The Renewable Revolution

Jul. 18, 2018 8:42 AM ETABB, AES, BP, DNNGY, FSLR, GCTAY, SHEL, SBGSY, SIEGY, SPWR, TM, TTE, TSLA, VWDRY157 Comments
Henry Miles profile picture
Henry Miles
2.29K Followers

Summary

  • With the migration from dirty to clean energy well underway, it’s time to consider whether we have entered the Renewable Revolution.
  • If so, given their leveragable advantage and resource capacity, I believe investment odds favor a few major renewable integrators that serve utility companies.
  • Other players in fossil fuels and clean energy will be defeated, acquired, or left to play zero-sum games within modified business models.

Lest anyone has forgotten, human-contributed global warming “got us here”. This reality and its destructive consequences have been demonstrated by a wide array of longitudinal studies conducted by thousands of scientists working almost everywhere. Moreover, people around the world embrace the Paris Climate Agreement. Support comes from public and private sector leaders through organizations such as the World Economic Forum. It also comes from everyday citizens as documented, for example, in the US by the research of Yale and George Mason University.

Public Opinion Has Shifted

The effect is that the migration from dirty to clean energy is well underway and accelerating. We know this from the conversion of coal-fired power plants to natural gas, from the rising sales of hybrid and all-electric vehicles, from the presence of more wind and solar farms, from the race to come up with new and improved batteries, and from invention in such areas as tidal turbines and hydrogen fuel cells. And, many believe that the trend to reduce carbon emissions will continue. We see it in the projections of government organizations such as the International Energy Agency, and in other forecasts including by Fred Lambert at Electrek who predicts that the lines for new BEV and ICE sales will cross in 20 years or so.

When I step back from all this, I see a transformation that resembles "The Industrial Revolution" and "The Information Revolution". If, indeed, we are witnessing the makings of "The Renewable Revolution”, it will lead to major dislocations but equally significant investment opportunities.

The Odds Favor Integrators

So, what are those investment opportunities? In the past, I have written about them in the context of a segmentation model I have offered of the clean energy industry. Those articles decomposed the business into six parts, including:

  1. Converters - The means to

This article was written by

Henry Miles profile picture
2.29K Followers
Now retired after forty years in financial services: a) analyzing corporate, bank, and sovereign risk, b) predicting bankruptcies and conducting commercial workouts, restructurings, and dissolutions, c) financing grain, soft commodities, oil, and the precious metal trade internationally, d) overseeing interbank finance and arbitrage, e) modeling and assessing the productivity of financial business units, f) directing aspects of M&A due diligence and post-acquisition integrations, g) serving as Chief Information Officer of a major full-service broker-dealer, h) consulting including as interim management to global banks, investment advisors, trust companies, and alternative investment / hedge funds, and i) serving as managing general partner of a family farm. An MBA, educated in economics, with a near minor in math, who held various securities industry licenses including Series 7, 63, 24, and 14 (all now expired). A donor and volunteer now focused on: a) public works landscape projects, b) helping motivated, first-in-family, degree and certificate-bound kids achieve their education, and c) developing STEM skills in primary and secondary school students. Formerly, an advisory board member of The Trust for Public Land involved with park and conservation projects including creating the first piece of a 10,000 acre metro wildlife area, and a produce farm in a distressed inner-city neighborhood. (All my proceeds from writing on Seeking Alpha go to charity.) Like I do when investing, always do your own due diligence in consultation with a licensed and competent financial/investment advisor(s) who puts your interests ahead of their own; if you don't have one, find one.

Disclosure: I am/we are long SIEGY, AES, ABB, TOT, FSLR, BP, RDS.B, TM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Always do your own due diligence in consultation with a licensed and competent financial adviser who understands your unique needs and puts your interests ahead of their own. Remember, there are added considerations in owning foreign securities including those associated with ADR sponsorship, buying and selling the pinks, foreign withholding taxes on dividends, and fees. (All my proceeds from contributing to SA go to charity.)

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