• Ed Flattau

Premature Investing

In the 1980s’, I thought I was getting ahead of the curve by investing in some fledgling solar energy stocks. They were going to be the next Wall Street bonanza, akin to IBM in the past and online powerhouse Amazon in the present.

No such luck. Solar energy was not as close to the cutting edge as I envisioned. The companies I chose either folded or struggled precariously on the margins.

In retrospect, my entrepreneurial intuition was 40 years too early. Financial gurus are finally jumping on board with projections that solar stocks are destined for a bright future in 2019 and beyond—and why not. Global output for solar photovoltaics has been increasing 40 percent annually of late. The International Energy Agency predicts that solar energy will supply five percent of the world’s electricity by the year 2030 and 16 percent by 2050.

For prospective investors who are faint of heart, it should be noted that solar costs have declined by 65 percent over the past five years, and in some circumstances, precocious renewable energy is already price-competitive with fossil fuels.

Industry executives ought to know what is going on, and a majority of them –according to the polls—believe that renewable energy, including solar, will provide 50 percent of the nation’s electricity by 2045.

It is not just sun power and other renewables coming on strong that build the case for an activist environmental investor to proceed. Coal, a major polluting nemesis of solar, is rapidly losing its place in the United States to cheaper natural gas as well as to falling prices for renewables. No new plants are planned as the overall American coal work force of approximately 53000 miners is steadily shrinking and dwarfed by the numbers employed in the renewable sector.

Then there is the crusade to divest ownership of fossil fuel stocks. It is a movement gathering momentum that bodes ill for oil company securities’ future, and promise for renewables’ outlook. Already, more than 985 institutional investors worth more than $6.2 trillion have committed to dump their oil stock. Among them are 40 American colleges. Ireland has become the first national government to undertake complete fossil fuel divestment. And though divestiture won’t by itself eliminate greenhouse gas-polluting fossil fuels, it will expedite their phase-out.

So renewable energy finally appears to be coming into its own and not a moment too soon for a fossil fuel-encumbered world or a speculative environmental investor. A foray into solar appears not as risky a proposition as it was four decades ago.

That doesn’t preclude some advice from an admittedly amateur but engaged stock picker. Fossil fuels are not going to disappear overnight. To any prospective solar investor seeking to make a quick killing, you may need patience, even when all the stars seem aligned.


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