The Irrational Exuberance About NET-ZERO is an Unaffordable Fantasy

The Irrational Exuberance About NET-ZERO is an Unaffordable Fantasy 

https://www.windtaskforce.org/profiles/blogs/the-irrational-exubera...

David Foley, Blackstone Senior Managing Director

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NET-ZERO GOES POOF!

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One of humanity’s greatest strengths is its ability to adapt to changing circumstances. That was an invaluable attribute in a world that once changed extremely gradually. Today, when paradigm shifts seem to happen every few years, it has become even more essential. 

Capitalism, with its inherent tendency toward creative destruction, has repeatedly proven far more effective than communism and even socialism. 

Market forces are powerful and unforgiving, at least for those who fail to adapt to their shifting needs and preferences. As a result of this ruthless winnowing out process, society at large benefits to a great degree.   

This reality is clearly playing out with regard to renewable energy. 

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The most graphic example of this is with offshore wind. 

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The number of projects being cancelled is becoming hard to track. The calamities of offshore wind can be vividly seen in the stock charts of two of the leading players in this field.

Vestas, a Danish company, is a producer of wind turbines and related equipment

Oersted, a Danish company, is the world’s largest developer and operator of offshore wind projects; the latter is particularly struggling presently. 

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Obviously, Oersted’s share price has fared significantly worse than Vestas’. 

The latter has “only” been cut in half while the former has collapsed by 75%.

Vestas’ stock has also avoided breaking three-year support

Oersted shareholders haven’t been as fortunate; it decisively broke below 600 krone early this year. 

As is so often the case when key support is taken out, it has fallen another 50% since then. 

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Yet, it’s much more than just trouble with offshore wind companies. 

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Those that operate utility-like renewable energy facilities, such as larger solar systems and onshore wind systems, which is much less risky than off-shore, have been hammered. 

I’ve made this point before and the carnage has included one of my long-favored names that, in the past, was an extremely lucrative investment. The three others, with similar business models, have also been mercilessly punished.

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NEXT-ERA ENERGY PARTNERS

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The suppliers of solar systems and critical components have not fared any better.

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It’s hard to believe that such devastation could have occurred at a time when trillions of dollars have been showered upon this industry.

It’s becoming obvious, this a sub-industry needs some serious adapting to a much less hospitable environment.

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The above quartet of nauseating visuals is another example of multi-year support levels being broken followed by yet more value destruction. 

First Solar which is down a comparatively modest 43% from its early-2023 zenith

The foregoing is disturbing enough for those who feel Net Zero is a feasible target.

As I relayed on Friday, the proliferation of negative articles and televised news segments on EVs is remarkable these days. 

It’s enough to get my contrarian juices flowing, though I struggle with the EV makers’ valuations. 

In that regard, of course, Tesla is in a nosebleed class of its own. 

But at least it makes money, even if not enough to justify a market cap of almost $700 billion. That’s precarious on its own, but when combined with crashing profit margins and intensifying competition from Chinese EV producers, it’s downright DISTURBING

KEEP THE FAITH, THE END OF ALL THIS NET-ZERO BS IS NEAR