It was eye-opening to see how quickly the Texan leaders began to blame wind and renewable energy for the blackouts during this month’s snowstorm. Aside from the cover they hoped false rumors of frozen windmills would give them, a statement by former Texas Governor and outgoing Trump Administration Energy Secretary Rick Perry illuminated another reason for the rhetoric: “Texans would be without electricity for longer than three days to keep the federal government out of their business,” he wrote in a blogpost. Oil interests in Texas (and across the country) are nervous about President Joe Biden’s pledge to put the United States on a path to zero emissions by 2050. They understand what any smart investor needs to as well: that now may finally be the moment renewable energy has arrived.
The last decade began with a rush of capital towards clean energy. Unfortunately, many of the big-time players crashed and burned. But the recent influx of new capital has led to a second boom in the solar and renewable energy market. Many view it as similar to what we saw with tech stocks a decade earlier: the first Dot Com Boom and Bust led to a second wave of more sustainable and more economy-shifting growth a decade later. We’re starting to see the same in Clean Energy.
Over the last year, the value of two top solar component suppliers, SolarEdge Technologies (NASDAQ:SEDG) and Enphase Energy (NASDAQ:ENPH), have soared. SolarEdge has risen by nearly 200% and Enphase has almost quadrupled in value with a 370% growth. The reason for both companies’ massive growth is a combination of factors that’s exciting for the entire space: they’ve scaled production to raise margins; they’ve improved technology to increase efficiency; and there’s been a general rise in adoption overall across the market. Those three baseline facts make it clear that Clean Energy is more than a fad.
As Unifimoney Board Advisor Max Osbon explained it, there’s clearly a long-term investment opportunity in the Clean Energy space: “People want clean energy globally. From France to the US, there have been regulations that have said that they don't want gasoline cars on the road in the next 10 to 20 years. If you're a young investor, the future of oil doesn't look like a bright prospect for investment — the future of clean energy looks a lot more interesting. Now, we don't know how that's going to shake out. We don't know if it's going to be wind, or solar or battery technology. But of course, there will be a massive demand for cleaner energy sources. Whoever gets it right will be a massive winner.”
The most concrete hurdle for mass adoption of clean energy has always been cost. With the built-in subsidize for gasoline in America, oil was relatively cheap compared to the alternatives. But over the last decade, that’s stopped being true, and finally, consumers are catching onto this fact.
The question for investors is when Clean Energy will breach the Adoption Curve chasm from Innovators and Early Adopters to the Early Majority. When that moment happens (and there are signs that it’s beginning to), there should be massive growth in the sector. That’s why now is the time to invest in Clean Energy.
The factor that can become the bridge over the chasm is sometimes hard to identify. In terms of electric cars, it was the bluster and magnetism of Elon Musk that convinced a segment of the population that electric cars were more than low-powered commuter cars. The ability to make a high-end, fast, exclusive electric offering convinced the market that electric was the future of automobiles — now, much slower adopting companies like General Motors are investing heavily in the trend. GM announced their goal to beat Norway in the clean energy game with a flashy Super Bowl ad starring Will Ferrell.
If we’re using the second internet boom as a framework for this post-gas moment then there will be dozens of Tesla-like successes in the Clean Energy space. Investors may have missed the rocketship when it comes to Tesla, but it seems there will be many more to board.
GM’s Super Bowl ad was a vessel to announce the company’s massive investment in Clean Energy tech. But taking on Norway will be more than a private industry initiative. In 2020, Norway’s sovereign wealth fund announced that it would invest $10.77 billion by 2022 in unlisted renewable projects like wind parks and solar farms. That infusion, along with a commitment beginning in the 1990s to bring 50,000 electric vehicles onto the road by 2017, has shown the power of government investment in the renewable energy sector.
At the end of January, President Biden signed a series of executive orders aimed at creating a sustainable energy future for America. As he explained: “A key plank of our Build Back Better Recovery Plan is building a modern, resilient climate infrastructure, and clean energy future that will create millions of good-paying union jobs — not 7, 8, 10, 12 dollars an hour, but prevailing wage and benefits.”
The massive investment that President Biden is pushing should spur the Clean Energy sector — green infrastructure and a focus on incentivizing clean energy can jumpstart the sector and create a capital infusion. On top of that, President Biden’s executive orders have begun the process of rolling back oil subsidies, which has artificially lowered the price of gas for years. The Leverage the Federal Government’s Footprint and Buying Power to Lead by Example Order stated: “The order directs federal agencies to eliminate fossil fuel subsidies as consistent with applicable law and identify new opportunities to spur innovation, commercialization, and deployment of clean energy technologies and infrastructure.”
The infusion of capital into green energy and the movement of subsidies from fossil fuels to renewable energy should further accelerate the affordability of Clean Energy. That, along with the conversation-shaping power of the White House, may very well be the accelerant needed to push Clean Energy over the Adoption Curve.
The moment wide adoption of renewable energy occurs will mean a windfall for those holding stock in the sector. That’s why now could betime to invest in Clean Energy.
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