By Norm Alster | The New York Times
Long-suffering investors in solar energy stocks had reason to enjoy the first six weeks of 2013. After several years of poor performance while the overall market advanced, solar and other “green” energy technologies were market leaders early this year.
But by the end of the quarter, most of these stocks had fallen again. Was the strong performance of early this year simply a dead-cat bounce? What are the prospects for an emerging, relatively expensive technology that seeks to displace dirty — but cheap — hydrocarbons?
At the core of solar’s sorry market performance lies an enigma: solar sells, but it’s tough to turn a profit.
Global demand for clean, renewable energy is not the issue. “Demand has exceeded by far the projections of even two years ago,” Ben Schuman, an analyst at Pacific Crest Securities, said.
At the end of last year, installed global solar capacity stood at 96.4 gigawatts, up 43 percent from 2011 and roughly the equivalent capacity of 115 typical nuclear plants, according to Shayle Kann, vice president for research at GTM Research. Mr. Kann predicted further growth of 35 percent this year, to 129.7 gigawatts.
Nevertheless, company profits in the sector have been erratic — and shareholder profits scarce. The Guggenheim Solar exchange-traded fund, which mirrors a portfolio of solar stocks, fell nearly 30 percent in the 12 months through March.
If you’d like to discuss energy issues, contact Court Rich, Co-Chair of Rose Law Group’s Renewable Energy Department at crich@roselawgroup.com
