OPINION | This article contains the author's opinion.
Green energy stocks have tanked in the last few months.
In comparison, the performance is far below oil and gas companies.
The difference may be attributable to higher interest rates. (Trending: Illegal Immigrant Deported 9 Times Commits Heinous Crime
In just two months, S&P Global Clean Energy Index, which comprises 100 of the biggest companies in green energy, has dropped over 20 percent.
Meanwhile, the oil and gas-rich S&P 500 Energy Index has grown by six percent.
“There’s a dark cloud hanging over green stocks,” Martin Frandsen, a portfolio manager at Principal Asset Management, said.
“Two years ago we got a huge growth in commitments to hit net zero, which translated into a lot of investment opportunities.” (Trending: As Fauci’s Net Worth Surpasses $11 Million, Americans Take A Closer Look At His Disturbing Lies)
“Then we hit this inflation wave and companies that locked in their [electricity] prices have been left very exposed. The lag effect is hitting now,” Frandsen continued.
David Souccar, a portfolio manager at Vontobel Asset Management, said, “To support rapid growth, you need to keep leveraging the balance sheet or issue equity. In a zero-rate environment, this formula worked. In a higher-rate environment, it falls apart.”
Renaud Saleur, a former trader at Soros Fund Management, said, “The contracts signed for offshore [wind] will be heavily lossmaking for a long time until the different governments realise that they need to give $80-$100 per MWh and not $30-$40.”
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