Capital Flight From Green Investments – “Innovation In The Energy Sector Could Slip Into A Major Crisis”

With another financial crisis flaring up, the green energy sector this time is taking a hit. This is being reported today in the German language Technology Review here.

Hat-tip: reader Jean

No wonder Al Gore blew a fuse a few days back. With this news and the Chicago Climate Exchange shutting down, the poor bloke is probably taking a real hit. Might want to have a skyscraper watch.

The article starts with the introduction:

Innovative companies of the finance-intense sector of renewable energy risk are getting their supply of cash cut off. Investors are opting for lower risk projects.”

Almost everywhere globally governments are scaling back programs that support renewable energies.”

And so it’s only normal that venture capital companies are now opting out. Investment strategies are changing. Technology Review writes:

Germany, Italy and Spain are reducing subsidies, in America the money from the 2009 stimulus package is slowly running out.”

According to Technology Review, people want quicker returns and less risk. Well who doesn’t? Technology Review writes:

During the last years many finance companies began, however, to invest in long-term projects with high capital requirements. That only worked mainly because they were able to expect subsidies from the state. Thus hundreds of millions flowed into start-ups in solar technology, which first had to build expensive plants to get the technology ripe for the market. The profits came later, if at all.”

Now the state subsidies are shrinking and new startups will have little chance of competing against the already established companies – too risky. The bubble has nowhere to go but to implode.¬†So watch the politicians soon¬†scramble and start blaming “speculators” and “greedy finance companies” for the mess they themselves created, and then start calling for more financial regulation. Technology Review sums it up:

David Victor, expert for solar and wind energy support at the University of California in San Diego fears the worst: ‘Innovation in the energy sector could slip into a major crisis’.”

12 responses to “Capital Flight From Green Investments – “Innovation In The Energy Sector Could Slip Into A Major Crisis””

  1. DirkH

    For the last 2 years i worked in a project at a solar energy company in Hamburg, guess why it ended. Liquidity crisis. The PV companies find nobody who will extend their credit lines; they ran out of suckers. Chinese competition will kill the weaker ones RSN.

    1. DirkH

      And just to repeat my own position: It will take 2 more cost efficiency doublings to make PV electricity competitive in Germany and then one to account for losses in storage. Each of these doublings will take 5 years. In 15 years we can run the country on PV. (and store/move around the energy as Methane or H2) Without subsidies. Many of the current PV companies will not live long enough to see that day.

  2. Tiberius

    This will be celebrated as a great victory by climate change deniers and by corporations profiting from the world’s continued dependence on non-renewable energy sources, I suppose. Whether it will be celebrated by our descendants 50 years in the future is another matter entirely.

    1. Joe

      Why? Because their grandparents didn’t use what they had, dismantled cost effective, life-improving forms of energy, and left the grandkids to frees to death in their mud huts?

  3. kuhnkat

    ” Might want to have a skyscraper watch.”

    Yup, that walrus hitting the deck from 100 floors up could cause major damage and possibly trigger a 7.0. Him landing on your car or head would definitely ruin your day.

  4. R. de Haan

    Pull the Government financial support on green technology and the entire industry goes bust.

    And that’s how it should be.

    1. DirkH

      I completely agree with removing the subsidies. The industry would shrink to a size that serves its niche market and grow naturally from there. It would force them to innovate or perish.

  5. Bernd Felsche

    The “major crisis” being that they’d have to do development on technologies that are commercially viable, instead of relying on a tiny proportion of the subsidies on production.

    It won’t be a crisis in *innovation*. Subsidies to “winners” chosen by politics produce unstable monopolies which are dependent on those subsidies. They are not an incentive to *innovate*. They encourage stasis.

  6. mwhite

    Relevent to Germany and others

    http://thegwpf.org/uk-news/3621-uk-windpower-targets-are-unfeasible.html

    “Plans to get more than a third of Britain’s energy from wind are unfeasible, as the national grid would not be able to cope, say researchers.”

  7. Holmfrid

    Italian innovation The Energy Catalysator, which produces 5 kW energy from 300 W input by cold fusion of Hydrogen and Nickel , will change the energy situation completely away from fossil, green and nuclear energy. In october the start up of a 1 MW plant i Greece will take place.

    1. Ulrich Elkmann

      Holmfird: this looks like a good occasion for a safe bet (the issue is clear-cut, and time horizon short), However, I fear that betting against this Italian job (produced in Greece, to boot) will not generate any sizable gain. There was a guest post about the E-Cat on Watts Up With That by Ric Werme, put up on August 4, 2011 [http:/wattsupwiththat/2011/08/04/andrea-rossis-e-cat-device-on-target], generating almost 300 replies, ca. 95% of which said, in no uncertain terms and varying degrees of politeness, “This Is A Scam”. The history of all those wondrous machines, from Orffyreus’s Wheel and Keely’s Water Engine to Pons and Fleischman’s cold fusion, should be enough to be skeptical, until the device has been put on the market and the first few million copies have been producing energy for some years. Otherwise you might as well invest in Cargolifter or book a moon trip on Virgin Galactic.

  8. Joe

    Despite what anouncement will be made, governments will as quietly as they can trim all of the subsidies for “green energy” on the chopping block of austerity. While it has been subsidised in many ways for 40 years, it’s ramped up to idiotic levels in teh past decade, and it will just disappear.

    The fact is that it’s GOOD for the companies in this area to be forced to, if it is possible, produce realistically cost-effective ways to get their goods to market without the thumbsucking, guilt-based marketing, and subsidies. The “Atomkraft Nein Danke” generation (now in their 40s) will have to finally grow up.