The naysayers regarding solar power have always made one accurate point: the technological cost effectiveness was not the same as cheap burning coal or other carbon emitting sources. Government investing in “green energy” was a boondoggle that will never provide dividends, was one line of thought. Contrast this with the first quarter report from the big UK hedge fund Lansdowne Energy Dynamics Fund, which for the first time is seeing the light of day relative to solar power profitability, and perhaps witness one of the great trend changes of our time.
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Solar power is nature power and it can mean profits… at last
Solar power technology has had numerous problems in a free market. The scarcity of key materials needed to produce solar panel technology is one reason the cost is so high. This, along with the power supply intermittency and high land usage, are some of the issues holding back widespread adoption.
All this is changing and professional investors such as Lansdowne – citing free market logic – are taking notice.
The hedge fund plans to “capture alpha from the U.S. solar boom” it sees coming, with a few caveats. The found cites four core reasons for the coming boom:
So long as government subsidies still exist, renewables are now becoming competitive with conventional energy generation. While this is an important caveat, it nonetheless benchmarks an important moment in the industry’s development. Increasingly, renewables are becoming the only growth venue for US utilities, the report noted. Further, regulatory visibility has massively improved. This all leads to a 2020 forecast where Lansdowne sees solar becoming competitive with conventional sources assuming one is within 40 degrees of latitude from the equator and the industry achieves further 20% to 25% cost reductions.
Solar power stock plays
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