Editor’s Note: EarthTechling kicks off in-house columns today to comment on timely issues around the cleantech revolution. Joining us is noted cleantech blogger Susan Kraemer, talking about off base financial media coverage of the solar industry.
The Wall Street Journal is still unctuously warming its hands over the supposed Solyndra-driven demise of the solar industry with more concern-trolling over renewable energy. “The collapse of Solyndra LLC in September sent shock waves throughout the solar industry, but the company’s spectacular flameout hasn’t completely scared investors away…” began an article subtitled “Despite Solyndra’s notorious failure, a few investors put new money in the sector” and saved as “Despite Gloom Around Solar Power, Some Investors Put New Money in Sector”. Give me a break.
Those investing in solar are hardly reeling from shock over one novel solar technology bankruptcy. Only the most avid Fox News watcher would conclude that one opposition-manufactured “scandal” involving one bankruptcy would kill off all competition for the fossil fuel industry that is so closely aligned with Fox News and the Wall Street Journal.
In May, before Republicans ginned-up the supposed controversy over the DOE funding of Solyndra, Ernst & Young revealed that private renewable investing was up 54% quarter over quarter and that 32% of that went to solar companies – so, the next quarter should finally bring the bad news, right?
But in September, third quarter investment in US renewables was also up a brisk 73% over 2010’s 3rd quarter. Clean-technology investments totaled $1.1 billion in the US in that quarter alone, according to an Ernst & Young analysis based on data from Dow Jones VentureSource.
So all through those months of the supposed scandal, investors were actually doubling down on solar investment. And far from dwindling to “a few” or “some” investors as the WSJ variously subtitled today’s concerns, the number of deals increased. The number of deals increased 36% from a year earlier, to 76, says Ernst & Young, and California, home of Solyndra, led the way.
By contrast, oil and gas investment in the comparably small and risky AIM stock market it monitors dropped in the same time period. The Ernst & Young Oil and Gas Eye index fell 26% during Q3, for the largest quarterly drop since the the econo-apocalypse at the end of 2008, continuing a downward slide.
“Secondary fund-raising totaled £168.7 million during Q3, 48% lower than the amount raised in Q3 2010 and 37% lower than that raised in the previous three months,” said the Ernst & Young. “Almost three quarters of the total relates to a single company – Gulf Keystone – with 90% of AIM-listed oil and gas companies raising no capital. This was mirrored across AIM, with the £413.8 million raised less than half Q2’s £954 million”.
So Ernst & Young data on private investment shows that investment in risky startups in renewables continued up during the brouhaha, while investment in a comparably risky startup sector of the fossil fuel industry continued down.
No, what actually is sending “shock waves through the solar industry” is the intense competition, driving down the costs to expected parity with fossil power – and that’s even not counting the hidden health and climate costs of fossil energy – within the next five years. Even China, the industry leader in cheap solar panel manufacturing is hurting from this increasingly fierce competition.
Solar is a young and rapidly growing industry, where demand and supply in solar are not yet well balanced, and in addition, new technology is driving both opportunities and risks for investors. That price competition is winnowing out companies, in the same way as it does in every other rapidly growing nascent industry. When it comes to other industries, the financial papers are able to cover that process without resorting to the smelling salts. Renewables, not so much.