Collapse in U.S. solar investment as Europe leads way
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The dramatic decline in U.S. solar stocks in the past three years — even more than wind companies — is creating a fractured market with Europe and China leading the way.
That’s the writing on the wall based on a new report by S&P Global, which shows private equity investment in U.S. residential and utility-scale solar down 93% from 2021. Just $3.1 billion has flowed into U.S. solar projects this year, down from $42 billion in 2021. Investment this year was more than 24% below last year.
At the same time, solar investment was up 55% in Europe last year, with more than $20 billion in private equity deals done, including in the U.K. It was also up in China.
As President Joe Biden this week imposed tariffs on certain solar wafers and polysilicon products from China, and President-elect Donald Trump threatens more — as well as to derail Biden’s renewable investment strategy — the outlook for solar investment looks dire in the short term.
Not a good sign for beleaguered solar stocks but solar capacity continues to rise, so a turnaround is inevitable. Right now, however, the action in solar deals is most certainly in Europe.
Don’t forget to contact me directly if you have suggestions or ideas at dcallaway@callawayclimateinsights.com.
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A majority of investors vote against ESG policies
. . . . Available data from one of the largest mutual fund’s shareholder voting programs shows more than three quarters of fundholders asked to vote on corporate proxy resolutions tick the boxes that are against environmental, social and governance (ESG) directives, writes Mark Hulbert.
Taking a look at the data from Vanguard’s shareholder voting program as it prepares to dramatically expand it next year, Hulbert notices that most shareholders either tick the box that follows corporate board recommendations, followed by the one that directs Vanguard to vote according to its policies. The box that follows ESG thematic voting standards is only ticked by about one in four. Hulbert’s disturbing conclusion is that, at least in the past two years, shareholders as a group have become less concerned about climate and diversity issues. . . .
Thursday’s subscriber insights
GE Vernova’s sizzling run boosted by dividend, buyback
. . . . Investors in high-flying GE Vernova GEV 0.00%↑, the energy arm of General Electric which spun off into its own public company early this year, were rewarded this week when the new company declared its first dividend and ordered a $6 billion share buyback. Shares of GEV rose more than 6% on Wednesday and were approaching $350, while some brokerages raised their targets, including Deutsche Bank to above $400.
GE is benefiting in many ways from the latest AI hysteria, which has focused on new data centers to power AI research and development at giant tech companies such as Microsoft MSFT 0.00%↑, Amazon AMZN 0.00%↑ and Google GOOGL 0.00%↑ , which are scouring the world for new sources of energy and finding it mostly in gas. Oil giant Exxon XOM 0.00%↑ also said this week it would begin directly supplying gas energy to new data center customers.
GEV CEO Scott Strazik said at an investor update announcing the dividend and buyback that demand for 24/7 energy from the tech companies is favoring its gas business rather than its wind business, which is forecast to continue losing money this year and has — somewhat — hobbled the shares of the company. He said GEV has been “humbled” by the wind losses but is going full speed ahead on its gas
strategy.
GE also raised its financial guidance for 2025 and forecast gains in free cash flow through 2028, but investors who are interested in catching this current run in its stock price since its public offering in April might want to target the end of this coming January as that is when the record date is for the dividend payout. At some point, the data center frenzy, like the original AI gold rush, will mature and the trend will move to another sector. But for now, he who holds the energy holds the keys to the kingdom.
GM pulls plug on Cruise robotaxi unit after losing billions
. . . . After watching the ubiquitous Waymo robotaxis ply the streets of San Francisco for the past several months, we took our first ride in one last week. It was easy to use through the Waymo app on your phone and the ride was pleasant and flawless, once we got over the initial jolt of being alone in the backseat of a moving car. It was
enough to make us want to ride again and if the local reaction is anything to go by in the city where Uber and Lyft got their starts, Waymo and driverless taxis are certainly going to become standard fare going forward.
So it was disheartening to see General Motors GM 0.00%↑ abandon its nascent robotaxi business, Cruise, this week after more than eight years of research and development and almost $10 billion spent. GM’s partner on Cruise, Microsoft, which invested $2 billion in 2021, said it would take an $800 million hit on the project. GM admitted the technology was simply too much for it to afford to scale at the rate needed to build a global robotaxi business, especially since it is still having cost and consumer demand issues with its consumer electric vehicle business.
The retreat of GM leaves Waymo, owned by Alphabet, as the clear leader in the automated taxi game, although Tesla TSLA 0.00%↑ claims to be close with its own cybercabs. Like Uber and Lyft, these businesses will take years to make any money and need to be owned by deep-pocketed tech companies or venture capital flows, not automakers with perennial labor and cost issues.
We expect others to enter the fray once the technology develops further, especially as it threatens to cut into lucrative revenue streams of other ride hailing companies in terms of food and parcel delivery. Amazon, for example, has an early autonomous vehicle business called Zoox. But for now, with GM out, all eyes will turn to Elon Musk and Tesla to see if they can come up with anything that can match the growing Waymo fleet as it begins to expand to other cities, with Miami the next target.
Editor’s picks: Small states argue for survival; plus,
Watch the video: At a landmark climate change hearing at the United Nations’ top court, small island states argue that human rights laws should apply because global warming poses an existential risk. As Henry Ridgwell reports for Voice of America, this case could reframe global climate change negotiations.
Banks need to act to narrow the climate finance gap
Trillions of dollars in financing are needed to mitigate global warming and adapt to climate risks, yet only one-fifth of financial institutions assessed in the 2023 S&P Global Corporate Sustainability Assessment have identified specific climate change-related business opportunities. Sustainable finance represents about 13% of banks’ total corporate finance activity, according to the new report – an annual evaluation of companies’ sustainability practices and performance. S&P says the share of firms with net-zero targets covering Scope 3 financed emissions, which represent the vast bulk of emissions for financial institutions, has risen slightly in the past year but remains low. The report also notes that companies that identified climate change-related opportunities described a variety of financing projects in their assessments, including renewable energy infrastructure, recycling and waste management, sustainable agriculture, and green and sustainable bonds and loans, among others.
Latest findings: New research, studies and projects
Climate tech innovation: Bring in the entrepreneurs
Curbing anthropogenic carbon dioxide emissions alone is inadequate to mitigate climate change, say the authors of a paper titled Entrepreneurial Success Pathways in Deep Tech Climate Innovation. And despite aggressive nationally determined contributions, corporate climate pledges, and renewable energy investments — these efforts alone remain insufficient to achieve planetary decarbonization. Technology innovation systems are required to address this shortfall. The authors say they have found two success pathways: (a) the presence of management leadership alongside investor relationships and (b) in the absence of government support, the presence of management leadership and commercial readiness. “We draw attention to a third pathway — the presence of investor relationships in absence of favorable industry structure. Our findings offer practical implications for entrepreneurs and investors deploying scarce resources, policymakers spurring climate innovation, and researchers advancing the fields of climate remediation and entrepreneurship.” Authors: Dinesh Moorjani, Stanford University; Rishee Kumar Jain, Stanford University; Ashby Monk, Stanford University.
More of the latest research:
Unpacking Business Ecosystem of Emerging Sustainable Industry: EVs in Developing Nations
Can Fiscal Rules Improve Banking Stability in Developing Countries?
Words to live by . . . .
“Winter is on my head, but eternal spring is in my heart.” — Victor Hugo
Well, this is more than beyond me. Years ago, when I was interacting with dot.com venture capitalists, I learned to simplify everything. Or, money isn't everything. Staying alive in current and future conditions is most important, and the simplest is often the best. If solar shares are dropping, it's time to buy. Unfortunately, we already have our solar, our EVS etc. I think I'm done here.