Staying afloat as assets get stranded

Stranded assets – assets that are unexpectedly or prematurely devalued, converted to liabilities or written off – are part of the creative destruction that drives capitalism.

Asset stranding of this kind regularly results from changes in technology, regulation or public opinion. Horse-drawn carriages and public telephone boxes have been consigned to history by the car and the mobile phone, respectively. Regulation will close Germany’s nuclear power stations, which were due to produce power until 2036. Following the Fukushima disaster in Japan and a wave of public opposition to nuclear power, Chancellor Angela Merkel announced that the country’s nuclear plants would be mothballed by 2022, causing havoc among the country’s utilities.

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Categories: Energy, Finance