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Who Is Eyeing Clean Energy?

Leo Kolivakis's picture




 


Submitted by Leo Kolivakis, publisher of Pension Pulse.

Reuters reports that Barclays pension fund eyes clean energy:

The
15 billion pound ($24 billion) defined-benefit pension scheme of UK
banking group Barclays Plc is poised to make a foray into clean energy
investments, its chief investment officer said.

 

Tony
Broccardo said the pension scheme was considering alternative energy
investments, including via private equity firms which finance green
energy projects.

"Clean technology is an area that could be a big allocation for us in the future," Broccardo told Reuters.

 

Broccardo,
appointed last year as the fund's first chief investment officer, said
the fund will seek exposure to alternative energy as part of its
"opportunistic" investment program.

 

Last
year, the strategy prompted allocations to corporate credit in the
United States and Europe, which increased its overall risk profile but
netted 20 percent returns.

 

Broccardo
said the fund had about 500 million pounds annually to investing
opportunistically. Combined with emerging markets and technology, he
said the pension scheme could allocate over 10 percent in clean
technology.

 

The scheme is
also poised to increase its investments in active management. "We have
had good experience with hedge funds and more active management.
Skilled managers will do quite well," he said.

Good
for Barclays. At least some pension funds are thinking carefully about
the big themes that will shape the future of energy. Clean energy is
definitely one of them.

And it's not just Barclays. After being
relentlessly negative on the solar industry since the summer of
2008, investment bank HSBC is starting to warm up to the sector again:

The
upshot: The worst of the solar sector’s woes may be behind us. That
doesn’t mean the good times are here yet—but it does open the door to
selective investments in companies that can weather the three years or
so of storms that still lie ahead, the bank says in a new report.

 

The
thesis of “Global Solar Power: Solar Eclipsed?” is straightforward: The
supply glut that has plagued the sector all year will persist until
2012. That will keep pushing prices down—bad news for corporate
profits, good news for the sector as a whole as it becomes more
competitive with traditional sources of power generation.

 

HSBC’s
winners include Yingli Green Power, Sharp, Solar World, and REC. The
bank doesn’t care as much for Suntech Power and LDK, among many others.

 

[Note: I like them all, including LDK, Suntech and Trina Solar.]

 

What’s
really interesting about HSBC’s new report is how solar power stacks up
today against other ways of generating electricity—it doesn’t. That is,
all the other power-generation technologies are in roughly the same
neighborhood, even wind power—but not solar.

 

For instance,
HSBC estimates costs per megawatt for different options: Combined-cycle
gas, 43 euros; regular coal, 62 euros; onshore wind, 58 euros; nuclear
power, 48 euros; geothermal, 43 euros. Photovoltaic solar power costs
290 euros per megawatt; concentrated solar power 181 euros.

 

Or
put another way: What price would oil or gas have to be for each
technology to be break-even without subsidies, using combined-cycle gas
turbines as the low-cost yardstick?

 

Geothermal is the cheapest:
It is competitive with natural gas at $5.16 per million BTUs or oil at
$57 a barrel. Nuclear power breaks even at $6.26 and $69.

 

Traditional,
onshore wind power breaks even with gas at $8.33 or oil at $92.
Offshore wind still needs a push: It requires gas at $17.14 or oil at
$189.

 

In contrast, solar thermal needs to see natural gas at
$35.66 or oil at $393. And good old photovoltaic solar, like the kind
on rooftops? Natural gas needs to be at $59.61 or oil at $657 a barrel.

 

Quick reality check: Gas today is at $3.93 and oil is at $66.

 

That’s not to say there’s no hope for solar power. There’s always the government.

Thanks
to price supports, HSBC expects solar power to reach retail “grid
parity” in some places—California and New York—as soon as next year.
That means solar power will generate electricity that’s competitive
with what you pay on your bill every month. It will take another five
years or so for solar to reach wholesale grid parity—when it becomes a
no-brainer investment for big utilities.

There is a
clean energy revolution going on and it's just in its infancy. Those who
can't see it are either blind or hopelessly ignorant. If pension funds
are smart, they will start thinking about investing opportunistically
in this sector now.

***UPDATE: Supply Glut Putting the Heat on Solar Stocks?***

Just so I am not accused of pumping solar stocks, read this Barron's article, Supply Glut Will Put the Heat on Solar Stocks.
I agree with some comments (I am not as bullish on FSLR relative to
other solar stocks), but respectfully disagree with other comments made
in the article. Looking ahead, I see PV supply chain revenues rebounding as demand picks up and credit concerns ease.

 

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Sun, 09/27/2009 - 10:19 | 80848 Anonymous
Anonymous's picture

And those cars that run on water are still being stockpiled by the automobile manufacturers. Present gasoline burning engines are wondrous and efficient things. They will be probably be peak technology for the rest of our life times.

Sun, 09/27/2009 - 10:10 | 80843 robert (not verified)
robert's picture

pickens got out of his texas plan because the utilities made it too expensive to hook his wind juice to the grid.

the cost numbers on the various forms of generation look a little suspect. at the very least, even if solar's E29c/w is true at this moment, it is only because the 50% drop from last year's module costs has not worked its way through into this equation. consider that fslr is quoting farms at $0.10/w right now - on par with gas. wait until eslr and the chinese plop solar panels in home depot soon.

the nuclear cost is definitely too low. quote me electricity cost on a recently finished nuclear plant, not one that was finished 20yrs ago.

Sun, 09/27/2009 - 09:18 | 80834 Ned Zeppelin
Ned Zeppelin's picture

Congress should issue a new domestic currency to finance the renewables industry, and make We The People the owners of the project.

Sun, 09/27/2009 - 03:38 | 80797 Anonymous
Anonymous's picture

seems like barclays tryes to pump a silly investment. then dump

Sun, 09/27/2009 - 02:15 | 80784 Joe Sixpack
Joe Sixpack's picture

Energy independence is the key, not "green" energy. Don't let the CO2 thing distract you from the goal.

 

www.EnergySolution.US 

Sat, 09/26/2009 - 22:17 | 80685 Anonymous
Anonymous's picture

not like the oil companies will lower oil price to price alternatives out of the sytem

Sat, 09/26/2009 - 21:46 | 80652 pivot
pivot's picture

assuming pensions want to make money, they should stay away from alternatives and clean tech.  I agree w/ some of the other posters in that there is too much competing interests (especially politics) that give too little visability into returns.  Its too easy for your technology or process to be charged an excise fee or for some competing technology to be given a subsidy to "kick start" innovation.  Government will continue to mess this up and play favorites, distorting mkts in the process. 

If pensions are long term investors they should invest in dirty, but well known fuel production.  Energy MLP's have averaged probably 12%+ return over the past 10 + years, and limited partnership oil/gas production partnerships have done even better (and there is no reason why this should not continue to be the case).  They must ask themselves "do we want to make money"? or "do we want to appear socially responsible".  I know which way their beneficiaries would answer...

Sat, 09/26/2009 - 18:42 | 80554 ToNYC
ToNYC's picture

CNG is domestic clean emission alternative that has only the fract-drilling issue (a water-recycling issue) to contend with on the debit side of the ledger. It is 100% domestic which means no empire-protection wars and Middle Eastern politics and defense weapons in trade need be engaged to play today and start with big rigs that can be converted virtually overnight.
All the above arguments seem to be calling CNG not clean burning low-emission and equate with the crude oil 7 million barrel per day U.S. import need/ fee to OPEC alone ( do the math on the EIA[Energy Information Agency] stats) 153 Billion USD per year payday to the OPECers alone for crude payment ..CNG is surely an alternative transportation fuel that can provide all the torque for a big rig where batteries are still closer to golf cart power. The oxymoronic coal lobby is hell-bent to link crude and natty gas. "Clean" coal requires mountaintops to be removed and thrown into the rivers of Appalachia..then they scrub the burning pellets and still need to dispose that ash in someonelse's backyard. Yes, of course it produces carbon dioxide but it's a huge advantage to strategic energy independence that the 153 Billion per year payday gang would prefer no notice be taken.

Sat, 09/26/2009 - 16:18 | 80517 dcosby7
dcosby7's picture

The question with green energy has never been "is it better" but rather "is it feasible".  A nationwaide electrical grid supported by wind, solar, geothermal, tidal farms never will be.  Complete independence from nuc/foss energy isn't either.  However a massive reduction in "dirty" energy is.  The roadblock is none other than people that want to sell you energy.  The above poster is correct, solar panels will soon become inexpensive.  The reason they are not already is because energy companies (traditional or green) want you to buy their energy not cheap, efficient solar panels on your roof which reduces your demand and would require them to pay you a market value for your excess production.  They won't own the manufacturing rights to theoretical future solar panels, so they need to sell you the solar farm model (which has value, just not as much as they want it to be).  T boone wants to sell you wind farms, but the reality is small(think box fan size), cheap, durable wind generates atop power poles across this country would be much more efficient and top off nighttime power needs much more easily.  No need to rewire a nation, but it's a longer term investment with very narrow return margins (cost of manufacture, installation, and up keep will nearly match profits).  the problem with big business gree is that it wants to be centralized and that is often antithetical to green.  light, cheap efficient solar panels on homes and busineses would drastically reduce daytime demand in large swaths of this country. Local, environment specific addtional resources to suppliment would make slahes in PM nighttime demand.  The real monster in all of this is going to be the fight over algae based biofuel.   Get ready to rumble with big oil for that.

Sun, 09/27/2009 - 06:12 | 80813 Anonymous
Anonymous's picture

The real monster in all of this is going to be the fight over algae based biofuel.

Check the math:
Algae can produce up to 15,000 gallons of oil per acre per year (http://www.hrbp.com/Algae/AlgaeSolution.html).
This corresponds to 15,000/42/365*640=626 barrels of oil per square mile per day.
The US total crude oil and products imports were 12,915,000 barrels per day in 2008 (http://tonto.eia.doe.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbblpd...).
In order to substitute only imported oil you'll need 20,631 square miles of algae ponds. This is something like 4 times Connecticut ot 2 times Massachusetts in terms of the area. This will change not only the climate, but the entire geography.
Plus, you'll need plenty of water, 365 sunny days per year, and, guess what - 1.8 tons of CO2 per each ton of algae produced. And where will this CO2 come from if everyone goes green?

Sat, 09/26/2009 - 10:37 | 80373 McGriffen
McGriffen's picture

where Al Gore leads, i gladly follow !  heh heh

Seriously, wind power gets a lot of press here in Texas.  For odd reasons though, Boone Pickens dropped his grandiose plans to drop cool $ billion(s) into a big-arse wind farm.  Oil dropping under $100, maybe had something to do or that the tax credits just weren't quite as agreeable.  Better spent on top-25 football, right !

As supplementary sources, easy to get on board with wind or solar.  But wind has a few issues...like dead bird carcasses (or the 'nimby' approach prevalent at martha's vineyard).

Imho, until or unless national the power grid fails (as in 2003, was it?) I just don't foresee any critical mass for either.  Natural gas is plentiful in a few southeastern regions and coal is plentiful in Montana and some others.  The cheapest alternatives are still fossil-based, and with better technology applications better accessible today than 25 yrs ago.

*nuclear power too...but it's not a real option is it

Sat, 09/26/2009 - 18:09 | 80548 Anonymous
Anonymous's picture

Fossil, you mean dinosaur juice LOL

Sun, 09/27/2009 - 10:55 | 80359 Leo Kolivakis
Leo Kolivakis's picture

***UPDATE: Supply Glut Putting the Heat on Solar Stocks?***

Just so I am not accused of pumping solar stocks, read this Barron's article, Supply Glut Will Put the Heat on Solar Stocks. I agree with some comments (I am not as bullish on FSLR relative to other solar stocks), but respectfully disagree with other comments made in the article. Looking ahead, I see PV supply chain revenues rebounding as demand picks up and credit concerns ease.

Sat, 09/26/2009 - 08:17 | 80349 Anonymous
Anonymous's picture

BATTERY STORAGE. The chemistry is there. The manufacturing is not. If the right technology can be combined with the right manufacturing process, a beautiful economies of scale will make these things available to the masses. VC money is lurking all over it: going to conferences, digging into patents, meeting with potential manufacturers.

The small gen and DRG (Distributed Renewable Generation) is ok. But the storage is what will liberate most people.

Sat, 09/26/2009 - 08:05 | 80346 ED
ED's picture

Solar reflectors are good. Dont need silicon

Sat, 09/26/2009 - 08:19 | 80350 Hephasteus
Hephasteus's picture

Silicon is easy to make. They aren't CPU's they don't undergo some odd 1000 manufacturing processes. Solar panels can and will be cheap. People just have to LET it happen.

Sat, 09/26/2009 - 11:18 | 80391 Anonymous
Anonymous's picture

Yes, thank you. Solar energy collectors/electricity generators are good. Also, solar reflectors and reflective paint to reduce home and office air conditioning costs are good. Solar water heating is good. A clothesline is good. A small backyard vegetable garden, even one tomato plant, is good. Adding a little "physical" solar to your family lifestyle, like adding a little "physical" gold to your family treasury (an actual coin, not a share of an ETF), is something that every family can do, and it adds to economic "people power", which is good.

Sat, 09/26/2009 - 07:46 | 80343 Anonymous
Anonymous's picture

yes, sure, the "clean" energy sector will prosper. and we all will be made to pay for it through cap & trade. maybe it will even turn to be the next bubble.
there is still some money in pension funds. the squid wants it.

Sat, 09/26/2009 - 04:47 | 80326 Anonymous
Anonymous's picture

Yes this green thing is good, beyond the clean part. Anything that can lead to energy independance is what this country needs now. We can't afford to import oil anymore to burn, what a waste. Creates jobs too.

Sat, 09/26/2009 - 02:19 | 80311 Anonymous
Anonymous's picture

If pension funds are smart, they will start thinking about investing opportunistically..

I don't know what your motivation is here. I have been involved with the company, and tried to discuss the forty million Canadian that Ontario Teachers wrote off in whole after one year in Railpower, which designed and manufactured hybrid locomotives. Unless the government, via its arbiter GE Finance, wants to take a flyer on your technology, then do not bother. I have seen more companies than I care to count get crushed by the monopolist from Fairfield, which has a hand in every 'clean' technology. Add to that the vampire squid at 85 Broad, waiting for their kill with carbon credits, and do not waste your time. No clean energy money will be allocated until the squid has its tentacles engorged. I was naive in thinking that the current American administration will be interested in promoting domestic clean energy. Instead they spent all of our money making good on the squid's bad bets. Money gone.

Sun, 09/27/2009 - 11:31 | 80881 gmrpeabody
gmrpeabody's picture

+1

Sat, 09/26/2009 - 01:58 | 80302 Hephasteus
Hephasteus's picture

I'm eyeing clean energy. You have do solar and wind together becuase you get more wind when you get less sun and you get more sun when you get less wind. It works in so many places.

Sat, 09/26/2009 - 11:40 | 80402 Anonymous
Anonymous's picture

Where are the power transmission lines also?
PCG planning to do a space station solar microwave
transmission to the grid. Would hate to be the plane
that flew too close to the sun...

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3251493

Sat, 09/26/2009 - 11:38 | 80401 Anonymous
Anonymous's picture

Tide too.
Where are the batteries and economics?

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3251493

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