Green energy investments have been shredded over the past eight years, gutting shareholder value and calling the financial viability of renewable energy into question.
The Energy Select Sector SPDR exchange-traded fund, which tracks the alternative energy sector, is down 15 percent over the past eight years. Barron’s reports that losses among individual ETFs in the green energy sector, however, are much worse. Guggenheim Solar ETF has lost investors 88 percent over the same timeframe, with PowerShares WilderHill Clean Energy Portfolio losing a similar 82 percent.
Global government cuts in green energy subsidies will continue to threaten alternative energy investments going forward. According to the Guardian, the U.K. was forced to cut a green tax relief program due to uncertainty in the market. Jan-Willem Bode, director of one of the largest green energy organizations in the U.K. said Wednesday, “Many shareholders feel like pulling the plug right now because it is just too much negativity thrown at the sector.”
Dwindling demand and oversupply in the energy market also don’t bode well for floundering alternative energy investments. According to Barron’s, with oil prices at record lows countries may be less likely to invest in expensive energy alternatives, especially with price volatility causing so much uncertainty.
Overall, the entire energy sector has struggled, with the S&P 500 energy index down almost a quarter in 2015. Despite the negative news, Treasa Ni Chonghaile of Kleinwort Benson Investors told Barron’s in an interview, “The situation is vastly different now, as renewable energy options such as wind and solar are more mature.” Chonghaile manages the Calvert Global Energy Solutions fund which is down 68 percent over the past eight years.
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