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Renewable Energy: Good and Bad News

A Republican victory is generally bad news for renewable energy (wind, solar, geothermal): there will be less pressure on tax increases and emission issues. But other forces are helping to prop up solar stocks today.

The good news for renewables: Proposition 23 failed to pass in California, which would have suspended renewable energy targets until the unemployment rate fell below 5.5 percent. Its defeat means California will likely keep its targets, which calls for 30 percent of its energy to be renewable by 2020.

This is a big plus for solar stocks. California is far and away the most important state for the solar industry; upward of 50 percent of all installations occur in that state.

The bad news for renewables: cap and trade is dead. Cap and trade would have increased energy prices because it would have added to the cost of fossil fuel plants. That would make renewable energy more competitive. As a result, prices may continue to stay too low to be competitive for many renewables, particularly wind.

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