Last month, Barron's published a sensationalist article warning of a looming death spiral for US electric utilities and traditional power generators. Although stretched valuations may mean that utility stocks are overdue for a pullback in the near term, the sector's future prospects remain undiminished.
The proposed combination of SolarCity and Tesla Motors amounts to little more than a bailout of the fatally flawed renewable-energy company that loses more money with each incremental sale. Investors looking for exposure to clean energy should stay away.
SolarCity Corp continues to lose more money with each incremental sale. Meanwhile, electric utilities can leverage their low cost of capital, existing customer relationships and ability to recover capital expenditures in rate base to spur adoption of renewable energy.
We highlight some of the key investment themes that stood out after three days of presentations and talking to management teams at the Edison Electric Institute's annual financial conference, one of the premier events for utility analysts and industry insiders.
After the first day of presentations and meetings at the Edison Electric Conference's 50th Annual Financial Conference, one theme stands out: increasing adoption of solar power doesn't sound the death knell for regulated electric utilities. In fact, this would-be disruptor creates a huge growth opportunity for incumbent power producers.
Up until midyear, investors couldn’t get enough of yieldcos—a new generation of spin-off that offers a similar investment proposition to some master limited partnership (MLP), minus the tax advantages. We explain why investor sentiment toward yieldcos has soured.
In the US, renewable-energy developers continue to reap the rewards of favorable policies at the state and federal level. However, concerns about rising electricity costs and general opposition to government subsidies raise questions about whether this support will continue.
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