By Gerard Wynn - Analysis
LONDON (Reuters) - Clean energy stocks worldwide, and especially solar, have roared upwards in the past 10 weeks following the latest spiral in oil prices, but proving a direct link with oil is elusive, analysts say.
U.S. crude oil futures have hit a succession of all-time highs, on Thursday hitting $96 a barrel, and the spectre of $100 now looms large.
That should be good news for clean energy companies that supply alternatives to fossil fuels such as wind and solar.
Worldwide, companies specializing in various climate change strategies including renewable energy, waste and water management are up an average 18-27 percent since late August, versus a 32 percent-plus hike in crude, various research shows.
But a definite link between the two is elusive.
“If the market perceives this is... a sustained oil price increase it should impact sentiment for clean energy,” said Merrill renewable energy analyst, Asari Efiong.
Most low carbon, fossil fuel alternatives such as wind and solar are still more expensive than oil and coal, and so should benefit from higher oil and power prices.
“It’s not as obvious a correlation (with oil) as you’d expect,” said Ian Simm, chief executive at Impax Asset Management, which has some 1 billion pounds ($2.08 billion) invested in environmental companies.
“Government support is much more important,” Simm added, who attributed current renewable energy optimism to stronger government backing.
Deutsche said last month it had invested nearly 6 billion euros ($8.66 billion) in climate change strategies, while Bank of America and Citigroup this year announced planned investments of $20 billion and $50 billion respectively in environmental markets.
Solar stocks are up 49.9 percent since the start of the latest oil price surge, triggered by a U.S. interest rate cut on August 17, versus a 32 percent hike in U.S. oil futures, according to New Energy Finance data.
Global equities generally, as measured by the MSCI World benchmark, are up 12 percent and energy stocks 19 percent, over the same, late August time frame.
Solar stocks are up 125 percent over all this year, says NEF, which tracks 17 solar power companies.
“Clean energy stocks are not driven by the oil price, but are dependent on it,” said NEF analyst Katya Grigorian.
Investment banks and others have issued a raft of indices this year to track “climate change stocks” in clean energy, waste, water management, energy efficiency and carbon markets.
Impax and ABN AMRO environment indices cover a range of sectors and each show a 23 percent hike since late August. The ABN AMRO index has tracked crude oil with about 16 percent correlation.
Standard & Poor’s and Credit Suisse launched this year indices which focus on clean energy, and are up 24 percent and 18 percent respectively since August 22.
The only black spot on the clean energy score card is biofuels. The escalating prices of feedstocks such as palm oil, corn and rapeseed have squeezed profit margins for producers of the alternative transport fuel.
NEF’s basket of biofuel stocks is down more than 15 percent this year, and up 3.7 percent since late August.