In today’s Exponential Investor…
- Johnson’s £160 million double-down on wind power
- Trump’s rejection of $2.3 trillion in stimulus
- The first steroid-induced market selloff?
Boris Johnson threw another £160 million into his “build back greener” push for a post-Covid-19 Britain on Tuesday, pledging to make the UK “a world leader in clean wind energy”.
Another £160 million might sound like a pittance when governments around the world are bandying about trillion-dollar figures for green energy revolutions.
But the figure comes on top of a planned multi-billion-pound stimulus targeting hydrogen fuel, carbon capture, and battery storage. This greater stimulus also builds on wind power, which has already soared 53% last quarter.
Everyone is making fun of Boris for saying people used to sneer at wind power as something that “couldn’t blow the skin off a rice pudding” – when he himself derided wind power with those words in 2013.
But for an economy that’s transforming rapidly from quarter to quarter, that sort of reversal seems almost appropriate.
Clean power producing 47% of Britain’s electricity and climbing
Green energy stocks ticked upward on the news. The Renewables Infrastructure Group (TRIG) added almost a point, and tens of millions of dollars in market capitalisation.
The Danish wind power firm Orsted, with 12 wind farms in the UK already, jumped 2.24%.
Admittedly, these aren’t spectacular rises like what we’re seeing from US-listed green energy firms.
But these upticks are in defiance of an ailing broader market index. The FTSE is down double digits for the year – yet UK listed clean energy and tech stocks have returned more than 150% for the year.
This outperformance has even led the Guardian to opine, “Britain’s investors have never had it so good.”
As Ian Simm, chief executive of the fund Impax, declared: “The investment climate for renewable energy has never been more favourable, and large institutional investors are increasingly seeking exposure to it.”
He would know – his fund has devoted £350 million towards alternative energy and renewable energy companies.
And there are still plenty of irons in the fire when it comes to Britain’s renewable energy revolution.
Existing technologies that become more mainstream each quarter will transform the power grid over time. But in the meantime, firms like Ceres Power are just a few years away from developing the fuel cell technology to heat homes throughout Britain with zero net emissions (it’s partnering with British Gas to make it a reality).
Or there’s Germany’s Conergy, which is now building solar products that can be established in terrain like hills and forests where solar hasn’t been economically or commercially viable before.
And don’t forget the 880,000 solar panels being established in Cleve Hill, Kent, as you read this. The new solar farm will eventually generate enough power to run 91,000 homes in the UK.
Of course, that would still leave more than 99% of homes needing power – so it’s a good thing the UK already leads the world in wind power, with offshore wind capacity that is already the largest in the world.
Today, offshore wind power generation meets 10% of the UK’s electricity demand – and that’s before the billions of pounds in new green energy stimulus, with yesterday’s £160 million cherry on top.
The planned 40 new gigawatts of wind power will be enough to power 40 million British homes, laying out a concrete goal for Johnson’s plans of building enough wind power to sustain all British households by 2030.
In the meantime, Johnson is in an enviable position. He doesn’t have to face voters for another three years plus change – yet his initiatives are already creating as much as 2,000 new jobs at once.
The £160 million infusion into green energy infrastructure, for example, will create around 2,000 construction jobs and prop up the sector to the point where it can support another 60,000 directly and indirectly in new factories, ports, and supply chains.
And lower energy costs in a few years won’t hurt his popularity, either.
As an American, I’m a little jealous. Here in the UK, a prime minister can practically snap his fingers and usher in a green energy revolution.
In the US, as you may have heard, it’s not so simple…
Walking away from $2.3 trillion in economic stimulus – 30 days from an election
Yesterday, US markets were performing well – up more than a percentage point for the day – until news of President Donald Trump walking away from stimulus negotiations hit.
Source: Donald Trump, on Twitter
See if you can discern when Trump pressed “tweet”.
Source: Sam Stein, Twitter
Trump’s frustration comes from the fact that House speaker Nancy Pelosi, Democrat of California, was holding out for $2.3 trillion in stimulus ahead of the election, instead of the $1.6 billion Trump and the GOP preferred.
It boggles my mind that Trump would turn down trillions of dollars in stimulus barely a month before the election.
That’s money that could have flown right into undecided voters’ pockets – and Trump as the incumbent president needs voters to feel as good about the economy and their personal financial situations as possible.
I really have no explanation for why he is doing this. It’s not that he’s committed to small government, Austrian principles (Trump has, after all, changed his party membership more often since 1990 than the White House changed hands in that time).
Pelosi hypothesized that the steroids Trump is taking to overcome Covid-19 are clouding his thinking. That may be as good an explanation as any.
Whatever the reason, barring some last-minute change of heart, it will fall on the next president to usher in trillions of dollars in stimulus.
Over the last 24 hours, four polls from reputable pollsters have shown Joe Biden with a double-digit lead – including a CNN poll showing a 16-point blowout.
If this holds, Biden won’t just win the Electoral College.
His coattails will lift Democratic candidates across the finish line in the House and Senate, resulting in a Congress that will give him exactly what he asks for – starting with a multi-trillion-dollar Green New Deal.
And a result like that could make green energy’s gains this year look like a speed bump in retrospect.
Managing Editor, Southbank Investment Research
PS The Green New Deal could be an enormous catalyst if it’s passed in February – but Exponential Energy Fortunes editor James Allen isn’t waiting that long. With a recently closed 838% win in his portfolio in under a year, James has already proven there’s no need to wait for favourable headlines to multiply your money in green energy investments – which is why his potential 8,505 winner he’s uncovered caught my attention. Full story here.