Solar Renewal Casts Shadow Over Utilities

February 27, 2014 by  
Filed under Wind Energy Tips

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The sun is shining on solar once more, as investors step back into one of the stock market’s most volatile sectors.

A 1.6 megawatt solar panel installation on the rooftop of Jethro Restaurant Depot in New York. Investors in the U.S. are newly confident about solar, but renewables subsidies in Europe are hurting traditional power providers.
Agence France-Presse/Getty Images

As The Wall Street Journal’s Chris Dieterich reports,  an industry shakeout that followed 2008’s vicious round of bankruptcies, coupled with falling costs of production, mean the brave are scenting big gains among traditionally volatile stocks.

State-level decision making, including in Minnesota and Iowa among others, has played a part in underpinning investor confidence.

A school of thought says that solar power’s growth potential is only just beginning to be explored, and that there could be even greater opportunities outside large economies like the U.S.

Globally, wind and solar power together are expected to double their share of power generation by 2018, to 8%. In the U.S. the two combined are expected to more than double by 2040.

A continuing concern for solar–and wind–is that, if the weather outside is unfriendly, then the power isn’t on. Adjusting power grids to work with this sort of intermittent behavior is one of the biggest challenges to further growth in solar.

The International Energy Agency says high levels of integration—up to 30% of annual electricity production or more—depends on whether a country’s power system is stable, meaning no significant investments are needed to meet demand in the short term, or dynamic, which requires significant near-term investments to meet growing power demand or replace old assets.

The IEA says this means that emerging economies have the greatest opportunity, given the right levels of investment, as they can build a flexible system from the ground up.

But in Europe—home to one of the IEA’s stable power systems—the challenges are clear. GDF Suez, a French utility with a presence in many European markets, wrote down its continental assets by $20.4 billion.

Its chief executive, Gérard Mestrallet, said the outlook for power generation in the region remains bleak. As the Journal’s Géraldine Amiel and Inti Landauro report, he has in the past said that subsidies for renewable energy are turning traditional power production into a losing proposition in Europe.

Mr. Mestrallet’s company isn’t alone. In Germany, which is in the process of a highly ambitious switch to renewable energy, the country’s biggest utilities RWE and E.ON are struggling to adapt.

Solar power may be attracting investment, but it is at the expense of traditional suppliers.

The Journal’s Liam Denning says there is talk on Wall Street of a looming “death spiral” for utilities.


Crude oil prices fell further in London Thursday, as broad support from the harsh North American winter began to melt away, but competing factors meant the price difference between the two main benchmark contracts hit a multi-month low. You can read the Journal’s latest oil-markets report here.

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