frenchee
16 years ago
Good news for PBW
Obama's Blueprint for a Daring Green Machine
By JIM MCTAGUE
Special Report: Going Green -- Despite the cost, Obama is determined to turn America green.
PRESIDENT BARACK OBAMA'S $787.2 BILLION STIMULUS PLAN includes the largest government investment in green energy since the expansion of the wind-driven Royal Navy in the 18th century. But the administration and Congress will have to forcibly change consumer habits, and spend billions of dollars more, if relatively expensive green energy is to become a viable alternative to less-expensive power sources such as coal and oil.
Dan Picasso for Barron's
Bills are coming in the House and Senate that seek to change how consumers use energy, how utilities produce it and how pollution is regulated.
They are about to try. The Environmental Protection Agency is drafting rules that will make it unprofitable for utilities to build new coal- and crude-fired plants, and for car makers to manufacture gas-swilling models like sport-utility vehicles and luxury sedans. Separately, Senate Majority Leader Harry Reid of Nevada has pledged to move a big energy bill in the spring with a cap-and-trade regime for greenhouse gases that, beginning in 2012, would raise an estimated $75 billion to $200 billion in annual revenue to fund Obama's green revolution.
Under cap-and-trade, big polluters would have to buy permits from the government to emit carbon into the air, with the cost of polluting increasing each year. If a manufacturer or utility reduced pollutants, it could sell excess permits to other companies. The government aims to reduce harmful emissions by 83% by 2050. The Reid bill may also contain a renewable-energy standard, mandating that utilities produce a specific percentage of power from green sources by a specified date.
Obama included cap-and-trade revenue in his new budget, unveiled last week. But the president's efforts to promote the plan may fail, owing to the fragility of the economy. Even Senate Democrats might oppose measures that will raise operating costs for the nation's farmers, manufacturers and consumers during the steepest economic downturn since the Great Depression.
THE PRESIDENT HAS A WORTHY IF SOMEWHAT utopian goal in mind: He is attempting to create a new industrial base that will produce solar panels, windmills, a smart electrical grid and other clean-energy sources and technologies, while simultaneously boosting the economy and reducing U.S. dependence on foreign oil. Leadership in green technologies theoretically would give the U.S. something to sell to the rest of the world that cheap-labor countries like China and India can't produce readily.
The stimulus bill demonstrates the administration's determination to build this daring green machine. Depending on how you slice and dice the numbers, the bill expends between $20 billion and $60 billion on renewable-energy projects and energy conservation. This dwarfs the previous record for green-energy spending: $1 billion contained in a 2008 agricultural bill for the construction of ethanol refineries.
The final price tag for the green-energy component of the stimulus bill could be considerably higher, according to utility-industry lobbyist Michael McKenna. He points to a 30% investment-tax credit for renewable-energy projects of almost every stripe that is placed in service in 2009 and 2010. The credit previously applied only to solar-power investments. The government estimated the new tax proposal will cost about $218 million over 10 years, a figure McKenna calls "laughably low."
He predicts utilities and other investors will clamor to take advantage of the credit before it expires, investing in technologies such as wind turbines, geothermal power, waste-to-energy conversion, landfill-gas recovery devices and renewable marine technologies. Even so, most private capital will stay on the sidelines until government spending makes the green industry look stable.
BECAUSE SOLAR, WIND AND OTHER forms of clean energy are now much more expensive to generate than energy supplied by coal, gas and oil, Congress would have to pass legislation that in effect forces Americans to use more of it. Jim Lucier, an analyst with Capital Alpha Partners in Washington, says this is far from a slam-dunk, given potential objections from blocs of senators in both parties representing coal, oil-patch and farm-belt states.
"Substituting more expensive energy for cheaper energy doesn't make sense," says Margo Thorning, chief economist for the American Council for Capital Formation. She thinks this realization will restrain Congress from jumping on the clean-energy bandwagon.
But Tony Kreindler, a spokesman for the Environmental Defense Fund, disagrees. "These are the same arguments that were used for opposing seat belts and air bags," he says, noting that lawmakers have been debating cap-and-trade -- the Holy Grail of the environmental movement -- since 2003. "The underbrush has been cleared, and the politics of [Capitol] Hill have changed," he adds.
Many big manufacturers and utilities are promoting cap-and-trade, Kreindler says, because uncertainty about government policing of greenhouse gases has stalled capital investments for years. He points to the U.S. Climate Action Partnership, a business/green industry sector seeking enactment of legislation to require big cuts in greenhouse-gas emissions. Its membership roster includes Duke Energy, General Motors, Ford, Shell Oil, Caterpillar and DuPont.
California Democrat Henry Waxman's Energy and Commerce Committee is preparing to introduce cap-and-trade legislation in the House (see "How to (Maybe) Make Money Out of Thin Air," Jan. 19, 2008.) But McKenna questions whether it will get the necessary votes. The lobbyist, who has polled House members, says about 150 are in favor, about 100 are opposed and 185 are undecided. If the votes eventually line up in favor, it will be a green light for green technologies and investors.
frenchee
16 years ago
Obama Plans to Add Energy Credits to Stimulus, Lawmakers Say
By Brian Faler and Ryan J. Donmoyer
Jan. 12 (Bloomberg) -- President-elect Barack Obama is making “significant” changes to his economic stimulus program, such as boosting energy tax incentives, after members of his own party called elements of the plan inadequate.
“I think they’re moving very effectively to respond to the issues that we raised the other day,” Senator John Kerry, a Massachusetts Democrat, said yesterday after lawmakers met with Obama economic advisers Larry Summers and Jason Furman.
Senator Maria Cantwell, a Washington Democrat, said Summers showed a willingness to double tax credits in the bill for renewable energy to more than $20 billion.
Obama’s plan for a two-year stimulus program of about $775 billion ran into turbulence in the chamber last week when lawmakers criticized elements including a job-creation tax incentive and the share dedicated to tax cuts. Some said Obama’s plan wouldn’t do enough to reduce the nation’s dependence on foreign oil while others called for more infrastructure spending.
“They’ve made some significant changes,” said Senator Charles Schumer, a New York Democrat; Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, said, “They are clearly listening to our colleagues.”
Schumer said Obama plans to produce an outline of a stimulus package rather than a detailed measure, leaving it to lawmakers to “fill in the blanks.”
‘Collaborative, Consultative’
“We’re going to have a collaborative, consultative process with Congress over the next few days,” Obama said yesterday on ABC’s “This Week” program. “If people have better ideas on certain provisions,” the president-elect said, “we welcome that.”
Schumer said there remains “a lot of opposition” among Senate Democrats to Obama’s proposal to give employers a $3,000 tax credit for hiring new workers, because lawmakers don’t believe it will spur many businesses to expand their payrolls.
“People just say, intuitively, at a time when a company’s sales are going down, why are they going to hire new workers no matter what the incentive?” said Schumer.
He said he expects Congress to complete work on the plan by Feb. 13, when lawmakers leave for a weeklong recess.
Summers declined to comment on the meeting other than to say it was a “good discussion.” It was the second time in three days Obama economic advisers huddled behind closed doors with Senate Democrats to discuss the plan.
Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat who sought more funds for energy programs, said yesterday, “There is going to be a much greater commitment of funds to projects that reduce our dependence on foreign energy.”
Cantwell said senators are discussing allowing unprofitable solar and wind energy producers to cash in tax credits they otherwise wouldn’t be able to use until they become taxpayers. Senators are also considering whether to make the credits tradable, she said.
frenchee
16 years ago
Good news for PBW below
Obama Calls for Doubling Renewable Energy in Three Years
by: Greentech Media January 09, 2009 By Jeff St. John
President-elect Barack Obama on Thursday called for doubling the nation's renewable energy production over the next three years, setting a timeline to one green piece of his economic stimulus plan.
Obama also called for funding to modernize the nation's electricity grid and make 75 percent of all federal buildings and up to 2 million American homes more energy efficient.
"In the process, we will put Americans to work in new jobs that pay well and can't be outsourced – jobs building solar panels and wind turbines; constructing fuel-efficient cars and buildings; and developing the new energy technologies that will lead to even more jobs, more savings, and a cleaner, safer planet in the bargain," Obama said Thursday in a speech at George Mason University.
Obama has pledged three million new jobs with his stimulus plan, which also includes tax cuts, investment in computerizing medical records, modernizing schools and universities, repairing roads and bridges and expanding broadband access to rural towns.
As for measures to promote renewable energy and other green industries, Obama has yet to release further details of his plan, which could call for as much as $800 billion over two years in tax cuts and spending.
But he warned that without quick action by Congress, the country could see a years-long recession leading to double-digit unemployment and the loss of $1 trillion in economic activity.
How green Obama's plan may be has been the subject of much speculation. Michigan lawmakers have said the stimulus plan might include billions in funding for advanced vehicle and advanced battery research, The Detroit News has reported.
Obama also has previously called for instituting a national renewable portfolio standard that would require the nation to get 25 percent of its energy from renewable sources by 2025.
But that will take some doing, given that the country got only about 7 percent of its energy from renewables in 2006, according to the U.S. Department of Energy.
Of that 7 percent share, 90 percent comes from hydroelectric dams and biomass power generation projects. Wind power accounts for only 4 percent, and solar about 1 percent, making the two renewable energy resources responsible for less than one-half of one percent of the nation's power supply.
Obama's call to improve the energy efficiency of federal buildings and 2 million American homes fits in with one of the green priorities of Steven Chu, Obama's nominee for Energy Secretary (see Obama Names Energy and Environment Leaders and Obama Creates an Energy Policy Troika).
As director of the Lawrence Berkeley National Laboratory, Chu has been a long-time proponent of improving building energy efficiencies, as well as developing new renewable energy technologies.
Josh Becker, a partner at New Cycle Capital who has close ties to Washington, has said that Obama will probably make a big push on weatherization programs to retrofit low-income housing for energy efficiency.
Green industry groups have put forward long wish lists of what they'd like to see from the incoming Obama administration and Congress (see What the Green Industry Wants From Obama).
Solar, wind, biomass and hydroelectric power producers want Congress to provide cash payments in lieu of tax credits now available for building renewable energy power plants or producing cleaner energy (see Industry Groups Call for Changes to Federal Incentives).
And smart grid companies want federal grants for projects to modernize the nation's electricity grid, as well as tax credits for companies that use so-called smart meters or devices and software to reduce power use (see Smart Grid Coalition Seeks Tax Breaks for Negawatts).
frenchee
16 years ago
Rays of Hope for Solar Stocks
Wedbush Morgan sees a more favorable U.S. policy under Obama.
Wedbush Morgan Securities
WE CONTINUE TO LIKE THE long-term prospects for the solar industry but remain concerned about negative short-term industry trends. We expect shares to continue to remain volatile, moving upward in response to positive headlines surrounding favorable long-term industry prospects and downward in response to short-term negative data points until the near-term industry correction is over.
Cabinet member and White House post selections signal the environmentally friendly attitude of President-elect Barack Obama. Secretary of Energy nominee Steven Chu; Carol Browner selected for a new White House post to oversee energy, environmental, and climate policies; Lisa Jackson, chosen to oversee the Environmental Protection Agency; and Nancy Sutley picked to head the White House Council on Environmental Quality are all strong proponents of renewable energy.
More favorable U.S. policy under the Obama administration could provide a boost to the sector in 2009. President-elect Obama has signaled that he is committed to tackling climate change and moving the U.S. toward energy dependence.
Industry lobbying groups are also pushing to attach several measures to the stimulus package expected in February 2009. Such measures include a massive investment in solar energy for federal government and military installations, revisions to the investment tax credit (ITC) that passed on Oct. 3, 2008, and creation of tax incentives to promote solar manufacturing in the U.S. passage of a national renewable portfolio standard (RPS) for electricity production and national climate change legislation could also benefit the sector.
The rapid advanced-solar-photonics decline during the fourth quarter of 2008 signals a difficult environment for solar companies. Companies have attributed this rapid drop in advanced solar photonics to the global economic slowdown, decline in the euro, reduced demand, tightening of credit markets, seasonality, and a supply glut in Spain following the country's revision of its feed-in-tariff.
The drop in advanced solar photonics has forced companies throughout the solar value chain to renegotiate contracts with customers and suppliers. We believe investor expectations are incorporating a 30%-plus drop in 2009 advanced solar photonics.
A recent DigiTimes article cited prices for spot polysilicon dropping to $150 to $175 per kilogram with prices as low as $100 per kilogram for product with less-stable quality and from new suppliers. We expect several companies may have to take inventory charges during fourth quarter 2008 to reflect the drop in spot poly prices. If the decline in poly prices continues, expect companies with supply contracts priced greater than the spot market to take write-downs and seek new terms for contracts. If spot poly prices reach $70 to $90 per kilogram, we would expect some silicon module manufacturers to approach the $1.00 per watt manufacturing costs achieved by thin film manufacturers.
The drop in the price of oil makes some projects appear less attractive. Given the drop in oil prices to less than $50 per barrel, it is likely that some renewable energy projects will be delayed or cancelled. While government subsidies have been the driving factor for recent industry growth, positive sentiment toward the industry is expected to be muted in an environment where the prices of fossil fuels are coming down. We have not yet seen any signs that countries with photovoltaic incentives are looking to reduce or eliminate subsidy programs due to the lower oil price and economic crisis.
We are maintaining ratings and price targets for Ascent Solar Technologies (ticker: ASTI), Energy Conversion Devices (ENER), Evergreen Solar (ESLR), First Solar (FSLR) and SunPower (SPWRA).
frenchee
16 years ago
MONDAY, JANUARY 5, 2009
GETTING TECHNICAL
Energy Stocks Get Energetic
By MICHAEL KAHN | MORE ARTICLES BY AUTHOR
Oil, coal and even solar power ETFs are attracting buyers again after a brutal bear market.
WITH THE PRICE OF CRUDE oil cascading down from $147 to $35 per barrel in just five months last year, many had given up on this commodity. Their argument stems from the global economic slowdown and the attendant "demand destruction" has been thrown around quite liberally.
The market's emotional pendulum swung too far to the greed side early last year and then too far to the fear side in the final quarter. Even if we never see those peak prices again, energy markets are technically oversold and ripe for a rally. That means we can look forward to a reversion to a mean price that is higher than what we see today.
The same is true for stocks of energy companies and one look at the Sector Select SPDR energy ETF (XLE) bears this out (see Chart 1).
Chart 1
From a peak over $91 a share in May 2008 to a low of $39 in October, this ETF clearly had a rough few months. It settled into a trading range after the decline, in which it still resides today. But unlike the broad market, it did not set a lower low in November. In other words, the bears attacked other parts of the market and left energy alone, relatively speaking.
Chart watchers consider this positive performance relative to the market a harbinger of better things to come for the sector. Indeed, the ETF was up Monday as the market was down. At $51 a share, the ETF is now knocking on the ceiling of its trading range.
Further, money continued to flow into the ETF over the past few months as evidenced by on-balance volume analysis. This indicator keeps a running tab of volume traded on days when prices rise -- supposedly thanks to increased demand -- less volume on days when prices fall -- supposedly on increased supply. When on-balance volume rises we can surmise that demand is beating supply and that bodes well for an eventual upside breakout from the trading range.
When oil-based energy faltered last year, so, too, did the incentive to move to other sources. Witness similar price collapses in natural gas, uranium for nuclear power, coal and their related stocks.
The Market Vectors-Coal ETF (KOL) sports a different chart than that of the SPDR energy ETF but it shows several reasons to believe that it has already seen its worst levels (see Chart 2).
Chart 2
While it did set its lowest level in November, it has been in a rising trend ever since. And during last week's low volume trading for the market as a whole, the coal ETF saw rising prices on volume that was above its own 50-day average. http://investorshub.advfn.com/boards/board.aspx?board_id=11590
Solid price action on solid volume is a technical positive. So is a 73% gain over that period vs. a 26% gain for the Standard & Poor's 500. This may not be a true bull market but for those looking to play what I expect to be a multi-week advance already in progress, this ETF does seem to be a good choice.
In the alternative energy arena, the Claymore/Mac Global Solar Energy ETF (TAN) was one of the brightest lights in the market last week. After falling more than 80% from its peak in 2008, the solar ETF is up 70% from its November nadir (see Chart 3).
Chart 3
To be sure, despite the mathematical trickery, this remains one beaten down sector. But the facts of money flowing back into the sector, a rising trend from November, a move above the key 50-day moving average and nice gains Monday when the rest of the market was weak tell us that investors are coming back.
For those looking for a bit more diversity in the alternative energy area, the Powershares Wilder Hill Clean Energy ETF (PBW) has a similar chart to that of the solar ETF (see Chart 4). The clean energy ETF covers solar, wind, and other "green" energy companies and also sports such positive technical features as a move above its 50-day average, rising trend and rising on-balance volume. http://investorshub.advfn.com/boards/board.aspx?board_id=8307
Chart 4
The bottom line is that the energy market, whether conventional or alternative, is set up nicely to lead stocks higher. Again, I must stress that this is no buy-and-hold bull market but for those looking for a short-term trade of just a few weeks, the opportunity in energy stocks and ETFs seems very good.
frenchee
16 years ago
Alternative Energy And ETFs Vulnerable To Market Winds
October 22, 2008 at 12:00 pm by Tom Lydon
Proponents of alternative energy and the sector’s exchange traded funds (ETFs) were among the few rejoicing at the higher cost of oil. But now that prices are less than half of what they were at their all-time peak, suddenly the industry
Evidently the alternative energy sources such as wind and solar are facing challenges as the oil and natural gas prices fall and the credit crunch has tightened the budget for these burgeoning industries. When oil was $147 a barrel, there was major incentive to explore opportunities for different energy sources.
Shares of alternative energy companies have fallen even more sharply than the rest of the stock market in recent months, says Clifford Krause for The New York Times. Investment capital for the bigger renewable energy projects that were getting off the ground may now become scarce.
Advocates are concerned that if the prices for oil and gas keep falling, the incentive for utilities and consumers to buy expensive renewable energy will shrink, similar to the 1980s cycle. The newer technologies are at risk because of the shrinking surplus of capital. Government subsidies will be harder to obtain because of economic problems that are preoccupying Washington now.
Wilderhill Clean Energy (PBW) is down 61.5% year-to-date vs. the S&P 500, which is down 35% in the same timeframe.
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