By Steve Goreham
Originally published in RealClear Energy.
The title promotes renewable energy equipment companies as part of efforts to transition to Net Zero carbon dioxide emissions by 2050. Wind and solar system providers, electric vehicle manufacturers, green hydrogen producers, and other green equipment companies form a growing part of the industry. many. But renewable equipment companies have had poor market results, so investors should be wary.
The Renewable Energy Industry Index (RENIXX) is a global stock index of the world’s 30 largest renewable energy industry companies by stock market capitalization. RENIXX companies currently include Enphase Energy, First Solar, Orsted, Plug Power, Tesla, and Vestas.
IWR from Germany established RENIXX on May 1, 2006, with an initial value of 1,000 points. This month, RENIXX is at 1,013 points, essentially zero growth in the past 18 years. By comparison, the S&P 500 Index more than quadrupled over the same period. RENIXX is down three years in a row from 2021, losing half its value.
Wind turbine manufacturers have faced serious financial challenges over the past three years, despite rising sales. Rising costs, high interest rates, and project delays continue to affect the profitability of wind projects and equipment suppliers. Shares in Denmark-based Vestas Wind Systems, the world’s largest supplier, have risen just 7% over the past 16 years, and its share price is down 58% from its high in 2021. Vestas is struggling to make profits in 2022 and 2023 and delayed dividends for shareholders .
Other major wind suppliers have also been poor investments for shareholders. The stock of Siemens Gamesa, the second-largest turbine maker, is down 65 percent from its peak in 2021. Gamesa reported a €4.4 billion loss in 2023 and received a €7.5 billion bailout from the German government in the same year. Other top wind suppliers have seen share price declines since 2021, including China’s Goldwind (down 77%) and Germany’s Nordex (-36%).
Eighty percent of the world’s solar panels are produced in China and the top six suppliers reside in China. The solar panel industry is experiencing overcapacity and severe competition. Share prices of the top seven providers have all fallen more than 50 percent since 2021. Shares of US company First Solar have risen since 2021 but remain below their 2008 highs.
Tesla, which was founded in 2003, remains the only publicly traded EV stock until 2018. By the end of 2021, Tesla’s price will increase to more than $1 Trillion, with a market value more than Toyota, Volkswagen, Mercedes-Benz. , General Motors, Ford, BMW, and Honda combined. But Tesla is an exception.
But in most cases, electric vehicle (EV) companies have invested heavily. Between 2020 and 2024, 31 EV companies will go public on US stock exchanges. Only one of the 31 companies, Chinese company Li Auto, has seen a price increase since its initial public offering (IPO). Thirty EV companies saw their stock prices fall, the fastest.
Companies’ EV prices down from IPO prices include Fisker (-99%), Nikola (-94%), NIO (-50%), Lucid Group (-75%), and Rivian (-88%). Another six of the 31 companies went bankrupt. Tesla and China’s BYD and Li Auto are the only profitable EV companies today.
ChargePoint is the world’s largest dedicated EV charging company (behind EV maker Tesla), with more than 25,000 charging stations in the US and Canada. ChargePoint goes public in 2021 by merging with Switchback Energy Acquisition Corporation, valued at $2.4 billion. The company’s current value is estimated at $585 million, down 76% from 2021. For fiscal year 2024, ChargePoint lost $458 million from $507 million in revenue.
It’s not clear if the charging company can make any money. The high-speed 50-kilowatt EV charger is about five times cheaper than a traditional gas pump. Eighty percent of EV charging takes place at home, reducing demand for public charging. ChargePoint, EVgo, Wallbox, Allego, and Blink Charging are all now priced at a tiny fraction of their original IPO prices. None of the EV charging companies are profitable, even after continuing to receive large government subsidies.
Plug Power is a leading supplier of hydrogen energy systems, including battery cells for hydrogen vehicles and electrolysis to produce green hydrogen fuel. Founded in 1997, the company went public in October 1999 at a split-adjusted price of approximately $160 per share.
But in its 27-year history, Plug Power has never turned a profit. According to financial reports, the company lost $ 1.45 billion in 2024, increasing from a loss of $ 43.8 million in 2018. The stock price is currently under two dollars per share.
Established traditional companies are finding that renewable equipment can be a bad business. By 2023, Ford will make $4.7 billion from the sale of 116,000 electric vehicles, or more than $40,000 per vehicle. General Electric’s wind turbine business will cost $1.1 billion by 2023.
The US federal government provides subsidies to renewable equipment companies between $7 billion and $16 billion per year between 2010 and 2022. But the Cato Institute estimates that due to the passage of the Inflation Reduction Act in 2022, the subsidy will skyrocket to $80 billion in the year fiscal year 2025.
Without the fear of human-caused climate change and rising levels of government subsidies and mandates, many of these green companies would not exist. There is no doubt that carbon dioxide pipelines, heavy electric trucks, offshore wind systems, green hydrogen fuel equipment, and EV charging stations will be viable businesses in unsubsidized capital markets.
Over the past year, leading financial firms have reneged on their climate change pledges. Bank of America, JP Morgan, State Street, and Pimco have withdrawn from the Climate Action 100+, which seeks to pressure companies and investment funds to address climate issues and implement environmental, social, and governance (ESG) policies. But it’s hard to invest in renewable equipment companies when they’re losing money.
Steve Goreham is a speaker on energy, environment, and public policy and best-selling author Green Break: Renewable Energy’s Failure Is Coming.
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