Goldman renewable energy dash more than greenwash
By Christopher Swann
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Goldman Sachs is making a dash to invest in renewable energy projects. It says it will invest $40 billion of its own and clientsâ money over a decade. The Wall Street firm isnât above self-serving spin, but itâs also never far from the money. With solar and wind power nearing cost levels that are competitive with fossil fuels, clean energy could burnish Goldmanâs bottom line as well as its green credentials.
A degree of cynicism over Thursdayâs announcement is warranted. The firm helped funnel $4.8 billion to clean energy firms in 2011, so its latest pledge, averaged over 10 years, would actually represent a drop in investment in the sector. But in fact Goldman has a record of being better than its word on environmental investments. A $1 billion commitment in 2005 turned into the deployment of $24 billion of financing by the end of 2011.
And, of course, money talks. Goldmanâs timing looks spot on. Solar and wind power seem close to a tipping point in many parts of the world, including the firmâs home market.
In sunny U.S. states like California, for instance, the price of solar electricity under long-term contracts has plunged from about 17 cents per kilowatt-hour in 2010 to around 8 cents now, according to Green Tech Media. It would cost a couple of cents more without government incentives, but itâs now within striking distance of electricity generated from natural gas. At todayâs low gas prices, that runs around 6 cents per kilowatt-hour.
Technological improvements have also driven the cost of wind generation down by about a fifth over the past decade, again to within easy range of gas-fired generation even in parts of the United States where the winds arenât especially reliable, according to the Department of Energy.
An added major selling point is that once generation equipment is installed, these prices are locked in for decades since the sun and wind are free. The same cannot be said of Americaâs gas or even coal, let alone oil. With renewable energy looking like it will soon hold its own competitively, Goldmanâs latest $40 billion promise is one it should have little trouble keeping.