Thursday, April 9, 2015

Shares of renewable energy companies are still steady one year after oil price plunge

When the price of oil started to fall or plunge in June 2014, it was not long before the market for renewable energy started feeling the pinch.

Although not a substitute for oil, renewable energy would rather that the price of oil be sustained on the high side. For one, a low price for oil would result in reduced demand for renewable energy particularly where oil has much more uses and is more versatile. By the way, the technology and use of oil and oil derivatives is incorporated in nearly every industrial sector of a modern economy.

This brings up the question: how have the stocks of renewable energy companies fared since oil started to plunge in 2014? A cursory look at three alternative energy companies with very high market capitalization could tell a good picture.

  1. Green Plains Inc. (NASDAQ:GPRE)

  2. Green Plains Renewable Energy produces Ethanol fuel. It ships about 1 billion gallons of ethanol per year.

  3. JA Solar Holdings. (NASDAQ:JASO)

  4. This is the world's largest solar cell producer. The company is based in the People's Republic of China. JA Solar employs more than 1, 400 people around the world.

  5. Ballard Power Systems. (NASDAQ:BLDP)

  6. Ballard Power Systems, Inc. is a global leader in PEM (proton exchange membrane) fuel cell technology. Ballard has designed and shipped close to 150 MW of hydrogen fuel cell technology to date.

The graph below shows that on a one-year trend, the stocks of these three global renewable companies on the NASDAQ have recently been holding steady. The graph shows the rate of change of the share prices. Market enthusiasm for these stocks have not dipped very much.

Shares of major renewable energy companies are still steady.
Source: Google Finance.

Except for Ballard Power Systems, whose price has fallen sharply by about 50% since April 2014, possibly due to the high price of producing fuel cells or constrained demand now that low oil prices might make its major customers, the automobile and fleet services companies, be thinking of sticking to cheap oil, one can say that the market is still hopeful that low oil prices will not last.

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