The wind industry and sector-related exchange traded fund are slowing down as a lack of high wind speeds keep turbines from turning out electricity.
The U.S. is experiencing some of the softest air currents in 40 years, which has caused electricity generated by U.S. wind farms to fall 6% over the first half of the year even as the country expanded wind generation capacity by 9%, reports Gregory Meyer for the Financial Times.
Looking ahead, Vaisala, a Helsinki-based weather measurement company, projects that the weather will stay calm into the first quarter of 2016 as the El Niño weather phenomenon keeps wind speeds in check across the U.S.
“We do know that the strong El Niño cycle that we are now in tends to be correlated with below-average continental wind resource, and we also know that meteorological expectations are for the El Niño phase to continue,” Moray Dewhurst, chief financial officer of NextEra Energy, said.
Consequently, the low wind speeds could weigh on the wind industry, along with related ETFs. For instance, the PowerShares WilderHill Clean Energy Portfolio (NYSEArca: PBW) and First Trust NASDAQ Clean Edge Green Energy Index Fund (NasdaqGS: QCLN) both include broad exposure to U.S. clean energy companies.
Additionally, the First Trust Global Wind Energy Fund (NYSEArca: FAN) focuses on the wind industry but it is slightly more diversified with a global scope. The U.S. makes up 12.3% of FAN’s holdings.
Some market observers argue that the lighter wind should be a catalyst for renewable energy investors to gain exposure in diverse places. Investors should look beyond a single firm or region in the nascent industry.