Stock Market Turns Against Clean Tech

Has the stock market turned against green energy? Economist Peter Tertazkian thinks so, as he noted in a post for the Financial Times.

"The broad-based Invesco WilderHill Clean Energy ETF is off 60 per cent from its peak last year. Still, those losses represent an average decline. Riskier stocks on the clean-energy spectrum have lost much more," he began.

"Take for example green hydrogen. Many publicly traded fuel-cell companies were market darlings in February 2021. Since then, risk investing has lost its allure and this peer group has shed about 80 per cent of its value. Unprofitable EV and battery storage companies have discharged a similar percentage of their market capitalization. A beat-up equity market is disconcerting for a technology-led energy transition. Ramping up innovation requires a lot of risk capital. Bruised investors who have seen market exuberance turn into market gloom are not likely to return and finance unprofitable companies at lofty valuations."

Tertzakian went on. "None of this is new. In financial jargon, it’s euphemistically called “rationalization.” History suggests it could be five to 10 years before the risk-takers come back. Yet all is far from lost. I believe a good clean-out of an overhyped market is a positive thing over the long term. For now, the days of cheap money chasing expensive dreams are over. Till those days come around again."

He believes the strongest companies will start merging to reduce costs, gain manufacturing efficiencies and achieve the corporate mass needed to scale up faster.