More big changes are afoot in the shifting sands of the global energy industry. Crude oil derived from shale formations (‘Shale Oil’) suddenly has the potential to create an abundance of hydrocarbon energy for transportation, where previously it was in short and ever-dwindling supply. For now this is a phenomenon unique to the USA, but has the potential to spread around the world.
I recently attended the UBS Global Clean Energy and Utilities Conference and met with some analysts in the clean tech field. It is clear that the market backdrop is still more favourable to energy efficiency, whereas the renewable energy sector continues to be challenging. In the current cost-conscious economies, companies want to stay competitive while reducing costs at the same time. Energy efficiency themes clearly play out well in this environment. For instance, one would expect the rise of gasoline prices in the US would hold back consumers from buying cars, but the demand for fuel-efficient cars actually spurred demand for automobiles in March. Another piece of anecdotal evidence is the recent growth of Kingspan, a leading supplier of energy saving solutions to the construction industry. The company reported an impressive 14% organic revenue growth in 2011 despite facing a challenging construction market.
This week Q-Cells, once the world’s largest solar manufacturer, filed for insolvency. Its share price dramatically fell below €0.2 from its peak of €80 back in 2007. As an investor who has been following the solar industry for many years, I have very mixed feelings about the fall-out from this German solar company.
Last Thursday, the two giant German electricity utilities E.On and RWE announced that they would abandon their plans for new UK nuclear power plants. This is a major blow for proponents of the technology here in the UK, and creates serious problems for much-heralded ‘third generation’ of UK nuclear power. It is also a big U-turn for the two companies, who had invested considerable resources into the programme.