The excitement revolving around bitcoin is causing some investors to miss another huge winner this year that – as the cherry on top – they can actually understand.
Bitcoin is hard to embrace, but impossible not to follow. It isn’t tangible, and it certainly is difficult to comprehend, yet all that is talked about is how it is up thousands of percent this year. So, it’s not suprosing that some missed an investment that’s performing even better: renewable energy. Its potential returns might not come so fast, but renewables are here to stay, which is more than what can be said about bitcoin.
It used to be that renewable-energy stocks heavily correlated with carbon-based energy stocks. If the price / barrel of oil rose, so did alternative energy stocks, as higher fossil-fuel prices would result in renewable sources being more competitively priced. And of course the same would apply for the reverse.
Throughout the United States, the percentage of renewable energy out of the total energy mix rose from 7,7% in 2001 to just below 15% by the end of 2016.
Renewables are accelerating in both use and investment. China is performing strong and pledged to invest 367 billion USD in renewable power generation – solar, wind, hydro and nuclear – by 2020 and more than 2.5 million people work in the solar power sector in China, compared with 260,000 people in the U.S., according to the most recent annual report from the International Renewable Energy Agency.
Furthermore, the declining cost of solar and other renewables tilt the scale in their favour. Resulting in the fact that, alternative energies aren’t so alternative anymore.
Of course, there simply isn’t a 100% proof investment out there. So it’s wise to remember these stock’s history of extreme volatility based on multiple factors such as competition from China, uncertainty over government subsidies in many nations; and a lot of attention from hedge-fund shorts.
For example: The biggest solar stock IPO’d at $27 a decade ago, went all the way to the dizzying heights of $300 when oil hit $147 a barrel in 2008, and then dropped to $11 as if it were about to go bankrupt when Chinese solar-panel makers glutted the industry in 2011–12. But its shares are up 90 percent this year, at $60. And that is a lot of volatility to go through over a decade.
Günter Maier, 07. December 2017, 16:33