The premium...

The premium hmm
http://www.economist.com/news/briefing/21587782-europes-electricity-providers-face-existential-threat-how-lose-half-trillion-euros
Part quote
"Clean break

For the companies, wrenching change and plunging share prices are obviously worrying. But should anyone else care? As Amory Lovins of the Rocky Mountain Institute, an American think-tank, points out, Germany has built a low-carbon energy business to the point where new solar power needs few subsidies; where wholesale energy prices are falling and threats to the reliability of the grid have not materialised. What’s the problem?

There are several answers. First, utilities have suffered vast losses in asset valuation. Their market capitalisation has fallen over €500 billion in five years. That is more than European bank shares lost in the same period. These losses matter in their own right. For pension funds and other investors, they represent lost capital and lower future earnings. For employees, they translate into lower wages and lost jobs. The losses—many of which predate the boom in renewable energy—have come on top of the huge sums Europeans have also spent on climate-change policies. Subsidies for renewable energy are running at €16 billion a year in Germany (and rising); the cumulative cost is around €60 billion.

Next, utilities have lost their investment role. Once they were steady, reliable and inflation-resistant, the US Treasuries of the equity markets. Pension funds need such assets to balance their long-term liabilities. But utilities no longer play this role, as evinced not just by collapsing share prices but by dividend policies. Until 2008 the yields of RWE and E.ON tracked German ten-year bonds. Since then, they have soared to around 10%, while government-bond yields have stayed flat. Renewables are not the only risky energy investment.

Most important, the decline in utilities’ fortunes raises disturbing questions about the future of Europe’s electricity system. To simplify: European countries are slowly piecing together a system in which there will be more low-carbon and intermittent energy sources; more energy suppliers; more modern power stations (replacing coal and nuclear plants); more and better storage; and more energy traded across borders. All this will be held together by “smart grids”, which tell consumers how much power they are using, shut off appliances when not needed and manage demand more efficiently.

In such a world, the old-fashioned utilities play two vital roles. They will be the electricity generators of last resort, ensuring the lights stay on when wind and solar generators run out of puff. And they will be providers of investment to help build the grand new grid. It is not clear that utilities are in good enough shape to do either of these things.

So far, it is true, they have managed to provide backup capacity and the grid has not failed, even in solar- and wind-mad Germany. In fact, the German grid is more reliable than most (countries run reliability indices: Germany has one of the highest scores in Europe). Greens therefore dismiss worries that renewables will undermine grid reliability, pointing out that, as wind and solar plants spread over the continent, there will be enough wind or sun somewhere to run some of them, at least during the day.

Maybe. But as the price swings in Germany show, it is getting harder to maintain grid stability.(Assumption here! actually disincentive for Base Load Power) Utilities are not rewarded for offsetting the variable nature of wind and solar power. Instead, they are shifting out of electricity generation. And this is happening at a time when renewable energy supplies, on average, 22% of Germany’s electricity demand. No one really knows what will happen when renewables reach 35% of the market, as government policy requires in 2020, let alone if they reach the national target of 80% in 2050. Almost everyone acknowledges that as the share of renewable energy rises, regulation of the grid will have to change.
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When we think about price premium what is the premium on survival? The existing utility model is being broken and they do not see a solution because they cannot see adaptation as a path.

Conclusion then E.On RWE etc will see massive drops in their value as part of the rush of #divestNow etc. as their price model does not let them invest in survival. This utilities such as Stadtwerke, Liander, Alliander, Austin Energy are publically owned or cooperatively owned.
Their price signal is different it is based on long term survival and ethics/mission.

(There are very few private industries that indulge in survival strategies the only one that comes to mind and that is the Building Industry where they competitively tender to buy jobs at less than cost in a recession. This can be very counter productive if there is too much competition! as the profit margin may be too negative.)

So CFU is a winner, and as the shutdown in the US rolls on panic may set in. I note that MetLife, Black Rock and Fiera Axium have bought RE projects in the past week. Is is as Synquasi says just soooooo slow.

I must also thank Synquasi, Jaluma83 and svencrysos for their efforts on the web too...