Campaigning in Iowa, the President today defended wind energy subsidies, saying “These jobs aren’t a fad.” He was campaigning for the renewal of subsidies for wind energy and solar, known as the Production Tax Credit (PTC), claiming it creates jobs and clean energy. The Energy Information Administration notes that wind receives a subsidy of about 5 cents per kWh, compared to 6/100ths of a cent per kWh for natural gas or coal.
I pointed out in my book Eco-Fads that wind power is a fairly expensive way to reduce carbon emissions, costing about seven times as much to reduce a ton of carbon emissions as was paid in Europe under their cap-and-trade system.
Perhaps, as the President claims, promoting the creation of wind and solar energy is a good economic strategy, creating jobs and helping the economy recover. For one indication, we can look at the stock prices of renewable energy companies over the last two years since the PTC was renewed in the “stimulus” package.
Vestas is the largest wind turbine manufacturer in the world. It lost 90 percent of its value, falling from about 300 to 29 today.
Gamesa is another large wind turbine manufacturer. It is headquartered in Spain which has many wind turbines. Spain’s unemployment rate, by the way, is 24.8%. Gamesa’s stock price started at 8, rose to 11 and is trading at about 1.50 today, losing more than 80 percent of its value.
There are other wind companies, but most of them have other products (like GE) or are Chinese owned and heavily subsidized by that government. Analyzing their stock prices isn’t appropriate.
Solar manufacturers also benefit from these subsidies as well. How are they doing?
Suntech is one of the top solar manufacturers. Its stock began at about 9 and has fallen to 1, a loss of nearly 90 percent of its value.
First Solar is another one of the top producers. There was a bit of fanfare recently when its stock price rebounded a bit. Over the last two years, however, the stock price has fallen from about 120 to about 20 today — even with the recent bump, a loss of nearly 85 percent.
Finally, in 2009, SunPower bragged that it was the “blue chip” of solar energy companies. Since that time, the price rose from 12 to 22, then collapsed down to about 4, a loss of more than 80 percent since the peak a year ago.
The record is pretty consistent — losses of 80 to 90 percent for both wind and solar, at a time when the federal government was providing significant subsidies.
It is true that the country is in a recession, so part of the decline is related to the recession. Just to be fair, here is the graph of the NASDAQ during the same period for comparison purposes – a gain of more than a third from 2,200 to over 3,000.