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April 06, 2004
Nuke Producer GE Energy Buys Solar Producer AstroPower
by William Baue
The GE Energy buyout of AstroPower represents a Catch 22 for social investors, who generally seek
to support renewable energy but screen GE for its nuclear production.
SocialFunds.com --
GE Energy last week finalized a
$15 million buyout of AstroPower, the solar photovoltaic (PV) cell producer that filed Chapter 11
bankruptcy on February 1. The purchase presents a potential Catch 22 for socially responsible
investing (SRI).
 On the one hand, it provides a much-needed
financial boost for one of the best-known names in renewable energy, a field social investors
typically like for its environmental benefits. On the other hand, parent company General Electric
(GE) is no white
knight in the eyes of many social investors, with its attendant environmental, social, and
governance concerns. GE's involvement in nuclear power may preclude social investors from
supporting its growing renewable energy portfolio.
"One of the things that's attractive
about AstroPower is that it really rounds out our portfolio," said Dennis Murphy, GE Energy's head
of public relations. "What we want to have is an arsenal of products and services so that
customers don't need to go anywhere else--if they're interested in wind they can come to us, and
now if they're interested in solar, they'll be able to come to us as well."
GE Energy
bought out Enron Wind in 2002. GE's wind energy operations, which represent the bulk of GE
Energy's renewable energy portfolio, now account for $1.3 billion of GE Energy's $18.5 billion in
yearly revenues. GE Energy also has nuclear energy operations
in its portfolio.
"It's not a significant portion--it's probably a little more than wind,"
Mr. Murphy told SocialFunds.com.
However, any nuclear energy is too much for SRI firms
with negative screens that exclude nukes.
"Nuclear power is an exclusionary screen for us,
so GE would have to be out of that business altogether," said Joanne Dowdell, director of corporate
responsibility at Citizens Funds, a New
Hampshire-based SRI firm with 11 fund offerings. "The broader question is, does GE's commitment to
renewables mean that they are phasing out of nuclear power--is there a strategic plan in place with
a timeline that is measurable?"
The answer is a resounding "no."
"We certainly
don't see that nuclear is going to be phased out--there are still a lot of nuclear power plants all
over the world that need fuel and services that we supply," said Mr. Murphy.
Many social
investors screen out nuclear power because they believe the potential of another Chernobyl
overshadows any benefit of cheap electricity. As well, they have concerns about the environmental
implications of radioactive waste generated by nuclear energy.
"Implicit in that stance is
the belief that nuclear can't possibly be a safe power source, and we obviously don't think that's
true," countered Mr. Murphy.
However, nuclear power is not the only beef social investors
have with GE.
"In addition to the exclusionary part of our screening process, we also have
a qualitative aspect, which raises still other concerns," Ms. Dowdell told SocialFunds.com. "GE
was found to have been leaking PCBs into the Hudson River for over a 30-year period."
Shareowner resolutions up for vote at GE's May 23 Annual General Meeting ask the company to
review and report on the cost of delaying PCB cleanup, ties to state sponsors of terrorism,
reducing greenhouse gas emissions, and executive compensation.
However, GE is not the
only large company with solar energy operations that are significantly sized in the renewable
energy field but are dwarfed by their other diversified operations, which often include areas of
concern for social investors.
"The largest producers of solar PV are Japanese
companies--the largest is Sharp, followed by others such as Sanyo [SANYY] and Kyocera [KYO]," said David
Schoenwald, portfolio manager of the New Alternatives Fund (NALFX). Launched in 1982, New
Alternatives is the first socially responsible investment mutual fund that focuses specifically on
environmental sustainability. The fund holds all three of these companies. BP (BP) is another large company with a
significant solar portfolio.
Mr. Schoenwald also mentioned a number of smaller companies
in the solar industry, including Canada-based ATS Automation Tooling (ATA) and Arise Technologies (APV.V),
Switzerland-based STMicroelectronics (STM), and California-based Cypress
Semiconductor (CY).
However, the fate of
AstroPower may also have implications for these smaller companies.
"The demise of
AstroPower has hurt the potentials of other smaller solar companies because people aren't sure what
happened to AstroPower and whether the same thing could happen to someone else who didn't have the
muscle and money of GE," Mr. Schoenwald told SocialFunds.com. " I think GE's buyout of AstroPower
is negative for smaller companies."
©
SRI World Group, Inc. All Rights Reserved.
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