The Catch-22 of Wind Energy Investments

Published on 01/19/18 | Saurav Sen | 544 Words

The BuyGist:

  • Wind Energy is getting cheaper, which means cheaper electricity.
  • That's affecting the enitre Power Market.
  • Having to deal with a new normal of cheaper Electricity Prices, Power companies are demanding cheaper Turbines.
  • Turbine Manufactures are now in a race to cut costs faster than their competitors. 


Howard Marks, the hugely successful High-Yield and Distressed debt investor, had reminded us that things in investing (and in life) are rarely linear – there is no simple cause-and-effect that we can use to explain the past or the present. He drew our attention to “first-order” and “second-order” effects. It’s a powerful notion. He borrowed the terminology (along with its dryness) from Economics. Ironically, economists generally stop at first-order effects. In investing, we’d be foolish to do so. In the Wind Energy ecosystem, we must look beyond. 

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