World’s top renewable firms reel even as installations surge
About 500 gigawatts of renewable generation capacity will be added this year, according to the International Energy Agency, and at least $1 billion a day is being spent on new solar additions alone. Yet companies in the sector are being squeezed by volatile costs, snarled projects, high interest rates and — in the solar sector — a rush to add new capacity that’s overwhelmed demand.
Xinjiang Goldwind Science and Technology Co., the No. 1 wind turbine maker, just reported a 98% slump in third-quarter profits.
The head of Longi Green Energy Technology Co., the top solar manufacturer, said on Tuesday that panel prices were at “irrationally” low levels. And in the US, SunPower Corp. plunged Wednesday after cutting its full-year forecast on weaker demand.
The company has dropped by over three-quarters this year, making it the worst performer on the S&P clean energy gauge.
Even as installations rise, “wind and solar equipment companies are not a good exposure to this trend,” said Vicki Chi, a Hong Kong-based portfolio manager at Robeco, which managed about $197 billion globally as of June and invests in energy companies. The wind and solar sectors are both highly competitive and there are “more attractive exposures” in electricity grid equipment and software, where demand should exceed expectations and entry barriers are much higher, she said.
The renewable industry’s travails are being reflected in a rapid drop in company share prices. The S&P Global Clean Energy Index has fallen 30% this half, while the broader S&P 500 Energy Index has risen over the period.
