Green Bubble?.........Wall Street 2 Tells the Future
So I just watched the new Wall Street movie earlier this week and I must say I was more then a little dissapionted. Other then the fact they carried about 7 plots throughout the movie, the good old fire and brimestone of Wall Street 1 didn;t shine through. Never the less, one Gordon Gekko insinuation got me thinking. Is green energy really the next big bubble?
The answer is most definitely yes. With the U.S government funneling nearly 35 billion to the industry last year, and private corporations drooling to find the next big break, the stage is set for a real rise and fall. The fact is, the energy markets in the U.S are giving medium amounts of capital to a very large amount of firms. The government spends that 35 billion across nuclear, R&D, wind, solar and many other ridiculous ideas that will definitely not work (I say that very seriously, wind and solar will NEVER be the major players in the U.S, nuclear does have some serious possibilities however). Take for example good ol Shai's special company that champions fusion. Now, warm fuzzy feelings from trying to help humanity aside, the fact that he tries to raise 100 million for a technology that is (in real life ) many many years away from real progress is a little unnerving. In the real world, that 100 million is pissed away from rising construction/operation costs and with little to no technological advance. The real scary thing, companies are doing this type of wreck less investment every day, and as the economy recovers it will only get worse.
Fractions of a percent of the companies that claim to have the next miracle cure for world energy will actually make something useful. This leaves everyone money with the losers when the music stops. Don't be fooled by Star Wars logic and mixed with an Inconvenient Truth. Anyone can make a pretty power point about future energy saving......doesn't make it real.
if it is a bubble, it is still in the early stages ... although i beg to differ with your opinion that is is even a bubble. while i am not claiming that oil will be "going away" any time soon, i see green taking on a more significant piece of what will ultimately be an energy pie of sorts (still dominated by oil, most likely.)
also, this green energy boom lacks the classic traits of a bubble, or at least one which has already taken shape. it lacks the mania, for example .. think gold as a manic industry. literally every other commercial you see is selling you gold. you can ask a retired coal miner whats a hot industry to invest in right now and he'll tell you gold, and probably could even tell you why. we havent seen this with green energy yet, and i highly doubt we will have truckers discussing the value of algae as a commodity anytime in the near future ...
Ha, couldn't be more wrong. Sure, the only reason solar is being built is that state governments in Cali and New Jersey are throwing piles of money at every yahoo who wants a panel on their roof - but it's moving down the cost curve, and while it might not keep growing at a 65% CAGR, initiative programs are going to keep it afloat the next few years until it gains traction.
Now wind - that's where the action is - its the most cost competitive with coal & nat gas. Half the states in the country are mandating clean energy targets, and wind's the best choice for utilities to fill the void. Look for lots of turbines going up from 2015 on - most of these caps are like, 20% by 2020. Be very bullish on wind.
Nuclear? too capital intensive - nobody's going to fork over 8-10 billion for a plant these days, esp when these things ALWAYS go over budget.
Look at chinese wind and solar manufacturers - they're pulling away from the competition. And there's MUCH MORE going on outside the US my friend - Germany's cloudy as balls and already has 10x much solar as us.
Wake up. buy now.
The problem with wind is that it lacks the efficiency and cost competitiveness of solar. Namely, 1) it requires a constant stream of wind to power the turbines, and 2) people don't live where the wind blows, creating extra $$$ for distribution. In contrast, solar lets you generate and consume energy in virtually any location. That opens up huge commercial opportunities and provides a market for both the major energy players looking for scalability, and the home-end users looking to implement the technology themselves (substitute roofing etc). Add to that the declining production costs - was around 50c / kwh in 95 and is now around 20c / kwh (maybe even less) - and I think it will kick winds little ass over the next 10-15 years. Although I do agree that the US needs to get its shit together if it wants to catch up to Europe and Asia.
I don't see a rapid bubble any time soon. Green energy is a project finance dominated industry, a sector we all know is incredibly slow to get anything done. The possibility of a bubble has also been addressed by the Spanish government who reigned in their ROCs from the most attractive rates in Europe to on par with the rest of the continent due to fears of a bubble evolving.
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