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Wind fears Trump bubble bursting

Could the "Trump effect" on the global economy pose a greater threat to wind power's prospects than his denial of climate change science?

That was one of the bigger questions the money folk were asking at the Infocast Wind Power Finance & Investment summit in San Diego in February.

The US wind industry looks in good shape to resist the president's opposition to clean energy. It has powerful allies at local level, with Republicans controlling four of the five biggest wind-producing states, and a positive story to tell about job creation and cost reduction.

True, Donald Trump shows little respect for facts, but the hard economics of American energy generation and the high approval of wind power across the country give him little room for manoeuvre.

Those factors don't apply to his tax-cutting and tariff-raising plans, which prompted some concern at Infocast. The last thing international and capital-intensive industries need is border taxes and tit-for-tat trade wars. Nobody wins in this situation, least of all consumers.

Then there is a broader picture of the US economy to consider. It looks in rude health right now, with unemployment falling and share prices soaring as Wall Street looks forward to cuts in corporation tax.

"Stock market hits new high with longest winning streak in decades. Great levels of confidence and optimism — even before tax-plan rollout!" read a typically vainglorious Trump tweet on 16 February.

Whether that confidence and optimism is entirely justified is another matter, though. A standard yardstick for assessing whether stocks are overor under-valued is the cyclically adjusted price to earnings ratio, constructed by economist Robert Shiller.

That is currently running at 29, and has only twice been higher; first in 1929 when it was followed by the Wall Street Crash and the Great Depression, second in 1999 at the peak of the dotcom boom.

It looks like a bubble and we all know what happens to them.

The wrong kind of quiet

Many European wind-farm operators will have been glad to see the back of 2016, a year when wind speeds across most of the continent remained stubbornly below the historical average for large periods of time. According to AWS Truepower's Wind Trends Bulletin, France was one of the worst-affected countries, with eight months of lower-than-expected winds. Brazil's operators will be praying for more of the same, though, with ten months above the average.

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