The World's #1 Renewable Energy Network for News, Information, and Companies.

Renewable Energy Stocks By Dollars Per Watt

Dollars per watt ($/W) is a lousy measure of the economics of solar, but it persists. Most likely, it persists because it seems familiar. We can pay $4 for a watt of solar, or $4 for a Iced Hazelnut Macchiato at Starbucks. Unfortunately, while the analogy may seem apt, this is a lot like knowing you’re getting a Macchiato without knowing if it’s a Tall, Grande, or Venti.

The actual energy production from a solar system depends greatly on a number of factors, including location, orientation, mounting structure, shading, string configuration, and choice of inverter.

Nevertheless, dollars per watt persists.  You’ll find it even in industry reports like US Solar Market Insight from GTM Research, as seen in this graph of annual PV installations and cost in dollars per watt:

Dollars of Stock Per Watt

Knowing that I can’t beat them, I decided to join them.  I used dollars per watt to provide a rough guide of how much solar an investor gets when buying the stock of publicly traded companies that own or finance solar: SolarCity (NASD:SCTY), NRG Yield (NASD:NYLD) and Hannon Armstrong Sustainable Infrastructure (NYSE:HASI) in a recent article about solar leases.

Here, I take it a little farther, and look at $/W for all renewables.  Below I also include wind farm owner and developer Pattern Energy Group (NASD:PEGI), geothermal company Ormat Technologies, Inc (ORA:NYSE) and hydropower and wind partnership Brookfield Renewable Energy Partners (NYSE:BEP.)   I dropped Hannon Armstrong from the list because I was not able to obtain sufficient information from the company about the renewable projects it has financed in time for publication.

The following chart shows how much of each company’s stock you would have to buy to get a watt of each type of renewable energy production:

Note that one weakness of $/W is that the numbers are not additive.  If you spend $43 on a share of NRG Yield, you will be effectively buying a little over 2 watts of wind power and a little over 6 watts of solar.  You can’t get the solar without the wind.  If you only want one watt of any renewable energy, the green bars show that you could spend about $2.50 on either Brookfield or Pattern, $3.63 on Ormat, $5.05 on NRG Yield, or $13.89 on SolarCity.

Of course, renewable energy is not all you get when you buy these companies.  With SolarCity, you also get the solar installation business, and Ormat has a significant business selling equipment and services to other geothermal companies.  Most of NRG Yield’s business is not renewable at all: it also provides heating and cooling in commercial facilities, and has significant natural gas generation.  About 3% of Brookfield Renewable Energy Partners’ generation is from two natural gas co-generation facilities acquired “as part of larger hydro portfolio transactions many years ago,” according to a company spokesman.

While dollars per watt can be easy to grasp when thinking about just one technology, the metric starts to suffer when we consider a portfolio of several businesses.  Things become a little clearer when you consider watts bought per dollar spent.  The following chart shows how many watts of each type of business you would get if you bought $100 worth of each company’s securities:

Conclusion

Dollars per watt is at best a rough starting point when evaluating a bid for solar on your home, or for evaluating companies that own renewable energy generation.  On the other hand, it works well with the intuition we’ve honed with years of trips to the grocery store and coffee shops.  That intuition may make these charts useful as you develop your understanding of renewable energy power producers.

Disclosure: I and my clients own HASI and BEP. I have short call positions in NYLD and PEGI, and short put positions in PEGI.

DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results.  This article contains the current opinions of the author and such opinions are subject to change without notice.  This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

This article was originally publihed on AltEnergy Stocks and was republished with perission.

Lead image: Dollar bill via Shutterstock

RELATED ARTICLES

Yingli Green Seeks to Reassure Investors After Stock Plunge

Louise Downing and Justin Doom Yingli Green Energy Holding Co., the second-largest panel maker said it’s confident it can keep making repayments on its debt and that it is taking steps to mitigate risks to its business. It blamed media reports ...
Electric Vehicle

Tesla E-motorcycles Complement SolarCity Microgrids

Mahesh Bhave, Contributor Batteries are the renewed focus of attention given the launch of Tesla’s PowerWall on April 30. What or where might the next major application be? Utility scale storage appears to be one. My thesis is that launching Tesla e...

First Anniversary of The Balkan Floods Highlights Renewable Energy Market Opportunities

Ilias Tsagas, Contributor One year ago this month, severe flooding in Serbia, Bosnia-Herzegovina and Croatia killed 79 people, displaced about half a million and caused economic paralysis of the region. In the wake of these the catastrophic events, ...
Canadian Climate Goals

Canada Announces Weak Climate Target

Danielle Droitsch, NRDC Last week, Canada has announced its contribution to the global effort to reduce greenhouse gases by announcing its post-2020 target. The target announced today is off-track to the 80 percent cut by 2050 they committed to in...
Tom Konrad is a private money manager and freelance writer focused on Peak Oil and Climate Change as investment themes. He manages portfolios for individual clients and is Head of Research for the JPS Green Economy Fund (http://jpsgreeneconomyfund...

CURRENT MAGAZINE ISSUE

03/01/2015
Volume 18, Issue 3
file

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @megcichon @jennrunyon

FEATURED PARTNERS



EVENTS

Doing Business in Brazil – in partnership with GWEC, the Global Win...

Brazil is one of the most promising markets for wind energy.  Ranke...

EU PVSEC 2015 (European PV Solar Energy Conference and Exhibition)

The EU PVSEC is the largest international Conference for Photovoltaic re...

Wind Power Central America

Wind power projects are expected to reach 46GW of total installed capaci...

COMPANY BLOGS

EU PVSEC 2014 extends its Scope

Added focus on application and policy topicsAbstracts for conference con...

EU PVSEC 2014: Call for Papers Receives Great Response

More than 1,500 contributions apply for presentation in AmsterdamScienti...

Get Into Your Prospect's Shoes

    It may sound simple, but one of the best strategies for d...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS