Cloudy days for green stocks

September 2, 2009

The federal stimulus bill hasn’t been a ticket to prosperity for clean energy investors.According to Environment America, a federation of state-based, citizen-funded environmental advocacy organizations, over 4 percent of the $787 billion dollar stimulus package passed in February was ear-marked for clean energy projects.Yet the Reuters Business of Green Index, a basket of 14 green stocks, has fared poorly over the last three months, down over 20 percent against the S&P 500 Index.Why isn’t the stimulus bill, which appears to be helping many stocks, not having the desired effect in the greentech and clean energy sectors?”What happens in Washington for the time being is nowhere near as relevant as you might think,” said Raymond James analyst Pavel Molchanov.He notes that green stocks are heavily dependent on the solar industry, 90 percent of which is outside the United States:”Even though there is a large array of clean tech stocks to invest in, the most attractive green stocks and the certainly the largest ones are in the solar stage. And solar has been doing quite poorly because there is quite simply an overcapacity in the global solar industry.”That has put pressure on prices, margins and earnings. Not surprisingly, solar stocks have fared poorly.Suntech Power Holdings, one of the 14 green companies selected by Reuters, had lost 13 percent of it’s value in August when it reported second quarter earnings. Shares of China’s Yingli Green Energy and U.S. panel maker SunPower Corp were down about 17 percent, and First Solar‘s stock was down nearly 15 percent in the same period.Not all of the news is cloudy, but Molchanov says it’s not time to put away the umbrella just yet.”The good news is that sentiment has gotten so negative that it probably doesn’t take much for it to start improving and expectations for earnings are generally pretty low. So that’s helping, but the overcapacity in the market is not going away in the foreseeable future.”


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It is noteworthy that the companies that invest in clean energy technologies are more seen as a political backed agenda than a real life problem solvers. No doubt it will take some time to gain some traction in the Wall street but part of the problem is the lack of proper promotion by the industries themselves to make it more lucrative to investment bankers.

Posted by Wesley Paul | Report as abusive

While the green index depends heavily on the solar industry, we shouldn’t just focus on the PV technology that is currently here. US companies such as BioSolar, are working on applications to make PV technology more sustainable in the long-run. While solar PV might still be rather inefficient, eSolar and other companies are quickly bringing heliostat-backed solar thermal to the grid. These utility-grade solar towers are the future of renewable energy, IMO, and we should be looking to the companies bringing low-cost solar power to the table as the future of the industry.Not to mention… a solar tower is pretty darn impressive to look at!

Posted by Nicholas | Report as abusive

I’ll echo that. 98% of the stimulus-funded ARPA-E applicants, presumably the best and brightest, received a “Notification of Discouragement” (really), since the program was funded at only $150 million, less than the cost of one obsolete F-22 fighter. So far the stimulus money is trickling down to weatherization programs and road repairs, but not to the cutting edge innovations which might change the game for our energy future. Biofuels are getting short shrift, despite their potential to replace fossil gasoline, diesel and jet fuel.

Posted by Daniel Gibbs, Ph.D. | Report as abusive

Yes it is true that green stocks are heavily dependent on the solar industry. Since most of the sources are outside of the united state so it will definitely put on the effect on prices and margins.

Posted by Stretch Marks Removal | Report as abusive

My evaluation of the weather is that the sun is not shining like it used to. The Bible speaks of a time of the sun not shining 1/3 of the day.Green technology is an illusion that cannot solve our problems. It only redirects the money. The solution is to turn from our employment lifestyle of creating, packaging, and transporting items primarily for the sake of having a job. That has polluted our air, land, water and food and made our bodies and environment diseased. There is no need for a health care reform, only a need for a healthy lifestyle.The solution is to turn to a garden paradise lifestyle with trees, plants and pets that provide fresh food around us. That also ends the energy crisis, disease, war, immigration, global warming-climate change fears, reoccurring financial crises and social security requirements. The garden paradise lifestyle is easy, fair, inexpensive and beautiful; and it is the only truly sustainable development available. True freedom, peace and security are available with God’s secular guidance available in holy books around the world.

Posted by Marie Devine | Report as abusive

I agree with most of what Marine writes. We are headed toward complete unsustainability with our materialistic, unhealthy, lifestyles dependent upon solutions that pollute our environment and will eventually destroy us. But we’ve gotten ourselves into this mess and we need to get ourselves out, and no government is not the solution but the problem. Green is a step in the right direction, God help us.

Posted by Gojis | Report as abusive