Are Alternative Energy Investments Slowly Declining?

Just as alternative energy business has reached a point where many systems will be available to the average consumer, investors have backed off and made this one of the lowest investment periods since 2009. Still, there were over $40 billion in investments. That’s a good deal of cash, but almost 22% less than in the first quarter of 2012 and 38% less than the previous quarter.

The biggest falls have been seen in the United States market. Investment has been cut over 50% on a year by year basis since the $15 billion top in 2010. China isn’t fairing much better, with a 15% decrease in investor capital. Even Europe, center to the clean capitals of the world, is seeing 25% less investor interest.

Why is this happening? It’s all math. Several major solar panel companies went under at the end of 2012 and early in 2013. The profit margins that used to exist on systems simply aren’t there anymore and the companies that invested heavily when prices were high were unable to make enough capital to remain afloat. This has scared investors into believing that there is no profit in alternative energy markets. Additionally, the lower cost of solar technology has steered small scale investments away from solar where the profit margin has decreased. Instead, investors are looking toward precious metals and other presumably inflation proof investments.

Should we be worried that investments have slowed down? Are these benchmarks a prelude to what is to come? Probably not. Although large nations are scaling back in their investments, this is most likely because the market was flooded with small upstarts and they simply were weeded out like any true capitalist venture would be. A slow market in Europe and America just means that we are ahead of the curve. Investments have almost doubled in every Asian country except China.

What we should be looking at, instead of investment numbers, is the number of new alternative energy systems being installed throughout the world. It’s not hard to see hte direction we are going with the huge investments in wind and solar power at the Thames Estuary wind farm and the Shams 1 solar farm in Dubai.

What do you think? Is this investment decline going to affect the speed at which alternative energies are developed?