As we report on the front and back pages of this month’s Quoted Cleantech, February proved to be another tough month for cleantech shares. Doubtless, the impact of Germany’s decision in January to reduce its feed-in tariff for solar electricity by another 15% (not 10% as analysts had been expecting) continued to drive down solar stocks, but wider economic concerns are also playing their part in discouraging investors from the cleantech sector.
It does not help that three of the so-called PIGS (or PIIGS) economies – Greece, Italy and Spain – are also important markets for the European solar industry. As these countries introduce austerity measures in order to deal with their debt issues, it seems unlikely that subsidies and grants for solar energy projects will be given a high priority.
Meanwhile, in the UK uncertainty about HM Government’s own debt and the strength of the pound ahead of the General Election (expected in May) has led to caution among investors generally. Wider stockmarket indices for the UK did not go down during February, but neither did they rise by much.
At the moment interest in clean energy is playing second fiddle to oil and gas among UK investors, as they look to exploration firms that are drilling for black gold in places as far flung as Iraq and the Falkland Islands – the recent strengthening in the price of oil no doubt being a factor.
However, with the UK’s media starting to become more vocal about a potentially severe energy crisis facing the country within the next few years as old nuclear power plants and dirty coal-fired power stations are closed down, there will be plenty of ways for investors to take advantage. Yes, the next UK Government – whatever its flavour – may be forced to fire up the old coal plants again (which would be a boon for the UK’s coal mining sector) in order to prevent blackouts, but cleantech solutions such as biomass will be given priority. Meanwhile, the expansion of offshore wind in the country has only just begun.
The cleantech industry is still in its nascent phase. Although it has so far relied on subsidies to move forward, technological improvements should eventually make clean energy competitive with traditional forms of energy. For this reason, we at Quoted Cleantech continue to maintain that investing in clean energy will deliver big returns over the long term.
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