The Great Big Push for Green Energy

Investing Daily Article of the Week

by Richard Stavros

If you’re still sitting on the sidelines waiting for a sign of when to invest in green energy, the events of the past few weeks suggest that now’s the time.

As someone who has worked in the energy industry, recent developments have been otherworldly.

In my last article, “Big Oil’s Carbon Bid,” I wrote about the stunning about-face of the European oil industry in their call for a global carbon price, which would bolster renewable investment.

Then in the last week, the White House unveiled a program where the government would act as an investment clearinghouse for renewable-energy technologies. Pension funds, foundations and philanthropies have already committed $4 billion to this initiative.

Ernest Moniz, the Secretary of Energy, said:

“One of the real challenges is the gap in financing clean energy. There is a continuing need for new capital investment.”

He explained that the government will not make investment decisions, but serve as an all-purpose informational resource for clean-energy investment.

For its part, Congress a few months back passed an energy-efficiency bill that had strong bi-partisan support. The new legislation would improve commercial building energy-use benchmarking, establish a program to promote energy efficiency in rental properties, and adjust efficiency standards for “grid-connected” water heaters.

Then, above it all, there is the Pope, who has weighed in on the issue, calling for a “revolution” to combat climate change, as part of a 184-page papal letter he issued this week.

The Pope wrote:

“We have not yet managed to adopt a circular model of production capable of preserving resources for present and future generations, while limiting as much as possible the use of non-renewable resources, moderating their consumption, maximizing their efficient use, reusing and recycling them.”

Utilities See Green

Meanwhile, earlier this month at the annual conference hosted by the Edison Electric Institute (EEI), the association that represents investor-owned utilities, attendees seemed to largely embrace a low-carbon future.

According to various news sources, a panel chaired by utility CEOs seemed resigned to the fact that the Environmental Protection Agency’s (EPA) Clean Power Plan, which would regulate carbon emissions of existing coal plants, will largely survive court challenges.

Though some of the CEOs with coal-heavy generation fleets still demanded tweaks to the regulation, all executives said they would work to meet the EPA’s carbon goals. This view was held despite recent Republican efforts to block its implementation.

However, the CEOs on the EEI panel-the heads of Dominion Resources (NYSE: D), Edison International (NYSE: EIX), Southern Company (NYSE: SO) and Exelon Corp. (NYSE: EXC) – were at odds over the use of subsidies to promote green energy.

Interestingly, some utilities are starting to see distributed generation as less of a disruptive threat than they did previously.

This evolution of thought is best evidenced by remarks made by Southern’s CEO Tom Fanning, who believes distributed generation is merely an extension of central station generation.

He quipped,

“If distributed generation is eroding your growth, own distributed generation!”

In fact, a new law that allows third-party financing and ownership of residential solar technology in Georgia is set to take effect on July 1. Once that happens, Southern will be entering the residential rooftop-solar market.

Fanning told EnergyWire last year:

“If somebody wants to buy distributed generation, I want to sell it to ’em.”

Moreover, Tesla Motors (NASDAQ: TSLA) CEO Elon Musk reiterated the belief by many energy executives that electric cars could be a future source of growth for utilities. Musk went so far as to predict that electricity demand could double or even triple, which if it were to become true would surely be music to utility investors’ ears.

Clearly, the overall momentum toward green energy has strengthened considerably in recent months. But determining where the best investment opportunities lie will require closely scrutinizing these initiatives and regulatory policies as they’re implemented.