TRENTON, NJ – The Orsted wind energy debacle in New Jersey is bad for green energy Governor Phil Murphy, but hedge fund operators are making money on the industry’s failures.
A report this week in Financial Times highlights how hedge fund managers are making good money betting against green energy companies like Orsted. As Orsted stocks flatlined at record lows this month, there seems to be more money to be made in betting against the green energy giants than there is to invest in them.
Hedge funds have gained financially following strategic bets against wind energy stocks, with firms like Marshall Wace and Qube Research & Technologies leading the charge. These organizations have profited significantly from the declining share prices of major players in the wind industry, including Siemens Energy and Ørsted.
The downturn in wind energy stocks mirrors a decreasing market enthusiasm for green energy investments, despite substantial incentives from governments in the United States and Europe. Factors such as high inflation and rising interest rates have increased operational costs and capital-raising challenges for wind companies, impacting their financial stability and project viability.
The S&P Global Clean Energy index, representing the top 100 renewables stocks, has seen a significant decline, dropping 35 percent this year after a peak in early 2021. This trend aligns with increasing interest rates and company-specific issues, as noted by James Smith, manager of the Premier Miton Global Renewables Trust.
The sector’s volatility has attracted short sellers, betting on the green energy stocks’ decline due to these economic pressures. Recently, Ørsted, a leading offshore wind developer, announced the discontinuation of two projects in New Jersey, citing escalating costs. This decision resulted in a 26 percent decrease in its stock value, exemplifying the challenges faced by the industry.
As the sector grapples with these economic headwinds, hedge funds continue to navigate this landscape, leveraging their bets against a backdrop of fluctuating market conditions and the uncertain future of renewable energy investments.