You know an industry is heating up when you start hearing the word “bubble” tossed around.
That’s the verdict of this week’s cover story (sub. req.) in the influential British newsmagazine The Economist, which finds that the renewable-energy sector, boosted by high-flying venture capital funds backing startups focused on ethanol, wind power, and solar energy, many of them in the Rocky Mountain region, is drawing dangerously close to dot-com levels of over-exuberance.
. . .
The report concludes with a dismissive quote from Douglas Lloyd, of Venture Business Research: “There’s too much money chasing too few opportunities. How is it possible that this many solar companies are going to succeed? They’re not.”
The actual article (it appears to be free online) has some great nuggets, like this one:
Eventually, the proponents of clean technology maintain, renewable energy will become competitive with fossil fuels, allowing governments to end subsidies. Mr Gay thinks solar power will be as cheap as that from big coal-fired power stations within a decade. Something of the sort has already taken place in Japan, where last year subsidies for solar were phased out.
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However, all this is somewhat misleading. Retail electricity prices in Japan are among the highest in the world, making it much easier for solar to compete. In most places, concedes Michael Liebreich, of New Energy Finance, renewable power and fuels will be more expensive than the dirtier sort for the “foreseeable future”.
That leaves the clean-energy business largely dependent on government handouts. Shares in the sector rose after George Bush’s state-of-the-union address in January, when he swore to wean America off dependence on foreign oil. They also rallied on hopes that the newly Democratic Congress would spend more money on greenery.
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