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Is Renewable Energy a Bubble Economy?  

You know an industry is heating up when you start hearing the word “bubble” tossed around.

That’s the verdict of this week’s cover story (sub. req.) in the influential British newsmagazine The Economist, which finds that the renewable-energy sector, boosted by high-flying venture capital funds backing startups focused on ethanol, wind power, and solar energy, many of them in the Rocky Mountain region, is drawing dangerously close to dot-com levels of over-exuberance. The Economist cites studies by Venture Business Research, which “reckons that investment in the field by venture capitalists and private-equity firms has quadrupled in the past two years, from some $500m in 2004 to almost $2 billion so far this year,” and from New Energy Finance, which says that “investment of all sorts in the business will reach $63 billion this year, compared with just $30 billion in 2004.”

The report concludes with a dismissive quote from Douglas Lloyd, of Venture Business Research: “There’s too much money chasing too few opportunities. How is it possible that this many solar companies are going to succeed? They’re not.”

By Richard Martin


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