NRG Energy is one of the largest utilities in the US with around 22 GW of Installed Capacity.However like Exelon,the share of Renewables is relatively low at just 2% of its overall Energy Capacity.Though the US Administration has all but given up on an Energy and Climate Legislation,Big Utilities recognize the need to generate low carbon electricity.Some sort of Carbon Emissions Restraint will be imposed on Utilities sometime in the future with EPA itching for action in restricting CO2 Emissions.Green Sector Stocks have fallen like a rock in 2010 due to the Copenhagen Disaster and lack of movement on a Climate Bill by the US government.Therefore it makes sense for US utilities to buy Renewable Energy Assets on the Cheap.Exelon bought Deere Energy Wind Farms at a dirt cheap price.NRG Energy which has around 550 MW of Wind and Solar Capacity bought Reliant Energy last year for $300 mm.It has augmented its Renewable Energy Portfolio with another $350mm buy of Green Mountain Energy.
BYD has fallen almost 35% this year heavily underperforming the market as sales growth has slowed substantially.After a 140% growth in Auto Sales last year,this year the sales growth will go down to 30% as the company has reduced sales target to 600,000 from 800,000 earlier.Chinese auto sales have fallen and BYD has been specially affected with its workhorse F3 Model declining in popularity.The company delivered a good first half with $100 million in 2Q profits.However the company is still quite expensive at $15 Billion Market Cap which would give it a P/E of around 38x.Also the company’s strategy to enter solar energy does not make sense.However BYD is a good story for the future.China has made a new Green Policy to create National Champions in the EV and Battery Industry.BYD is a perfect candidate with its strengths in both areas.While its execution in the EV sector is yet to give results,it is already planning into the future getting into the Grid Storage Sectors.I would not put money presently but would wait for a better entry point in the future.
USA is increasing its protectionist actions recently filing 2 cases in World Trade Organisation against China over Electrical Steel and Credit Card payment providers.Only last week a US Union had filed a complaint with the US government about the Predatory Practices of Chinese Green Companies.USA thinks that China has unfairly put duties on US made Steel and it is locking out Mastercard and Visa from the credit card processing market in China.There is little doubt that China indulges in favoritism and implicit and explicit support of domestic companies.However it the scale that is the only difference .Like all other things China also implements its policies king size.MNCs in recent times like GE,Google,Siemens have all criticized Chinse discrimination against foreign companies.However WTO remains an ineffective body to resolve complex Trades Disputes.The US Congress is also getting into the China-Bashing Act by passing 2 bills that mandate “Buy American” clauses.The US has already antagonized the Indian IT Industry by specifically targeting the Indian companies like Infosys and Wipro.These new bills target China making it mandatory for government departments to buy American made goods.With November Elections fast approaching,politicians are outdoing each other in protectionist rhetoric.
Organization of the Petroleum Exporting Countries (OPEC) on its 50th Anniversary has called the Developed Nations Subsidies as “Unfair” and has referred Alternative Energy as the biggest challenge facing the Rich Oil Exporting Nation Cartel.OPEC is being a huge hypocrite as Fossil Fuels Subsides totalled $550 Billion last year which is almost 12x the Subsidies given to Green Energy.However no mention of this fact was said as these Green Subsidies were “not acceptable” OPEC.The OPEC Chief Abdalla el-Badri wanted a level playing field with this nascent Green Energy.OPEC is a 12 Nation Club formed mostly of Middle Eastern Nations who control 80% of the Global Oil Reserves and 33% of the Production.Saudi Arabia is the non-official leader of this Cartel and has been known for its opposition to Climate Change efforts.The other nations too support Saudi Arabia recently blocking a group of Poor Island Nations from accessing climate change data.These Nations have shockingly asked for Aid as Global Warming Concerns reduce the Fossil Fuel Demand.Most of the Middle East Exporters are filthy rich generating huge amounts of cash from the Export of Fossil Fuels.
Note this Hydro Plant will cost around $31 Billion which is quite costly at $15/watt if the the $31 Billion is used for the 1800 MW capacity.This is is almost 15x the cost of a typical Hydro Capacity and would need massive subsidies.Papua New Guinea is a poor country and might receive aid from Australia but the $31 Billion would make even the richest country balk at this price.Australia is not exactly energy deficient with massive resources of coal,wind and solar energy.In Renewable Energy the country has been quite slow with provinces like NSW and South Australia promoting renewable energy through regional subsidies.Hydro Power is the main source of Clean Power accounting for 90% of the Clean Energy Mix.The Project will take 10 years to build and their remains an outside chance that Oil Prices become so high that 24 hr Hydro Power at that time might make sense at $15/watt.
While Solar Energy is a new kid on the block,Wind Energy has been growing very strongly in the past Decade.Italy was rethinking its Renewable Energy Certificate (REC) Scheme to remove price guarantees but at the last minute it changed its mind.Wind is being installed at a rate of 1 GW per year in the last few years.The Italian Mafia has latched onto this lucrative business muscling their way in.The Sicilian Mafia is said to own a large portion of the country Wind Farm Assets and the $1.9 Billion Seizure of assets from a high flying businessman is proof of this.43 Companies mainly operating in the Solar and Wind Segments were seized by the state in one of the biggest swoops against Organized Crime.Wind Turbines involve acquisition of land,local permits and subsidy grants which require a lot of organization and local clout.The Sicilian Mafia is uniquely place to control and organize the setting up of Wind Farms.With a government guaranteed return of Euro 18c/KwH,the Wind Subsidy in Italy is one of the highest in the world.Compare this to the Rest of the World where Wind Subsidies get around $0.10/KwH.Note Criminals have not only been involved in Italy,but there are also reports of nefarious activity in Renewable Energy in Bulgaria,Spain,Canary Islands etc.