Coal Outperforms Solar on Wall Street

They are not as well known as the S&P 500, or even the Dow Jones Sustainability Index.

But two indexes – the Stowe Global Coal index of 38 coal producers and the Bloomberg Global Leaders Solar index of 38 solar module and component makers – suggest that government support for alternative energy is declining, according to a March 17 report by Bloomberg News.

Bloomberg reported that the coal index has gained 6.5 percent in 2010, while the solar index has dropped 17 percent. Furthermore, the report noted, Peabody Energy Corp, the biggest coal producer, is rated a “buy” by 79 percent of investment analysts, while 44 percent recommend First Solar Inc., the largest maker of thin-film solar panels. This is the largest gap between the two companies in two years. 

Bloomberg said solar companies’ profitability is falling because of competition from China and cuts to state support in Germany and Spain. As a result, the report said, many investors believe solar is too risky and coal is the safer investment.

Ironically, both forms of energy are poised for continued growth. As a result, coal prices are rising, but still remain as much as seven times less expensive per kilowatt-hour than solar power generation, according to sources in the Bloomberg story.

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