Market
forces are sparking solar and wind energy growth.
They want you, your college or alma mater, your local
firefighters’ pension fund, and all other investors — big and small — to adopt
a new financial strategy.
They’re calling for everyone to shed their oil, gas, and
coal assets while actively investing in solar and wind power, along with other climate-friendly
industries.
Are they tilting at windmills?
Renewable-energy stocks slumped because many investors
wrongly assume that cheap oil will sap demand for
solar panels and wind turbines.
For one thing, solar power is on fire. New installations
go online every three
minutes, and the sun’s rays are fueling more than a
third of the electric power installed last year across the
country.
Wind energy is also flourishing after growing 26.2 percent a
year for nearly two decades worldwide.
Those modernistic
turbines now boost grids in many of the most conservative and oil-rich corners
of the United
States, including Texas, North Dakota,
and Oklahoma.
While climate concerns do help, market forces are driving
this surge.
Generating a kilowatt of solar energy today costs less
than 1 percent of what it cost in 1977. Both wind and solar are
becoming increasingly competitive against dirtier energy options. And on
average, U.S. homeowners can bank on saving $20,000
or more within two decades of sticking solar panels on their
roofs.
“It isn’t often we have an opportunity to both do well
and do good,” Wallace Global Fund executive director Ellen Dorsey wrote
in a Wall Street Journal op-ed.
Yet that’s the case today for people and institutions
which, like Wallace, divested from oil, coal, and gas over the past two
years — and then channeled money into wind, solar, energy efficiency, and other
climate solutions.
The Guggenheim Solar exchange-traded
fund (ETF) zoomed up 128 percent in
2013, while the First Trust ISE Global Wind Energy ETF jumped 65 percent. These
renewable-energy benchmarks blew past the Dow’s 26.5 percent gain that
bull-market year.
Even with last year’s decline, solar shares
increased 118 percent and wind stocks gained 46.5 percent over the course
of 2013 and 2014, outshining the Dow’s cumulative 36 percent rise. In contrast,
standard oil and gas stocks inched up 11 percent, fracking shares sank 3
percent, and coal shares plummeted 42 percent during that period.
Of course, the market has foolishly snubbed the immense
promise of wind and solar power before.
Many individual
stocks in these industries fizzled
between 2010 and 2012, and they remain far below levels seen prior to the 2008
crash.
But I think the past two years say more than the previous
five about how the stock market will treat these industries from now on.
While renewable energy remains vulnerable to volatility
as governments phase subsidies in and out, it’s poised for massive growth.
Consider this: Thanks partly to China’s efforts to
stamp out smog by closing coal-fired power plants, solar power alone
may fuel half the global grid by 2050, according to the International Energy
Agency. That would mark a major transformation from its global market share
today of under 1 percent
worldwide and less than 2
percent in the United States.
What about wind? It generates about 5.5 percent of
America’s electricity and has plenty of room to grow.
Wall Street will eventually accept renewable power’s full
potential. In the meantime, you can do well by doing good by heeding that call
from Ban, Tutu, and the Rockefellers.
Columnist Emily Schwartz Greco is the
managing editor of OtherWords,
a non-profit national editorial service run by the Institute for Policy
Studies. OtherWords.org.