Rising fuel prices, fresh concerns about nuclear energy, and instability in the Mid-East have once again turned investor attention toward renewable energy investments, and they’ve been pumping money into green mutual funds, ETFs and stocks.
The first quarter of 2011 marked the first positive quarter since mid-2009, according to Lipper, Thomson Reuters’ mutual fund tracking service.
Still, the sector faces uncertaintly and volatility for a variety of reasons. There is crushing competition with a plethora of companies in solar, all expanding manufacturing, and dealing with smaller margins because of price competition.
Weak energy demand and low natural gas prices during the recession have made renewables a less attractive investment for utilties.
A number of EU countries, admired for their prescient feed-in laws, have been or will be cutting them back, including Germany, France and Italy. The cuts are partially due to lingering effects of the recession.
Then there’s the gridlock in the US congress over energy policy. Republicans blocked a cap-and-trade bill last year that would have propelled the industry forward, and are bent on reducing incentives and funds for renewable energy, in favor of fossil fuels.
On the bright side, solar prices are sliding significantly, making them more affordable for homeowners and businesses. Wind turbine prices are also much lower, in the $40-$60 range per megawatt hour versus $60-$80 in 2008. On the other hand, the long term outlook for fossil fuels is undeniably rising in price.
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