Yahoo Finance Wind energy stocks: Time to breeze into these renewables?
Investors consider renewable energy stock options as funding for the sector is set to surge
The European Union has agreed to ramp up its renewable energy targets in a bid to fight climate change and help end its dependence on Russian fossil fuels.
As part of the deal, EU leaders vowed on Thursday that member states would commit to sourcing 42.5% of its energy from renewable sources, like wind and solar, by 2030 – with a potential top-up to 45%.
Massive additional investments in wind and solar farms will be required to reach the goal - €113bn (£99bn) in renewable energy infrastructure to be exact.
It comes after the European Commission presented its Green Deal Industrial Plan in February “to enhance the competitiveness of Europe's net-zero industry and support the fast transition to climate neutrality”.
The investment plans are likely to be well received by the shareholders of the energy companies that could profit from the extra funding.
Read more: Energy bills rise to leave low income households £200 out of pocket
Wind power stocks to watch
Siemens Gamesa Renewable Energy (GCTAF), a Spanish-German wind engineering company, is one of the companies at the forefront of the clean energy transition.
It recently announced a deal with ScottishPower Renewables to supply a big order of wind turbines to the East Anglia 3 project in the North Sea.
Charlie Jordan, the chief executive of ScottishPower Renewables, said: “Continued ambition and innovation in turbine technology by partners such as Siemens Gamesa has allowed ScottishPower to purchase market leading turbines at a scale that will generate enough green energy to supply 1.3million UK homes."
The company is also in the running to build a major offshore manufacturing facility in New York.
Moreover, it was recently selected by another major player in the sector – RWE (RWE.DE) – as the preferred supplier for Denmark’s largest offshore wind power plant.
“RWE will build the Thor wind power plant in the Danish North Sea, approximately 22 km from Thorsminde on the west coast of Jutland. Installation of the turbines at sea is expected to begin in 2026,” a company statement said.
Shell (SHEL.L) has also been very vocal about its focus on wind power investments and has numerous projects in its portfolio and in development.
One of them is a partnership with Mitsubishi's subsidiary Eneco (R14.SI), to build an offshore wind farm off the Dutch coast from the town of IJmuiden. The project is due to start operations in 2026 and is set to be delivered through a joint venture called Ecowende.
“Offshore wind is once again a key growth area for Shell. We have more than 2.2 gigawatts (GW) of offshore wind capacity in operation and under construction, and 9.2 GW in the funnel of potential projects across North America, Europe, the UK and Asia (Shell equity),” Shell said in a company statement on its website.
Meanwhile, Spain-based multinational electric utility company Iberdrola SA (IBE.MC), which also specialises in onshore and offshore wind projects, as well as solar energy, said on Thursday it has signed a power purchase agreement (PPA) with Mercedes-Benz Group AG (MBG.DE).
The deal for 140 MW of wind energy from a Baltic Sea wind park is part of the automakers' push to make production costs more predictable.
Iberdrola and Amazon.com also recently agreed to collaborate on new wind and solar projects in Europe, the US and Asia-Pacific.
Time to invest in wind power?
Andreas Schroeder, head of energy analytics (quantitative) at ICIS, said “yes, it is a good time to invest” in renewables.
When asked about the stocks investors should be keeping an eye on, he highlighted how large corporations such as RWE (RWE.DE) and Orsted (ORSTED.CO) have gone big into renewables and said they will further benefit from growth in the sector.
Meanwhile, Michael Cerasoli, a portfolio manager of energy infrastructure strategies at Eagle Advisors, said there’s a saying on Wall Street that “investors should go where the puck is going, not where it’s been”.
He also said Initiatives like the Inflation Reduction Act in the US – and the Green Deal Industrial Plan in Europe – are backstopping what will likely be the largest capital investment the world has ever seen.
“Within this spending, a majority will be on renewable energy infrastructure itself, like solar fields, wind farms, geothermal, biomass, and more.
“So the question then becomes – how do you as an investor take advantage of the paradigm shift that is energy transition? In its most basic form, we believe investors have two options, invest in manufacturers / innovators or invest in the owner / operators of the assets themselves,” he said.
