'Green' energy: Red ink nightmare

‘Green’ energy: Red ink nightmare

Email Newsletters

Sign up for one of our email newsletters.

Updated 2 hours ago

Another green energy company generously infused with taxpayer subsidies is circling the drain after reports that it overstated its cash flow.

According to a Securities and Exchange Commission filing by a subsidiary, solar energy giant SunEdison faces a “substantial risk” of bankruptcy, USA Today reports. SunEdison also is under investigation over whether it exaggerated its cash position, according to The Wall Street Journal. Company shares have fallen 95 percent in the past 12 months and for the first time traded for less than $1, The Daily Call reports.

And once again, it’s not just shareholders who are on the hook.

SunEdison and its subsidiaries received nearly $650 million in government subsidies and tax credits since 2000. In comparison, Solyndra — the poster child for the government’s failed green dreams — picked up $535 million in loan guarantees before it declared bankruptcy in 2011.

Recently, the Spanish green-energy company Abengoa filed for Chapter 15 bankruptcy protection after receiving $2.7 billion in federal loan guarantees.

Rather than shore up selected “winners,” government’s helping hand oftentimes prolongs the inevitable for too many green initiatives — which would have been better off on their own.

It is government’s incessant meddling that’s turned more than one green dream into a red-ink nightmare.

TribLive commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments — either by the same reader or different readers.

We follow the same standards for taste as the daily newspaper. A few things we won’t tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don’t include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don’t want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won’t publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.

"Green" energy: Red ink nightmare

High risk, but high reward in Tesla and these other 'green' stocks, says Goldman Sachs

Reuters

Tesla and a few other clean-energy stocks are top picks at Goldman Sachs.

Electric-car maker Tesla Motors Inc. is a Goldman Sachs top stock pick in green energy, a sector in the spotlight this week as climate-change talks begin and the world’s wealthiest people pledge to invest in clean technologies.

Electric and hybrid cars, LED light bulbs, and solar and wind power are reshaping global industries and presenting investors with a new opportunity, the Goldman analysts said in a note Monday. The market is worth $600 billion, the investment bank said.

Investing in such industries will be a “high risk/high reward” proposition, but staying out of the field entirely is “increasingly risky” for investors, the Goldman analysts said. Companies that made Goldman’s list enjoy competitive advantages and are geographically diversified, they said.

The note was published as world leaders gathered in Paris to discuss climate change, and as dozens of the world’s most powerful people — including Microsoft Corp. MSFT, +0.78%  co-founder Bill Gates, Alibaba Group BABA, +3.32%  Chairman Jack Ma, financier George Soros, Facebook Inc. FB, -1.15%  co-founder and Chief Executive Zuckerberg, and Amazon.com Inc. AMZN, -1.26%  founder and Chief Executive Jeff Bezos — have pledged to invest billions of dollars in clean-energy research.

Bill Gates cites India in new energy initiative

(1:20)

Bill Gates is launching a multi-billion-dollar initiative to accelerate clean-energy research and development. Without incentives to go green, he says “India will generally err on the side of development.”

Tesla TSLA, -0.58%  battery power packs “are key to Tesla’s growth,” the Goldman analysts said. The electric-car maker has halved the unit cost of its packs, with costs expected to drop further to about $150 a kilowatt/hour once Tesla’s “gigafactory” is fully running.

“In contrast, Tesla’s competitors use (lithium ion) batteries that are expected to cost $250/kWh in 2020,” Goldman said. Tesla expects its battery factory, under construction outside Reno, Nev., to begin cell production in 2017.

Semiconductor company SolarEdge Technologies Inc. SEDG, +2.88% , which makes inverters that improve the efficiency of solar panels, has doubled its volume year-on-year, and Goldman expects it to remain on this path. Along with gaining more market share, SolarEdge is also diversifying customer base, adding more customers outside the U.S.

Among wind-power turbine makers, Goldman highlighted Vestas Wind Systems VWS, +1.41%  , the leading player in the sector, and a “key beneficiary of strong volume growth.”

Specialty chemicals producer Albermale Corp. ALB, +0.85%  has both access to raw materials and the technology needed to turn out value-added battery-grade materials, while LED lighting maker Acuity Brands Inc. AYI, -0.31% is likely to benefit from emerging Internet of Things applications where LED lights command higher prices and margins, according to Goldman.

Solar and wind power are a $200 billion market, the bank’s analysts said. They projected sales of electric and hybrid vehicles to grow to $88 billion by 2020 and to $244 billion by 2025, from $12 billion in 2015.

It’s no coincidence that green cars, power and lighting are at the forefront of a low-carbon economy, the team noted. Power generation and transportation account for more than half of energy-related carbon-dioxide emissions, and lighting consumes 15% to 20% of electricity.

In contrast, other low-carbon technologies, such as nuclear and hydro-power generation, biofuels, and fuel-cell vehicles, either lack the scale or the momentum to drive change, Goldman said.

More from MarketWatch

High risk, but high reward in Tesla and these other "green" stocks, says Goldman Sachs

Report: Germany's 'Green' Revolution Is Running Out Of Money

4626333

It wasn’t long ago that President Barack Obama was pointing to Germany as an example of how the U.S. should develop green energy, but that was before news that Europe’s biggest economy might be running out of money for its green energy revolution.

Germany’s $412 billion plan to power itself with green energy may be running low on cash, according to a new report by financial consultants, as consumer energy prices skyrocket and traditional power plants require more subsidies to stay in business.

“The necessary equity funds for the expansion of the network infrastructure and offshore wind can probably be provided only with the participation of alternative and international investors,” warns a report by consultants with Roland Berger and the World Energy Council.

“High risks however make it questionable whether the investment needs can be met at a sufficient capacity and speed,” reads the unpublished study obtained by the Frankfurter Allgemeine Zeitung, a German newspaper.

For years, Germany has been trying to force more wind and solar energy onto its electrical grid, but what started as a well-intended effort to fight global warming devolved into an expensive labyrinth of subsidies and special interest politics.

The idea was that once the grid was transformed to power more green energy, costs would go down as new technologies and efficiencies came onto market. But the report by Roland Berger and the World Energy Council cautions that at least 280 billion euros will be needed in the next 15 years to meet Germany’s green goals. And that’s with “sustained political support,” the report warns — without it, the transformation could get even more costly.

That’s only the tip of the cost-berg, the report warns. The report also warns that funding for offshore wind farms faces “high risk and market entry barriers” and a “significantly tighter situation.” Germany and other Europeans countries are increasingly relying on offshore wind farms for electricity, especially as nuclear power plants are phased out.

“The high risk of investing in offshore wind farms, however, contradicts the risk profile of institutional investors,” the report warns.

And don’t forget money needed for the transmissions systems required to bring such localized and dispersed electricity production to the homes and businesses which need it. The German Energy Agency estimates these systems will cost the country 28 to 43 billion euros by 2040.

One thing that’s often overlooked by green energy supporters is that people need energy while new sources are being built. Germany’s energy transition, however, is causing traditional power plants — which still supply most of the country’s power — to go into the red financially and require an ever increasing amount of state subsidies to survive.

“Many traditional utilities, which previously financed investments in the electricity sector, mainly through their shareholders’ equity, are today with their backs to the wall,” Uwe Franke, president of the German wing of the World Energy Council, told the Frankfurter Allgemeine Zeitung.

Franke told the paper that “new investors would have to be found to ensure ‘the energy transition and the security of supply.’”

[H/T The Global Warming Policy Forum]

Follow Michael on Twitter and Facebook

Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@dailycallernewsfoundation.org.

 

 

  Share

 

 

 

 

TOP

Report: Germany"s "Green" Revolution Is Running Out Of Money