Saturday, June 05, 2010

The Green Bubbles of Wind and Solar Under Stress

Small wind and small solar can fit very nicely into particular niches -- such as off-grid energy production. But large wind and large solar projects are another thing entirely.

There has never been a good economic justification for large scale wind or solar projects. Europe fell head over heels for the green energy -- carbon hysteria scams long ago, but is just now beginning to pay a tremendous price for its folly. Any other economies that are foolish enough to join Europe in its delusional pursuit of wind and solar power -- to the neglect of clean nuclear and advanced coal $ gas, will pay a huge economic penalty.
... few if any wind energy, solar energy, and other green electric power installations could make money without subsidies. As governments across Europe curb spending and cut subsidies in response to the Greek crisis, the props to green energy are being cut back. As almost each day is marked by a new, and harsher national austerity plan announcement in countries ranging far up the scale from small-size Greece, we can be sure that reining in deficits will not be kind to green energy vanity projects.

On May 6, German lawmakers reduced subsidies to new solar plants by as much as 16%, dealing another blow to the generally high cost German solar energy industry, already faced with rising, low cost competition from China and India. Italian solar industry groups expect government support for new wind and solar energy power generation plants to be scaled back by 25% or more, in June.

In Spain, where subsidies to the country's massive windfarms and their dependent industries is estimated to have attained as much as 12 billion Euros in 2009, either directly or through "feed-in tariff" subsidy for power sales, government proposals target at least a 30% cut in subsidies.

... Sales and profits for North American and Chinese renewable energy companies selling their products in Europe have declined, as the Euro has lost about 15% against the US dollar this year. Affecting profits more than sales in first impact, profits for China's leading solar-cell maker Yingli Green Energy will fall more than 40%, and Yingli's major home rival Suntech Holdings will suffer a 79% drop in profits, according to Barclays Capital analysts, if the Euro stays below $1.25 in the next 6 months.

This has quickly spilled over to stock price valuations. European, North American, Chinese, and Indian wind and solar energy companies are suffering large falls in their stock price value. The higher priced, higher tech sectors have been most affected, shown by Canadian Solar's stock falling about 50% since April 1, while stock of Suntech Holdings is off by 35% since April 1. Spain's biggest producer of wind turbines, Gamesa Corporacion, has lost 43% of its share price value since January 2010, and 19% since April 1. _EnergyTribune

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