Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Safe Solar Havens - What You Dont Expect Wont Happen

Commodities / Solar Energy Mar 29, 2013 - 06:12 PM GMT

By: Andrew_McKillop

Commodities

BLOOMBERG MIRACLE ADVICE
On March 29 Bloomberg told its readers that Germany’s solar industry "is set to benefit from the financial crisis in Cyprus as investors seek a haven in the guaranteed returns provided by clean-energy plants". It cited a small German firm called Milk the Sun GmbH (more appropriately Milk the Pigeons Unlimited) which claims it is now deluged with investor requests for advice on placements in the "sensitive range" of 100 000 euros and up.


European zombie media has been loyally maintaining the storyline that in Cyprus the so-called tax, or in fact theft of deposits would only operate on accounts holding more than 100 000 euros.

This propaganda can be put to rest right away. This carefully maintained lie, still being bleated on 29 March by (for example) French state-owned media and its partner news outlets owned by big business friends of the State, round the clock, is decorated by the storyline that the Cypriot cash confiscation primarily affects rich, tax-evading Russians.

These are in fact about the last and least to have been affected, due to "capital control breaches" being organized, more than a week ago, to Help the Rich. One choice target for theft has been small and medium-size businesses with net working capital held in Cypriot banks,  which is now gone forever to feed the creepingly insolvent Euro-monster. http://www.zerohedge.com/news/2013-03-29/caught-cyprus-crossfire-small-businesses-suddenly-zero-cash

As we know or can find out, round the clock from crony media in Europe, Cyprus is a highly special case, like Greece was, and Slovenia will be. Bank deposits elsewhere are sacred. Even Queen of Hearts Merkel feels obliged to have German media "reiterate her four-and-a-half year old pledge" to guarantee bank savings deposits. Now we asked to believe that following Cyprus, there will be a "flight to quality" bringing funds to Germany’s solar industry.

HOW IS THE SOLAR INDUSTRY FARING?
Q Cells as recently as 2010 was not only Germany's biggest producer of solar PV equipment, but the world's largest, fattened on generous government electric power feed-in tariff subsidies, by federal and local government aid and subsidies, and almost unlimited investor enthusiasm. Q-Cells filed for insolvency on April 3, 2012, at the insolvency court in Dessau. The executive board reached the decision after its review of alternatives for financial restructuring came to no avail. A very heavily downsized Q Cells was finally bought-out by South Korea's Hanwha Group. Relative to its peak stock exchange value in 2007-2008, its final 2012 share price value of 9 euro cents resulted in a total or maximum loss of shareholder value estimated by analysts at around 8 billion euros ($10.5 billion).

Q Cells was replaced by China's Suntech as the national, and the world's biggest producer of solar PV equipment. On March 21, 2013 the Wuxi Municipal Intermediate People's Court in Jiangsu Province officially accepted the petition for insolvency and restructuring of Suntech Power Holdings Co. As at present, the exact amount of losses are conjectural and depend on the restructuring or break-up of the company, which has already sold its Arizona, US subsidiary. To date, net losses only on defaulted debt notes of the company are about $1 billion. IHS Solar and other industry analysts explain that Suntech's insolvency, exactly like Q Cells' crash, was due to an inexorable cost squeeze between falling prices for whole systems, modules, and unit cells, while finished wafer costs despite lower silicon costs remained stubbornly high. Loss of government subsidies and in Suntech's case trade disputes with the US then sealed the fate of these former giants.

Today however, Bloomberg tells us that Germans with savings of more than 100 000 euros, concerned because of what has happened in Cyprus, would "rather put their money in renewable energy plant", with supposedly "guaranteed returns" than leave it in the bank or invest it in stocks. We could or might suggest they buy gold bars (without the titanium infilling), if they want to lose less than they will lose dabbling in solar energy investor plays.

LOW TIMES FOR THE EURO - AND SOLAR ENERGY
The Cyprus crisis has surely and certainly reduced trust in the euro, and this distrust may be especially strong in Germany for historical reasons. In theory, this should fuel a flight into material assets, but the current situation is far more complex than this easy one-liner readout suggests. One immediate and real problem, for this "conventional readout", is that the Cyprus theft or "confiscation" of savings and of small business working capital has increased public concern that bank savings accounts may be unsafe, further limiting investment options. Operating an investor account and holding, selling and buying shares firstly needs a bank account. To be sure, you can visit your broker with a bag of gold filings, dust or coins but this will be a tiresome and probably expensive way to run your investor account!

The Bloomberg article talking up the "solar security option", or at least what it says now applies in Germany, claimed that even "elderly people from rural areas" are now being moved to invest in solar energy, but the article quoted a German retail solar equipment dealer as saying there are also "other reasons". These in particular include the rising cost of electricity in Germany - and the approach of Spring and then Summer!

Showing the woeful quality of investor advice in this renewable energy domain, in Germany, buyers of solar equipment prefer to buy plants in Germany, and make a point of avoiding purchases in countries such as Spain or Italy. In both these countries, and in Portugal and Greece however, the quantity of distressed assets in the solar energy sector is massive. Per-kilowatt prices of recently installed but now uneconomic equipment are often 33% to 50% less than in Germany - despite its solar industry rout!

The reason is "perceived investor risk", which due to the Eurozone crisis and its latest, most extreme manifestation in Cyprus, has become political risk. Much more important and other than the smart option of purchasing the distressed assets in the solar domain, which also exist in windpower, and shipping the equipment out of Europe to back out oil-fired power production, Germans believe that current feed-in tariffs favouring solar PV and windpower will remain intact, or only slowly decrease. They believe that the sudden, almost total abandonment of feed-in tariffs in Spain, in particular, signals almost continent-wide scaling back of feed-in tariffs - but not in Germany. This belief may well be a massive mistake.

Solar energy is a decreasingly good investment in Europe, especially northern Europe, and the easy years of exaggerated returns are over. Believing the Bloomberg storyline would have been easier if Bloomberg had published it on April 1st, as an April Fool's Day piece of investor advice!

By Andrew McKillop

Contact: xtran9@gmail.com

Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

© 2013 Copyright Andrew McKillop - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisor.

Andrew McKillop Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in