Alternative energy — solar, wind, hydropower, biofuels, and the like — have been the shadow hanging over broader energy stocks for years. Costs for solar and wind have declined precipitously for decades and are now largely commercially competitive with conventional fossil fuels. The spectre of alternative energy upending fossil fuels as the preferred choice has consistently been the counter to any fossil fuel investment thesis.
At the same time, though, few public companies in alternative energy have been good investments over this time frame. That rapid decline in costs has translated into a race down the commodity curve for many technological developments, which doesn’t tend to translate into great returns on capital.
As is the case in any industry, though, there are some great businesses that