Spending on renewable energy, which surged 16 percent in 2014, will remain strong this year, largely unaffected by the slumping oil prices that have artificially depressed their shares.
That’s the message from Stuart Bernstein, Goldman Sachs Group Inc.’s global head of clean technology and renewables, and Vishal Shah, Deutsche Bank AG’s renewable-energy analyst. Because oil produces only 1 percent of U.S. electricity, the crude plunge that’s roiling markets should have only a “modest” effect on clean-energy developers or the companies that equip them, Bernstein said in a telephone interview.
“I don’t want to be dismissive of the impact of declining oil and gas commodity prices on renewable energy,” Bernstein said. “But they will have a very small impact on the long-term cost of electricity.”
Clean energy attracted a total of $310 billion in investment last year, up from $268 billion in 2013 and the first increase in three years, according to Bloomberg New Energy Finance. Goldman Sachs managed $4.1 billion in clean-energy public markets transactions last year. That was about 40 percent of the total and the most of any financier, according to league tables published by New Energy Finance.
Goldman has boosted its efforts in clean energy while other financial companies are pulling back, which helped the company retain the top spot, Bernstein said.
Shares of solar companies have been dragged down alongside slumping oil prices, and may offer a buying opportunity, according to Deutsche Bank’s Shah. There is little connection between solar panels, which make electricity, and crude that’s processed mostly into transportation fuel, Shah, who is based in New York, said in an interview.
With the Bloomberg Intelligence Global Large Solar Energy Index of 21 companies down more than 40 percent since mid-June, Shah sees bargains. Panel makers and rooftop installers expect strong demand this year, especially in China, the U.S. and Japan, the biggest markets.
“None of these markets are going to be affected by cheap oil,” Shah said in an interview. “Oil is just not driving the solar industry.”
What is driving solar power are global calls to curb carbon emissions, national efforts to promote clean power and rising retail electricity rates that are spurring demand from consumers.
Solar installations may reach 63.6 gigawatts worldwide this year, up at least 22 percent from 2014, according to New Energy Finance.
Shah’s buy recommendations include the rooftop installers SolarCity Corp. and Vivint Solar Inc., First Solar Inc, the top U.S. manufacturer, and SunEdison Inc., the developer that’s expanding in China, India and Brazil.
SunEdison has slipped more than 15 percent since mid-June, as oil prices plunged by more than half. First Solar is down more than 40 percent and SolarCity has declined almost 29 percent, while Vivint has lost 47 percent of its value since its initial public offering in September.
Shah expects the demand for solar power to translate into gains in equities. This “is going to be a very, very strong year” for solar installation, he said.