Dominant global players have yet to emerge in wind and solar
Handful of clean-energy companies build `supermajor’ skills
More than a decade after the birth of the modern renewable energy industry, solar and wind await their John D. Rockefeller.
Bloomberg – Clean power remains a tumultuous and fragmented business, crowded with companies grabbing for slices of an emerging market that aspires to reshape how the world meets its energy needs. They rise and fall as technology advances and demand seesaws. Some have grown into sprawling regional players, often propped up by government subsidies. A few, like Suntech Power Holdings Co. and Q-Cells SE, soared to prominence, then all but flickered out.
Yet there are still no companies that dominate the industry.
“We are a long, long way from anyone in the clean energy space exercising the kind of monopoly power that Standard Oil did,’’ said Ethan Zindler, head of Americas for Bloomberg New Energy Finance, an industry researcher. “It surely will consolidate, but we’re a long way from that yet.’’
The blueprint for global domination, though, remains on the drawing board. And questions abound about what a clean energy “supermajor” might look like, to borrow a term from the oil industry.
Will they need to rule both the wind and solar markets? Are traditional utilities with sprawling infrastructure and vast customer bases best positioned to rise? Or will it be new companies entirely?
“We are still in the formative years,” said Tom Werner, CEO of SunPower Corp., a San Jose, California-based panel producer majority-owned by the French oil major Total SA. “It is not clear yet what the business model will be that will catalyze you to be a supermajor.”
The top of the clean-energy pile can be precarious. SunEdison Inc. — the clean-energy developer based in Maryland Heights, Missouri — christened itself a “supermajor” in July when it announced its ill-fated takeover of rooftop installer Vivint Solar Inc. Since then, SunEdison shares have dropped 99 percent.
“My pets have a longer average lifespan than the solar companies I write about,” said Jenny Chase, a Bloomberg New Energy Finance analyst.
Wind and solar technology has been around for decades, yet the modern industry only started booming in 2004, when Germany pioneered a method of subsidizing clean energy through feed-in tariffs. That mechanism guaranteed wind and solar companies a transparent revenue stream, allowing them to secure bank financing and develop enough scale to reduce costs.
Now, a dozen years later, David Crane, the former president and chief executive of NRG Energy Inc., said the moment for a supermajor could be ripe. He points to a recent selloff in renewable stocks that opens an opportunity for a private-equity giant or pension fund to cobble together a green behemoth.
Others, though, predict clean energy will remain a decentralized and fragmented industry, making it unlikely for anyone to dominate. Antitrust laws put in place partly to break up Standard Oil ensure that no one company ever will have Rockefeller’s market power.
Still, size and global reach is important for renewables to drive down costs in what’s essentially a commodity business focused on selling electricity, said Francesco Venturini, CEO of Enel Green Power SpA. He predicted that the industry would ultimately be led by a handful of players, rather than a single monopolist.
“I don’t think there is going to be one Rockefeller,” he said.