sector without either a major shakeup or government intervention. One scenario is as remote as the other. When the last drop of oil is harvested, alternative strategies will fire up or not -- and that is that. Few leaders will gamble heavily on renewable energy, even if an unprecedented victory in terms of commerce would lift up their personal reputations tenfold. It is just too chancy. A large-scale transformation could produce millions of jobs and literally change the world, but failure and a screeching halt is more likely.
In sum, renewable energy is too expensive, undependable, and needs further research, which translates into money. Wind does not always blow, the sun does not always shine, and in regions, water is scarce. Ideas are forthcoming; performance is scanty. Corn ethanol did not really pan out. Now, maybe sugar ethanol will do the trick. How positive is that? Further, must people go farther and farther to meet halfway and re-fashion their lifestyles to fit the special needs and wants of carcinogen-free energy? Short of returning to caves to huddle beside fires, paint the walls, and not disturb nature or the stratosphere in any way, shape, or form, what should they do? There is a third possibility -- a gigantic breakthrough, by virtue of an accident or providential brainstorm. But the plain fact is, the invisible hand of Adam Smith capitalism cannot do it, nor can 2013 socialism. The sales pitch having to do with declining costs after installation is not winning hearts and minds. Irrespective of economic system, the inconveniences, even if proven transitory, are plentiful. In other words, this dream might, in the near future, die hard. In the meantime, the whole subject faces rigamortis, book deals, and speaking engagements.