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.
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
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
"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.
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."
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
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."