Hedge fund manager announced the obvious – Watt?

It finally happened. After years of government subsidies, media cheerleading and financial markets that support cards for House of Cards, hedge fund managers stepped forward and said that many of us have always known: the so-called clean energy sector is now “dead.” Nishant Gupta, founder and chief investment officer of London-based Kanou Capital LLP, did not stand out when describing the serious state of solar, wind, hydrogen and fuel cell investment.

Gupta clearly said, “The entire industry…is dead now.” This marks a turning point where even those in the financial world who have long played with green energy narratives, admit that these numbers simply don’t add up.

It’s no secret that the clean energy sector is in trouble. Over the past year, the S&P Global Clean Energy Index has fallen by 20%, while the broader S&P 500 rate has risen by 16%. It's a devastating underperformance, especially in an industry that should take the forefront of the world.

Gupta cites several reasons for the industry’s collapse, including high interest rates, supply chain struggles and what he calls “political headwinds” in the United States, which is a reference to the Biden administration’s green agenda, which is expected to remove climate-centric rules, and green investors are green investors.

In short, the entire “green energy revolution” is based on government intervention, not market fundamentals. Now, with subsidies and mandates integrated into reality, the industry is showing its true underdogs.

Gupta is not alone in the assessment. The market is clarifying its judgment. As solar energy company Sunnova Energy, just saw its stock price crash at an astonishing 71%. The so-called transition to green energy has hit the wall, and traditional green darlings (such as Orsted A/S) have also suffered major setbacks.

Due to the continued high costs, even hydrogen, which should have been the next big event, is in trouble. It turns out that the economy runs economically on fuel, which requires more energy to produce energy, rather than politicians claiming it is a magic solution.

If green energy fails, what's next? According to Gupta, energy investment will continue, but not in the way climate activists may wish. His hedge funds are looking at opportunities related to supply chains, especially companies focusing on improving efficiency rather than thoroughly green energy production.

Gupta's draft picks include Ingersoll Rand and Legrand SA, a company specializing in energy-efficient air and gas compressors, benefiting from increased demand for electric vehicle chargers and heat pumps to power. In other words, while climate policy crowds stick to windmills and solar panels, the real money is in companies that deal with the inefficiency created by their policies.

For years, climate activists, politicians and company ESG fighters have been telling the world that fossil fuels are heading out and renewable energy will take over. They created a fantasy land, economics, engineering and basic supply principles do not apply.

Now, reality is catching up. When investors make money from clean energy venture capital, the only question is how much taxpayer money will be wasted before the political class acknowledges failure.

Gupta's declaration is not only a market insight, but also confirms that the laws of physics and economics still apply no matter how much wishful government involves. The “clean energy revolution” may not have died completely, but it must have been supported by life. As the demand for world energy continues to grow, reliable and affordable energy (rather than politically driven experiments) will win the day.

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