Kalkine Pty Limited’s New ‘Global Green Energy Report’

The melt-down of the glaciers, rise in sea-levels, waning forests and wildlife, and extreme weather conditions amid intensifie human activity are contributing to global warming.

Green Energy utilizes renewable resources that are perpetual, and can be constantly refilled including solar, wind, hydro, tidal, geothermal, biomass, etc. to help relieve the issues around climate change.

The big question is: Will Green Economy be a Reality or an Illusion? Economic growth and environmental sustainability may co-exist as a new future for the planet post-COVID-19.

Introducing Kalkine’s New ‘Global Green Energy Report’

Kalkine Pty Limited’s new ‘Global Green Energy Report’ provides individual an opportunity to recognize quality green energy stocks globally. Renewable energy presents earnings potential given the push from authorities to cut carbon-emission, increasing capacity additions, cost drive-downs at solar photovoltaics’ and higher budget allocation by the government.  

Why does Investment in Green Energy Businesses Hold Prominence?

Investment in green energy provides a long-term opportunity as the energy sector is shifting towards decarbonization. With oil consumption to drop as low as 2012 levels, renewable energy is set to become the fastest-growing fuel source. The companies with operating renewable assets, providing equipment, and or services are set to benefit from this trend, and lithium-ion batteries may serve as prime energy storage in off-grid renewable energy space due to superior lifespan and power densities.

Booming Clean Energy Space amid Rising Global Demand

While the pandemic has impacted fossil fuels, the net new renewable energy capacity addition globally may reach a record level in 2021, representing a substantial share in total power capacity addition.

With 80+ listed renewable energy stocks having a market capitalization of over US$1.1trillion (November-end, 2020, from Refinitiv), the US is one of the main markets with ~30 states generating electricity from clean energy.

The US capacity addition in 2021-22 will be supported by Renewable Portfolio Standards. Australia’s PV additions are expected to reach over 3.5GW in 2020 (Source: IRENA), while the distributed PV market continues to expand. Similar trends have been witnessed for countries including the UK, Canada, and New Zealand.  As charted below, the global wind energy capacity (in GW) grew by a 5-year CAGR of 4%, while global solar energy grew by 8% from 2014-2019.

Data Source: International Renewable Energy Agency (IRENA), Chart Created by Kalkine Group

How has the Green Energy Sector Performed Globally?

The clean energy sector has adapted to several economic headwinds including the great depression, oil shock, global financial crisis, and the recent COVID-19 pandemic. Lifted individual sentiments can be gauged by the fact that renewable energy stocks offered growth potential over the past decade than those in fossil fuel supply.

Recovering from March-lows, some of the Independent Power Producers globally recorded new highs in October 2020. Selected wind and solar operators also witnessed an all-time high, given order backlogs and better-than-expected fundamentals.

The S&P Global Clean Energy Index, having a significant contribution (29%) from the US, reported 99.37% YTD returns outperforming S&P Global 1200 Index by a whopping 90.00% (November-end, 2020, from spglobal.com).

Promising Returns Showcased by Few Energy Stocks

Enphase Energy, Inc. is a NASDAQ listed company providing energy management solutions to the solar PV industry. The stock delivered a return of 437.93% against 12.62% by the S&P 500 from the beginning of the year till November-end 2020. NextEra Energy, one of the largest utility companies in the US recently touched a new high with YTD gains of +24.10%. The stock yielded a healthy ROE of 11.4%.

Innergex Renewable Energy, a Canadian renewable power producer posted YTD returns of +50.24%. Meridian Energy, an ASX listed company generating electricity through hydro-power stations and wind farms. The stock provided YTD returns of +26.17% and a dividend yield of 3.78%.

Though few risks in the sector prevail such as uncertain US production-tax credits, financial distress of distribution companies, limited stimulus, and elevated debt levels which may impact the capex, financing flexibility, etc. of the companies, there are immense opportunities to be recognized.

Considering the above, Kalkine’s Green Energy Report Offer(s) Stocks with: 

• Fundamentals: Listed companies with steady revenue streams and stable cash flows generally driven by long-term electricity contracts with a feed-in tariff structure. Other factors that this report touches upon include manufacturing capacity and utilization, healthy gross margins, adequate liquidity, ROE, and decent dividend yields for respective stocks. 

• Diversification: Wide-exposure to sub-sectors including electricity generation, utilities, refining, marketing and transportation, equipment manufacturing, and service providers. 

• Businesses Tethering on Regulatory Compliance: Track-record of prudent regulatory compliance and well-qualified management team.

• Global Scale: Businesses that can leverage global scale to lower the equipment and operating costs.

To summarize, Kalkine’s Green Energy Report is easy to comprehend with deep-insights from a pool of experts on investment in alternative energy. The report aims to cover stocks after an overall assessment of the global demand and supply scenario, recent events, investment outlook, valuation potential, and associated risks, etc.