The Dawn of the #Solar Age and the Greatest Investment
Opportunity of all Time
Point Roberts WA, Delta BC, January 21, 2020 – Investorideas.com, a
global news source and leading investor resource covering Cleantech and
renewable energy stocks issues today’s Cleantech
column at Investorideas.com and Renewableenergystocks.com with J.Peter Lynch.
Read this in full at https://www.investorideas.com/news/2020/renewable-energy/01211PeterLynch-Solar-InvestmentOpportunity.asp
J.Peter Lynch
We are at an historic junction of
human history in which we are transitioning from the age of fossil fuels to the
age of renewables and distributed energy, in effect a true paradigm shift. The tide has turned and the worldwide
momentum is irreversible. This change is occurring all around the world and has
been accelerating dramatically in the last 3 years.
One of the most critical factors
in this accelerated transition is plain and simple, yet financially compelling
– economics! Strangely this is seldom
highlighted in most articles
Renewables are in fact cheaper than all forms
of fossil fuels especially when you compare all of the relevant factors –
initial cost, timing of cash flows (cost of money), absence of any variable costs
for decades, superior job creation by a number of magnitudes, no pollution, no huge
resultant cleanup costs and few if any health related costs.
The truly interesting and
significant dichotomy in this transition is that at this time the greatest threat
mankind has every faced – Climate Change, is upon us and must be address
immediately and at the same time Climate Change also presents us with the greatest
investment opportunity of all time!
Climate Change must be addressed
and by far the fastest and cheapest way to address it is with existing
renewable technologies – solar, wind, biomass and working together connected to
batteries when needed and distributed energy networks that are far more flexible,
extremely resistant to disruption (storms, terrorism) and have a
significantly higher proven reliability.
The investment areas include: solar,
wind, batteries, electric cars, fuel cells and micro grid related companies are
just starting to appear and present themselves and many more will arise as the
transition accelerates.
It is
important for the investor to understand that humans tend to think linearly
(pretty much straight), whereas innovation and paradigm shifts are never linear
they are always in an S-curve type of acceleration when it moves along on a
slight incline (the decades of the change) and then takes off sometimes almost
vertically. That is one of the reasons investors generally miss the inflection
point where the innovation or paradigm shift starts its dramatic acceleration.
It will be the savvy and aware
investors and corporations that will take advantage of this. Now that the
economics are much more obvious this will spark the investment community and
they will further accelerate the transition. It will become increasingly
difficult to ignore the superior financial numbers of renewables and in the end
the best investment for investors and for the planet will be the same –
renewables.
You may hear about or read about
how expensive it will be for the transition to renewables and yes it will be
very expensive, but it will be far cheaper than repairing old and decrepit
infrastructure and building new power plants that are actually obsolete
before they are built and many will end up as stranded assets.
Why
are renewables the Greatest Investment Opportunity in History?
Renewables will be a great and
transformative investment because they have all the key characteristics of a
great investment. They are simply: Better, Faster and Cheaper!
Better – it is clean energy, the only truly abundant energy source,
available everywhere, has far less financial risk and is the only energy
source that strengthens rather than weakens national security.
Faster - solar scales up as much as 15 times faster than nuclear or fossil fuel plants. There is simply
no financial comparison when it comes to speed of building and the time
value of money involved. (Money tied up in a project than takes many years
(5-10) verses one that is built in 12 to 15 months.
Cheaper – due to recent dramatic decreases in price (62% for wind and 82% for
solar) in the past 5 years. These decreases have continued in 2018 and are
projected to continue in 2020 and beyond. Another
fallacy concerning both wind and solar is that they take up too much land. As
you can see below that is simply not true.
The intrinsic advantages of solar
are dramatic and insurmountable
1.
Solar
is abundant, can be utilized in almost any size (a wrist watch to city) and
available everywhere. One could say that it is the most “democratic” form of
energy in existence.
2.
Solar is renewable and is not finite as are all
other fuels and it is the only source of energy that can easily supply all our
long term needs. ** The energy from approximately 2 weeks of sunshine hitting
the earth is greater than ALL the energy stored in existing fossil
fuels.
3.
Solar & Wind are the only energy
generation technology’s that do not utilize (and pollute) vast amounts of fresh
water. This is a key advantage that is seldom
mentioned. However, it is without question, an advantage that is
insurmountable.
4.
Solar & Wind are the only energy source’s that
do not create or emit carbon and further contribute to climate change.
Why Investing is different when a
‘paradigm shift” is occurring.
One of the “old” contrary adages
in stock market investing is: “this time it is different” – it is generally
associated with novice investors who most of the time, lose money.
It is a true that most of the
time – things are the same, but during a paradigm shift – the old rules
do not apply and a unique & dramatically different playing field
presents itself to investors.
It happened before when personal
computers (distributed computing) supplanted main frame computers (centralized
computing) and it is happening now with distributed renewable energy
technologies overtaking antiquated, inefficient and costly centralized energy
generation.
The risk of investing in huge
power plants that have 30+ year lives when there is the distinct possibility
that they could become negative cash flow nightmares quickly is simply
gigantic. With efficiency improvements and solar and wind growth the
electricity demand worldwide has been decreasing for the first time ever. This decrease
in demand will certainly lead to dramatic decreases in revenues and almost
certainly long term negative cash flows for central plants.
Likewise investing in assets
(oil, coal, gas) that are in the ground also presents an unacceptable level of
risk to any investor. These assets could become stranded as a result of climate
change or simply because they will cost too much compared to renewables to
extract. In the U.S. there has recently
been significant pressure for colleges and state pension funds to divest their
portfolios from investments in coal and other fossil fuels.
Over the past year the S&P 500 index (SPX)
has been up 28.88% Oil ETF’s have been down 10.50% Solar ETF’s up 66.04% and
Wind ETF’s 27.8%. The results over the
past 3 years are similar. Why anyone would invest in fossil fuel related companies?
I do not know what the investment strategy these analysts were utilizing, just
let me just say that I am not familiar with that particular investment strategy
and would never recommend it.
The end of the fossil fuel era is
approaching and the trend is irreversible. It is simply another example of
the capitalist process of creative destruction that has taken place in many
industries over the last 100 years and has always resulted in a huge
investment opportunity.
Mr. Lynch has worked, for 36 years as a Wall Street security analyst, an
independent security analyst and private investor in small emerging technology
companies. He has been actively involved in following developments in the
renewable energy sector since 1977 and is regarded as an expert in this field.
He was the contributing editor for 17 years to the Photovoltaic Insider Report,
an early publication in PV that was directed at industrial subscribers, such as
major energy companies, utilities and governments around the world. He is currently
a private investor and has from time to time been a financial/technology
consultant to a number of companies.
The next article in this series will
cover each of the industries sectors solar, wind etc. It will also highlight
(not recommend) the strongest stocks in each sector. These selections will be
the result of my using of a system I use for stocks. It is a combination of a
stocks relative strength and the individual volatility of each stock.
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