Renewable energy is growing and spreading but still challenging

Popular and media interest in renewable energy has waned in recent months but two reports issued this month show that the industry is growing in capacity and investment, spreading geographically, and delivering energy at increasingly cheaper prices.  REN21’s Global Status Report is a mammoth, 170-page document but is written and produced well making it easy to review.  The second is a short document produced by NRDC to benchmark various countries on their renewable energy footprints.

Even so, the industry faces a number of challenges.  Technology is developing slowly, subsidies continue to be important, and grid integration poses a number of challenges.  This was seen in an interesting layout of articles in the Wall Street Journal yesterday.  In two side-by-side pieces, the Journal first reported on how Japan’s new feed-in tariffs may not be sufficient for material supply of renewable power, while a second article just across talked about how the country was restarting a nuclear plant to meet electricity demand.

The shale gas weekend

Shale gas seems to be the flavor of this weekend wherever one looks.  If the Wall Steet Journal did an editorial defending fracking, the New York Times continued its superb Drilling Down series on shale gas with a piece questioning if the industry was another bubble in the making.

The WSJ editorial was a great point-wise rebuttal of the major advocacy efforts against fracking, while still highlighting the need for industry to be extra-vigilant on safety and environmental risks.  It was refreshing to see an editorial focus on facts versus unsubstantiated opinion.  The NY Times article — based on a ~450-page archive of emails and documents — highlighted concerns around decline curves, asset valuations, economics, and the hype-driven transactional activity.

Shale gas in North America is a nascent yet dynamic industrial enterprise.  It is too early to make calls around a number of uncertainties although they do provide stakeholders — companies, service providers, investors, and regulators — with a framework to evaluate and address these plans.

Geothermal’s resurgence

The Wall Street Journal published today a good review of geothermal energy, which, “spurred by new technology and government funds, is enjoying a resurgence.”

Growth or dividends: Investing in oil

The Wall Street Journal today presented an interesting framework to think about investing in oil.

The article takes a rather conservative perspective and suggests that investors should look at oil not for growth but for dividends.  So they consider the super majors a better bet than the independents.

While several points in the article are valid — e.g., depressed gas prices, surplus capital availability, and an uncertain short-term outlook for the oil industry — it is probably premature to write-off further growth in the oil industry.  Investors still value exploration over production based on the appreciation companies have enjoyed when reporting new discoveries.  Further, gas prices do not seem to have adequately reflected the drop in unconventional investment.

Interesting times.