A tale of two investors … it’s all about the subsidies!

The largest Dutch pension administrator, APG, decided not to invest in wind farms, “and is choosing to put money into fossil fuels instead.

Why?  Seems the fund management is “wary of investing because of the insecure role that government subsidies play” and, they note, successful investment in wind is “largely dependent on subsidies and tax advantages.”  The fund managers cite the changing rules for industrial wind in Spain as example of their concern, where subsidies were again pulled back.

On the other hand, investor extraordinaire Warren Buffett, presumably expecting that US taxpayers will be on the industrial wind hook for years to come, is very happy to toss investor money at the twirling energy impostors noting his comfort in accepting the generosity of Taxpayers with this statement – “I will do anything that is basically covered by the law to reduce Berkshire’s tax rate. For example, on wind energy, we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit.” – (US News, 5/12/2014,) (h/t SOAR)

It’s good to keep in mind folks, that in spite of all the hype, the effort to promote industrial wind isn’t to stage a renewable-energy revolution, “This is all about making money!”  And a large chunk of the profit obviously comes from government subsidies Taxpayer pockets.

By the way … from the “want a little cheese with that whine?” file – the fellow who runs EverPower Wind Holdings says the just signed Ohio law which stops increases in requirements for the use of renewable energy essentially ruins the possibility of any new large-scale wind development.

That’s an amazing admission, don’t you think?  Why on earth would a for-profit company admit that their product is so terrible it takes a law demanding its use just to keep it alive?  Do these profiteers actually think their Customers, and the Taxpayers who are required to help put the profit in their pocket, are that stupid?  Oh … wait … maybe that stupidity is what Mr. Buffett is banking on as well.

Back to the Dutch investment thing that got me started this whole rambling post – it was all about the logic of investing pension funds in industrial wind.  According to the source article, the investment firm we’re talking about is the biggest pension administrator in the Netherlands, and also one of the biggest in the world, with management assets of €359 billion.  No small potatoes and their answer to industrial wind is no!

This reminded me of an AT post from a couple of years ago when I questioned the logic of a $240 million investment in Edison Mission Energy.  The firm representing teacher pension funds thought it was an excellent partnership even though it came at a time when Edison Mission Energy’s parent, Edison International, was issuing stern warnings to the subsidiary to either shape up or ship out.  In addition, the “development pipeline of potential wind projects has been reduced to 1,300 megawatts from 3,800 megawatts.”  The decision to reduce commitment to wind came “as a result of capital resource constraints and limited market opportunities.”

Just months later Edison Mission Energy filed for bankruptcy and it’s assets were purchased by NRG Energy.  Hopefully all worked out well for the teachers, although I would be hard pressed to believe this is the path the investment adviser had in mind when the deal was signed.  Seems to me this is more likely a case of the blind squirrel finding an acorn once in a while.  But, who knows, maybe the teachers actually have a little more cash in their pockets as a result of their investment in a soon-to-be bankrupt company … but I’m almost certain the Taxpayer’s do not!

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One Response to A tale of two investors … it’s all about the subsidies!

  1. Pingback: A tale of two investors … it’s all about the subsidies! | ajmarciniak

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