Energy crisis bursts green shares bubble22 Jan 2022 10:32
Today’s Daily Telegraph:
The energy crisis has burst a multibillion-pound bubble in green stocks as gas prices surge and the world confronts the true cost of net zero. Shares in renewable energy companies have tumbled to their lowest level in 16 months, almost completely unwinding gains made during a stampede into companies aiding the shift away from fossil fuels. It comes as new figures revealed that private equity snapped up oil and gas firms worth almost £12bn last year, a huge increase from £232m in 2020 as the sector ploughs investment into renewable energy.
A basket of global clean energy shares, which includes renewable giants Iberdrola, Vestas and Orsted, has tumbled 45pc since the record peak a year ago, wiping tens of billions of pounds off their “excessive” value. Rising material costs, frothy valuations and escalating interest rates have dampened investor enthusiasm after a flood of money into the sector. Surging gas prices are also thought to have raised concerns, because they highlight the challenge of ditching fossil fuels.
Stewart Cook, co-head of European markets at Berenberg, said: “Clean energy stocks were caught up in the record moves higher in non-profitable, almost concept-like themes such as ESG and electric vehicles. These moves and valuations were exaggerated by huge inflows to investors and liquidity chasing these relatively small, embryonic sectors.”
Renewable stocks have fallen by a fifth since the start of December after being hit by a wider shift by investors out of pandemic winners, particularly in tech, into more traditional sectors as interest rates rise. Solar shares have slipped 45pc from their record peak, while wind firms have dropped by a quarter.
And meanwhile here we all are, merrily debating why a poxy aspiring energy company cannot develop itself beyond a proof of concept stage. Small aspiring wannabes are supposed to be nimble and able to move quickly - that isn’t something anyone can say about the energy market in southern africa for sure.
Back to my favourite question - Why is that??
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