Is this the future for the Clean Energy Finance Corporation?

Let’s face it – the whole idea of the government – aka taxpayers – being in the game of funding investment in clean energy  is not a good one.  I have memories of the disastrous VEDC and WA-Inc, both of which involved shady characters, corruption, illegality and a massive loss of taxpayer funds.

But governments never seem to want to learn.  This time it will be different.  We have very professional people on the board. Sure.

But the real issue is that there is already a  market for new ventures in the clean energy space, even if the cashflow of quite a  few companies is underpinned by government grants.  And the news is very ugly judged by this excellent piece in Business Spectator by Daniel Palmer.

The sell order on Aussie clean tech stocks

Negative 16 per cent. Down 39 per cent. Off 32 per cent. Minus 8 per cent. Fell 30 per cent.

These are the last five years of returns for the ACT Australian CleanTech Index. Awful would be an understatement.

The index has underperformed the benchmark ASX200 by over 50 per cent since the middle of 2009. What’s more it’s underperformed the Small Ords index by a similar margin.

The market capitalisation of the 69 stocks in the index is now at $6.5 billion. In July 2007 it hit a record high of $16.3 billion.

For all this pain, the top 20 stocks within the index have hardly changed since 2009, which shows that few new companies are making a significant impact even though many of the biggest players have weaker valuations than a few years ago.

Looking at the figures on a sector-by-sector basis and it’s clear geothermal has run into the biggest roadblocks since the middle of 2007. In the five financial years since, the best return from the geothermal component of the index has been -18.6 per cent in FY2011, and FY2013 is looking no better, with the index already off 17.1 per cent in the first half.

Geodynamics aside, geothermal in Australia is on life support.

Panax, Petratherm, Eden Energy, Hot Rocks, Green Rock Energy, KUTh Energy and Torrens Energy were all spruiked as geothermal stocks to watch back in 2007/08. Right now they all trade at, or desperately close to, all-time lows. They all are worth less than $10 million, most of them less than $5 million. Many of these firms have already shifted focus to other activities.

Geodynamics on the other hand is still worth around $50 million and at least making progress, even in spite of its partner’s (Origin Energy) call to opt out of financing for now. That said, any setbacks and its ability to move forward may be deeply compromised as support from government and its key partner will be less forthcoming.

Geodynamics clings to a spot at the end of the top 20 list, after sitting pretty at number six a mere four years ago. This time last year it had fallen out of the top 20, but despite falling around 27 per cent since then, it has managed to re-enter the list. If nothing else it epitomises the weakness of the index.

As I mentioned in an article about the global clean tech index (Renixx), the data shouldn’t be confused with investment. There has indeed been substantial clean energy investment during the same period, but the companies making that investment are largely outside of the index. For example, Pacific Hydro, Meridian Energy, AGL, Siemens, GE, Origin and First Solar, not to mention installers like True Value Solar.

There is hope that the index’s weakness stems from the smartest clean energy players being outside the index.

There is also hope the struggles may simply be the result of growing pains associated with developing new technology. It’s not as if this share price weakness in clean tech groups is restricted to Australia and perhaps the early signs of market positivity this year suggest we have reached the point in the market where the only way is up.

It is, after all, said that the darkest hour comes before the dawn. The problem for investors in ASX-listed clean energy companies is it’s so dark now it’s hard to tell if it can get darker.

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64 Responses to Is this the future for the Clean Energy Finance Corporation?

  1. Biota

    How much super is ‘invested’ in this stuff?

  2. Bruce of Newcastle

    But the real issue is that there is already a market for new ventures in the clean energy space

    AHAHAHAHAHAHAHA!

    Sorry. Lost it there for a moment.

    Being down 30% or so is an achievement. In the US it is 90% in the same time period. Not helped by the likes of John Chanos who famously shorted green stocks a couple years ago.

    I suspect our renewables sector is held up by RET and the carbon tax, which means they could be in for a hard time next year. A very very hard time if you listen to what coalition MP’s are saying.

    Unfortunately I fear a number of union super funds here may have bought the lie. If the Libs win the election they could be in deep do do with their members. Sad that.

  3. Crossie

    How anybody thought geothermal was a starter in Australia is beyond me. We have the most stable landmass on the Earth with no live volcanoes anywhere near.

    Even Iceland with their ferocious volcanic activity get only 26% of their power from geothermal power plants. Were Moree hot springs meant to power the whole of Australia?

  4. Crossie

    The public funds being invested in green energy mirrors the Obama administration’s efforts. Julia is such a fan of all things Obama that she is determined to follow his lead regardless of the Solyndra et al debacle.

  5. Leigh Lowe

    Shit!
    $100 invested in these basket cases five years ago is now worth $22.
    And all that after shovelling public money into these beasts as fast as Lard-Arse can go.
    There is a certain delicious irony that these investment train-wrecks are racing their greatest media proponent in Fairfax to the bottom.
    Although I think Fairfax is in front over the five year time frame in the plumetting stakes.

  6. Leigh Lowe

    How much super is ‘invested’ in this stuff?

    None of mine!
    If these dickheads want to take a holier-than-thou attitude to investing and buy themselves religious indulgences from Gaia by pissing their money away, good luck to them.
    Me? I am in it to make money.
    I look forward to paying an ethical investor to mow my lawn or caddy for me when I retire.

  7. Rafe

    Don’t miss this link with a cute multi-coloured graph, it is in Judith’s piece but it is easy to miss.

    “We have very professional people on the board.”

    As for the competence of this administration, it is hard to say which has been worse, the policies or the implementation. Some say that the quality of the public service has declined, certainly the insertion of whole layers of high level content free mnanagers has not helped. This does not bode well for good government under new management.

  8. Crossie

    How much super is ‘invested’ in this stuff?

    I have been careful not to choose any green options for my super but you never know.

  9. stackja

    Workers elected union bosses. Voters elected political bosses. They assumed the voters were suckers so they just took the suckers for a ride. Who is to blame? The suckers who keep electing bosses.

  10. JC

    I have been careful not to choose any green options for my super but you never know.

    They chose greenslimers. I chose a good old fashioned refinery in the US near a pipeline hub and close to doubled my money… and the stock is still going higher damn it.

  11. Biota

    You must feel bad about that JC!

  12. JC

    Guilt ridden, Biota. I couldn’t sleep at night at the thought my refinery stock was going up while the scumbag, rent sniveling solar and wind mill “industry” were taking it up the backside with a red hot poker.

  13. JC

    Just look at this filthy disgusting stock. First Solar Inc. I can’t believe people paid 300 bucks a share for it in 2008.

    I actually made some money shorting the scum when it was around 133 bucks, but it was only a small amount. It was the first time I ever married my ideology and trying to make money. IT really felt good.

    If there’s still morons telling us/thinking solar is the wave of the future ahahhahahahahahahahahaha perhaps they can explain why FSLR is almost busted even though they have creamed the rent seeking trough. Freaking idiots.

  14. Token

    These are the last five years of returns for the ACT Australian CleanTech Index. Awful would be an understatement.

    The index has underperformed the benchmark ASX200 by over 50 per cent since the middle of 2009. What’s more it’s underperformed the Small Ords index by a similar margin.

    …but the ferals in Jonathan Moylon & the turds at the ABC will give investors 5 unicorn farts for the good vibes they created (and for employing a bunch of deadsh*ts would are not employable otherwise).

  15. Token

    …but it was only a small amount. It was the first time I ever married my ideology and trying to make money. IT really felt good.

    Doing God’s work feels like that.

  16. ev425128

    How much super is ‘invested’ in this stuff?

    All of mine – except for the odd billion or two invested in the Wonthaggi White Elephant.

    I think you can guess now which fund holds my super. Too f’n busy trying to save the place I work at to spend time managing my own fund. And being a total airhead when it comes to the market does not help.

    Long time listener, first time caller. The posters here are more knowledgeable, entrenched or vitriolic than I can usually compete with. It is somewhat intimidating to write this, even though I can always choose not to “submit”. *engages courage mode. enters the cat*

    Not right-wing, no longer left. I’m certainly libertarian though the “l” will not be capital in the eyes of some.

    The intro out of the way (sorry about that), my fantasy discussion with my fantasy investment advisor (fantasy because I know he’s a robot and no advisor at all) begins with the question “how much of my money will be invested in ‘ethical’ investments?” “Ethical” means that that they consider something more important than returns to me.

    In my fantasy I withdraw all of my investment (20 years worth) from UniSuper and make a killing on the market.

    Don’t know if anybody will read this, don’t know that it really matters. It is nice, though, to commit my first post here – because I am libertarian, and it’s nice to engage with some likemindeds.

  17. Bruce

    First Solar? Cool! A hat tip to JC for emulating the other JC. I must apologise to Mr Chandos, his first name is Jim (my excuse is a Mr C Merlot was doing the typing for me).

    Also apology to Dr Sloan. I was not being critical of her post, I was laughing at the idea that there is a real living market in renewable energy stocks. At least Frankenstein’s monster was plausible in the 19th century. In this case it is a market in the same way that a decomposing corpse is lively.

  18. JC

    Bruce..

    oh yea Chanos was very short the stock, but I think that was early on from memory. He hated it.

    Funny guy, Chanos.. he was one of the first dudes to pick Lehman going under by shorting the stock but actually lost money that fateful year in 09. I could never figure that one out…

  19. Bruce

    Haven’t got the booze out my system yet. John Chandos is a character in a Conan-Doyle novel, Jim Chanos is a hedge fund guy…

    Anyone who can pick flameouts like Enron, Lehman and First Solar before the fact is a hero even if they don’t always make money out of them.

  20. PSC

    Lets have a look at the stocks on that list.

    The second largest stock on the list, TPI (waste disposal) was geared to buggery after a debt fuelled asset purchase spree, and now has a 2.2 EBITDA interest cover, suspended dividends on the ordinary stock. I personally would be unsurprised if management had on occasion had energetic and less than optimally constructive conversations with the banking syndicate about the details of the debt covenants. Not to mention a three month market suspension in 2009 to negotiate with potential private equity partners. Not to mention Mr “short selling is a despicable practice” Peabody as CEO – who when he sued TPI it saw the stock price go up, I assume because investors got the message that he really wan’t running things from behind the scenes. Market cap moved from 3.7bn in 2007 to just over 1bn today.

    The biggest stock, SGM (scrap metal merchant) has suffered alongside the steelmaking industry. SGM has a market cap of just under $2bn – down from around $6bn in 2007. Bluescope for instance has done much worse.

    There’s a good argument that running landfills and scrap metal merchanting are on the periphery of “green tech”. But this was over 50% of that ‘green tech’ index in 2007. Which perhaps says more about the creators of the index than ‘green tech’.

    Geodynamics – the biggest clean energy stock – had a market cap of around 332m five years ago, orders of magnitude less.

    So the title of this post – “the future for Clean Energy Finance Corp” is perhaps misleading, in that it goes onto discuss an index whose performance has been largely driven by two stocks who have nothing to do with “clean energy”, one which had management which some might describe as diffident, and another in an industry which has faced secular headwinds.

  21. Alice

    JC says

    “If there’s still morons telling us/thinking solar is the wave of the future ahahhahahahahahahahahaha perhaps they can explain why FSLR is almost busted even though they have creamed the rent seeking trough. Freaking idiots.”

    You are the fucking idiot JC.
    They had thriving solar in California till the government built the electricity grid and suckered everyone into jhoing for the token of a free shitty hot water heater. Once they got that they were gtrapped in the grid.

    As for you JC. You arent against government and you aret for them. You are just in there making a buck in a bank. You have no conscience anywhere you fucker.

    You know damn well the future fund is being rorted by banks and their “agency fees: but you want to call me a liar.

    I dont forget you big fat traitor. You cant listen to JC. He masquerdes as a conservative but has the morals of a toilet roll.

  22. Leigh Lowe

    ……. the scumbag, rent sniveling solar and wind mill “industry” were taking it up the backside with a red hot poker.

    …. and the irony is, it takes coal to get that poker red hot!

  23. Alice

    Id like to ask you JC – is the way we measure how well we are doing as a human race measured by shareholder profits? Because a lot of people know by now these shares are being pumped and dumped by market manipulatotrs (mostly banks).

    Fuck off with the shareholder profits arguemnt JC. it aint no argument.

  24. Biota

    Alice, what are you going to live on in your retirement?

  25. Alice

    rent biota and more than many

  26. Leigh Lowe

    Remain calm Alice.
    The subject matter is rational investing.
    You display all the hallmarks of the sort of ditzy type who pisses their money away on follies like “Effical Investing” for the sake of a clear conscience and an even clearer bank account.

  27. Alice

    I have jack shit in super and all in bricks
    Those bastards in the super industry set about scaring the bejeezus out of everyone in the late 1980s.
    So many have been ripped off.

  28. JC

    PSC

    The future of Green Energy is clearly shown in these US ETFs.

    Market Vectors Solar Energy (ETF)

    Put up the chart. It collapsed from $650 a share to 43ish today.

    PWND – Global Wind Energy Portfolio

    26 bucks to 6.

    Alice

    You are the fucking idiot JC.

    Okay

    They had thriving solar in California till the government built the electricity grid and suckered everyone into jhoing for the token of a free shitty hot water heater. Once they got that they were gtrapped in the grid.

    Explain Alice as it’s incoherent.

    As for you JC. You arent against government and you aret for them. You are just in there making a buck in a bank. You have no conscience anywhere you fucker.

    Alice, you were drunk last night and it seems this evening as well. I’ve told you perhaps 6 times now that I don’t work for a bank.

    You know damn well the future fund is being rorted by banks and their “agency fees: but you want to call me a liar.

    No, I never called you a liar. You were clearly too drunk to understand the truth. However I didn’t think you were lying. Just drunk. Again

    I dont forget you big fat traitor.

    are you Birdie’s sister?

    You cant listen to JC. He masquerdes as a conservative but has the morals of a toilet roll.

    Ginned up again, are we?

  29. Bruce

    Alice – I appreciate your concern, but in practice the whole green corporate industry is corrupt. Which is quite apparent from the last link I gave. ASX listed banks at least have APRA to keep an eye on them.

    It solely exists on taxpayer money plus money scammed out of poor Aussies who believe them, and is based on the lie that we must do something to save the world from Climate Change™. Snake oil sellers reincarnated.

    I do not class solar hot water systems in this, as that technology has been around since the 70′s when my father and I put one in our roof.

  30. Alice

    Leigh – you mistake me. I can assure you I have the first dollar I ever earned and have not “pissed my money away” anywhere.

    I leave that to the “super believers”

    (Im a believer – was a Monkees song if Im not mistaken)

  31. Alice

    I really dont give a damn about solar or the green thing Bruce. I do give a damn about people like JC laughing his head off about it “not having a thriving market” etc when the reality is governments who rolled out the electricity grid did everything they could to get people off solar and on to “the grid”.
    had things been different etc

    But now to hear JC say “a ha ha it doesnt have an industry”. He may as well say ” big coal electricity and government gobbled you all up – which they did”.

    If coal ran out and governments all went down – its there.

  32. Alice

    You stupid man JC.
    You cant keep relying on accusing me of being a drunk when you have very strange attitudes

    (let me explain – JC thinks if shares do well thats a mark of confidence and the company is doing well

    BS – one of the banks JC works with could be pumping the stock for a fall….

    JC – please – efficient transparent stock and share markets are a thing of the past and you know it.

    Aint no country for old men or old women.

  33. big dumb fu

    Alice, do you ever read back what you write here later when you are sober? Serious question.

  34. Alice

    big dumb fu

    Never heard of you.

  35. big dumb fu

    Because I rarely post. Watch from the sidelines mostly. Seen plenty of crazy come through here. Just wanted to know, whether you read any of your posts back in the morning?

  36. Steve of Ferny Hills

    Don’t take offence JC. It’s just Alice’s way of hitting on you.

  37. Aaron

    Alice, you sound like the crazy lady in town who randomly insults passers-by.

  38. wreckage

    California was never going to run on solar in the 2000′s like it allegedly did in 1920. The population has increased by several orders of magnitude and the share of subsistence farming has plummeted.

    The grid was a symptom, not a cause.

  39. Rousie

    Alice -
    Step…away…from…the…keyboard

  40. JC

    Don’t take offence JC. It’s just Alice’s way of hitting on you

    I know. She’s trying to be all alpha female and stuff. It never impressed as much as femininity does.

  41. If politicians knew anything about business, they’d be in business.

  42. Gab

    Alice is alright, but then I skip over most of her rants (sorry, Alice). Strikes me as a real softie at times but also likes a bit of verbal biffo – hey, she livens up the place on occasion. Strikes me as a female version of Graham, almost.

  43. fingerbone bill

    In an odd way it would be good to see the CEFC run for five years or more. Unlike the RET and feed in tariffs, the cost of which is hidden in retail and network charges, the performance of the Corporation will be readily measurable. Unless there is an Australian Edward Somerset out there researching a brand new renewable technology, the corporation is doomed. A scandal or 2 would be a bonus.

  44. John Mc

    Alice is fine. I’d take Alice over Hammy or Monty any day. They’re just ugly bores. At least Alice has some character behind her …….unusual..perspectives.

  45. Rousie

    Hmmm
    ALP talking points vs whatever is popping into my head talking points.
    I suppose even Sybil had a good personality or two

  46. Gab

    True, John, the others are excruciatingly predictable but Alice…well she often surprises. And she’s never dull like the others.

  47. big dumb fu

    Couldn’t agree more. Alice is infinity more entertaining than the alp talking point automotrons.

  48. CameronH

    Can somebody please tell me what technology was used to generate solar electricity in California in 1920? I was not aware that this technology was available then.

  49. JC

    More on leftwingers are hypocritical swine

    Mark Levin releases a tape of Demorat Diane Fienstein talking about having carried a concealed weapon to protect herself against a threat.

    “if he or she takes me out, I’m going to take him/her out”

    This Demorat is leading the charge against gun control in the US senate.

    Fme.. these people are disgusting. Just disgusting hypocritical swine. They keep forgetting there’s an internet and most of what the have said in the past is potentially available.

    http://www.youtube.com/watch?v=iuBbLeqZbPA

    Fisk Doctrine.

  50. JC

    wrong thread please delete.

  51. Elizabeth (Lizzie) B.

    Hey Alice, sometimes I look back over what I put up the night before and think that I wasn’t altogether listening to what was being said.

    But then I often decide – neither was anyone else. So to each their own.

    Anyway, you are heaps nicer than trolls, so I’m glad you come here. And your bedtime has extended from 9.30 to 10.30. That’s gotta be good.

  52. I have to admit that Alice, mad cat lady that she is, is far more entertaining than our regular trolls.
    I even go so far as to read some of her comments….

  53. tgs

    Funny guy, Chanos.. he was one of the first dudes to pick Lehman going under by shorting the stock but actually lost money that fateful year in 09. I could never figure that one out…

    Well, as a very famous economist once said:

    “Markets can remain irrational longer than you can remain solvent.”

    Timing short trades successfully can be incredibly difficult even when you have the economic fundamentals correct as you need to also correctly predict when the market will reflect those fundamentals.

  54. Bearbrass

    Dr Sloan please forgive me for posting this slightly off-topic entry here -

    I have just sent this email to the ABC after hearing this interview on the AM radio program yesterday – http://www.abc.net.au/am/content/2013/s3669601.htm – the howler I draw their attention to is near the end of the transcript;

    “Dear people at AM –

    I was astonished yesterday morning to hear your environment reporter ask IPCC Chair Rajendra Pachauri “Are you as a climate scientist concerned about where we are at in this point in time and what the future could look like?”

    Is it possible that Ms Clarke, as a specialist reporter in this area, is unaware that Dr Pachauri is not a climate scientist at all? His degrees are in engineering and economics. Surely Ms Clarke’s question was misleading to your audience. I noted also that Dr Pachauri did not correct her error but allowed the misrepresentation to stand.

    warm regards…”

  55. PSC

    More on leftwingers are hypocritical swine

    - JC, 2013

    I like to deal with rightists. They say what they really think – not like the leftists, who say one thing when they really mean another

    - Mao Zedong, 1969

  56. Leigh Lowe

    Is it possible that Ms Clarke, as a specialist reporter in this area, is unaware that Dr Pachauri is not a climate scientist at all?

    Why would that matter?
    After all, for years they have been slavishly following the predictions of Flannery whose core skill is tracking dinosaurs through the swamp a mere 250 million years after they have passed by.

  57. Leigh Lowe

    Alice,

    I think you confuse the investment tax vehicle (superannuation) with the many and varied management structures and investments possible within the umbrella of super.
    There are defined benefit funds, usually public sector or large corporate, and, if you want to start Sinc off on a rant just say “UniSuper”.
    There are retail commercial funds which are heavy on glossy brochures and fees but light on performance.
    Then there are industry funds which I used to think were reasonable value from a fees and performance standpoint, but I would now be nervous about them being hijacked to advance union agendas (see Setka, John).
    I run an SMSF. Sure, I make about the same number of cock-ups as larger funds, but at least I don’t charge myself a fee to lose my own money.

    As far as investments go, a super fund can hold real property so, if rental houses are your go, you can do this via a super fund (if the tax advantages stack up for you that is).
    In short, “super” and “property” are not mutually exclusive.
    One is an investment, the other is a tax structure.

  58. .

    I like to deal with rightists. They say what they really think – not like the leftists, who say one thing when they really mean another

    I like this Mao chap the way I like Yahweh – he’s really in your face and doesn’t take shit from anyone.

  59. .

    I’ll report back one day on how my ING living super account is going.

    Hopefully I make a few good trades and can draw down a decent income at a usurious tax rate soon enough (early withdrawals).

  60. MT Isa Miner

    ev425128. don’t waste time on regrets about Unisuper. Use your energy getting what you can out. It took me over 4 years to pry their grasping hands off my money and still I had to cut and run before I got it all , before my blood pressure went Chernobyl.

    You have to get your money out,especially if you think we are due for a bigger fall. Make the decision and then DO IT.

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