The wave of excitement that ‘green’ investing generated last year seemed to come crashing down as quickly as it started.
While gas was nearing $5/gallon, many Americans were screaming for ways to reduce our dependency on oil. As prices receded, the scream has become a whisper again.
As green or clean-tech companies were reaching out to the credit markets to fund new operations, the market virtually dried up.
Faced with the twin blows of falling oil prices and a drying up credit market, all things green quickly fell out of favor. One look at the charts of former market darlings such as SunPower (SPWRA) tells the story.
But I don’t necessarily think that it is over for these companies or the green movement in general. In fact, I think this may all be a blessing in disguise.
When things were going hot and heavy in the green investing realm, startups were multiplying overnight, each one hoping to catch on and ride the wave. Many had dubious business plans at best. To me, this sounds just like the dot com bubble of the late ‘90s.
The other problem that seemed to be surfacing was the ability of the existing infrastructure to support these new technologies. Great idea: wind farms in the panhandle of Texas. Bad idea: overloading the existing power grid trying to get the power where it needs to go. With as many doubters as this movement has, any mistakes or slip-ups would be openly ridiculed.
The benefit of the slowdown is that the green industry will have time to sift through all the technology and direct money to the most viable options, and build out the infrastructure necessary to support the changes. Also, as all technology advances, prices will come down. When demand returns (it inevitably will, just wait until gas heads back towards last summer’s high), the technology will be much more affordable, eliminating some of the issues of converting people over.
I’m not saying that the technology will be ready for mass adoption in the next year or two, but when it finally is, we will all be better off. Had the industry kept going at the pace it was, most would have bought into already outdated or unsupported technology. Now at least the industry can go through a normal growth curve.
