Investing

Solar stocks soar, British pubs pour; and Biden vows more on green jobs

By David Callaway, Callaway Climate Insights

Is there no end to the horrors of this pandemic? Just as British pubs are allowed to open after four months of lockdowns, 70 million pints of beer are found to have gone rotten in pub cellars and now must be literally poured down the drain, the BBC reports. Aside from the tragic loss of all that beer, this is causing headaches for British water services agencies such as Severn Trent and Thames Water, which need to avoid overwhelming the sewage systems.

Water is, after all, at a premium on an island nation like the UK, and not just because you can make beer with it. The ancient sewage system, not unlike in many countries including the U.S., leaks as much as three billion liters a day — about one-fifth of the UK’s daily water consumption — according to a recent report by the UK’s Public Accounts Committee.

Lack of action on the pipelines over the past 20 years has left parts of the UK vulnerable to being without water by 2040, the report said. Another 20 years to fix it is not quite the scare the South Africans had last year when Cape Town almost ran out of water, but it’s indicative of what is to come.

The current investing universe for water, at least in the U.S., is small. There are a handful of ETFS, which have all performed well in the past few years and have generally recovered from the sharp Covid-19 market declines of the first quarter. But a lot more is being done in the private equity and hedge fund arenas.

As we’ve seen with the coronavirus pandemic, these types of things are not a problem until they are. Then they are life and death. Same with climate change, in which scarcer water resources will become a dominant theme sometime soon. And that’s no small beer.

. . . . Joe Biden set out his election campaign stall of climate initiatives Tuesday, adding $300 billion to his primary pledge of $1.7 trillion in new spending and, more importantly, promising the bulk of spending during his first, and likely only, term as president should he win. Biden’s $2 trillion plan had a little bit for everyone, promising millions of union jobs on infrastructure upgrades, 1.5 million new energy efficient buildings and homes, a strategy to pay people to convert to electric vehicles, and special attention to minority communities in greater danger from nearby fossil fuel activities.

The plan doesn’t mention fracking, which is expected as it’s simply an election promise right now. The Trump administration predictably seized on that aspect and said fossil fuel jobs would suffer under any Democratic plan. But the upgraded strategy more deeply draws the line between the candidates at a time when how the U.S. spends its way out of the Covid-19 crisis has the attention of the nation. For the Biden plan to move ahead, the Democrats would need to win the Senate in November. . . .

. . . . Sunrun’s purchase last week of Vivint Solar created the largest residential solar company, with about 15% of the market. But that left plenty of room for more consolidation, sparking a run on solar stocks that jacked the sector.

The Invesco Solar ETF (TAN) is up more than 6% since the announcement and was last was $42.15 in Tuesday trading. The upbeat tone extended to shares of  First Solar (FSLR), up more than 8% to $59.42;  SolarEdge Technologies (SEDG), up more than 8% to $163; and SunPower (SPWR), up 9% to $9.38.

Tesla (TSLA) remains the 800-pound gorilla in the solar universe, but the unexpected combination of its two distant rivals and the fact that only 3% of U.S. households are equipped with solar creates an open runway for new players. . . .

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