There is currently no money to be made from things like wind and solar, a hedge fund set up specifically to profit from that niche has concluded.
“The whole sector — solar, wind, hydrogen, fuel cells — anything clean is dead for now,” Nishant Gupta, the founder of the UK-based fund, Kanou Capital, told Bloomberg, hours after one of the largest solar energy players in the U.S. warned it has doubts about its state as a going concern.
“The fundamentals are very poor,” Gupta, who manages some $100 million, told Bloomberg, adding “I’m not talking about long term. I’m talking about where I see weakness right now.”
The hedge fund executive added, however, that the long-term outlook for the transition remains bullish, with investments in transition technology expected to increase substantially by the end of the decade.
“Energy transition–related investments are expected to increase from around $1.8 trillion per year to $5–to-$6 trillion by the end of the decade,” Gupta told Bloomberg. “With roughly a third of that spending directed toward the supply chain, we’re highly focused on identifying supply-chain bottlenecks as core investment opportunities.”
The energy transition, hailed as both inevitable and profitable, has run into trouble over the past three years for reasons ranging from the energy crunch that began in Europe in the autumn of 2021 to higher interest rates following the fallout of the pandemic lockdowns, and supply chain snags resulting from ambitious generation capacity targets adopted by various pro-transition governments.
Wind and solar have recently become a lot less profitable also because of declining subsidies as governments find that they cannot keep supporting their selected champion industries indefinitely. The return of Donald Trump to the White House has also contributed to the increasingly negative outlook for transition industries specifically in the United States.
Source: By Irina Slav for Oilprice.com