Given what President-elect Donald Trump has said about his energy strategy — he favors coal and wants to end federal subsidies to the clean energy industry — does it still make sense to invest in wind, solar and other alternative sources of power?
The answer is an emphatic yes, according to investment advisers, who say clean energy companies will continue to thrive during a Trump administration, regardless of what the president says or does. The sector has become as much about getting returns on investments and catching the next technological boom as it is about reducing greenhouse gases and helping the environment.
“No longer is there a trade-off between what you believe in and what you can make money off of,” said Nancy Pfund, a founder and managing partner of DBL Partners, which made early investments in SolarCity and Tesla.
Even without subsidies, she said, alternative energy sources will be well positioned to compete with coal and other carbon spewers.
But the challenge during the Trump administration and beyond will be to make sure that passions for change and innovation, or anger at environmental policies that favor fossil fuels, do not cloud sound investment analysis.
“People have chased some investments that weren’t timely or were not quality investments in order to participate,” said Chat Reynders, chief executive and chairman of Reynders, McVeigh Capital Management, a $1.3 billion asset-management firm.
R. Paul Herman, chief executive of HIP Investor, an investment rater and portfolio manager, said investors should look for companies that are trying to save money and reduce risk through clean energy and monitor their fossil fuel producer investments as renewable energy gets cheaper. For long term bets, look for companies focused on energy innovations.
The last is the holy grail. Pfund’s firm, DBL Partners, had great success investing in Tesla and SolarCity, but she said she was not looking to mimic those investments today.
“The last thing I’m going to do is keep investing in the same old, same old,” she said.
Reynders said he was steering clear of solar panels but liked companies that install the panels.
For investors with a greater appetite for risk, there are certainly longer-term energy investments. One is graphene, a super-thin, incredibly strong material that can be used as a conductor. Its promise is for batteries of the future, and probably much more.
Paul Sullivan writes for the New York Times.