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’.”