A rethinking regarding power generation has been taking place around the globe for years. As the effects of climate change become clear, more and more countries are switching to wind, solar and geothermal energy. With the war in Ukraine causing oil prices to skyrocket, the issue of clean energy gains even more importance. The current developments could lead European countries to intensify their efforts around green power generation. The Greens in the EU Parliament are already calling for drastic measures such as an EU fund for renewable energies to accelerate the energy turnaround. For example, Germany plans to achieve a full supply of green electricity by 2035.
Even before Russia's military aggression, the International Energy Agency (IEA) was positive about the future. In their "Renewables 2021" report, the experts assume that the growth of global power generation from solar, wind turbines as well as other renewable technologies will accelerate in the coming years. In numbers, global renewable capacity is expected to increase by an average of just over 300 GW per year through 2026. This means green energy would likely account for nearly 95% of the increase in global power capacity by 2026, with solar alone accounting for more than half.
Not only would renewable energy producers benefit from even higher investment in light of the war, but those companies that manufacture wind turbines, solar cells or electrolysers can hope for more business. This hope has already reached the trading floor. At various industry representatives such as Vesta Wind Systems or the hydrogen specialist Nel, the confidence is already reflected in the share prices. The shares have posted double-digit percentage gains in the past four weeks.
However, not all companies can be lumped together. For example, the share price of energy giant RWE, which has consistently improved its business to become greener, is only treading water in the short term. On the one hand, RWE is focusing on green electricity and is also currently participating in a new liquefied natural gas terminal to obtain natural gas from all regions of the world in the future, independently of gas pipelines. On the other hand, the Germans are involved in the Ukraine conflict due to a long-term gas contract with a Russian supplier.
However, the renewable energy sector is not only at the center of attention because of the current tense geopolitical situation; recently, there has been positive news from the sector. For example, in the solar industry, which has been battered by shrinking margins and supply bottlenecks. First Solar caused a surprise with its figures for the fourth quarter. The company earned USD 1.23 per share in the final quarter of 2021, which was not only almost 14% more than in the previous year, but also significantly exceeded the average estimate of analysts of USD 1.05 per share. On the sales side, the upward trend was just as dynamic: Revenues soared by 48.9% to USD 907.3 million. The First Solar share may now have found a bottom in the USD 70 range after the sharp decline since October last year.
The Renewable Energy Group, on the other hand, has not bottomed out. On the contrary, the U.S. group recently recorded strong increases. The reason: oil multinational Chevron put a USD 3.15 billion takeover offer on the table for the producer of biodiesel and renewable diesel. The USD 61.5 per share offered corresponds to around double the price before the announcement. One reason for the deal is likely to be that Renewable Energy Group is active in a very attractive market. According to the Energy Information Administration, renewable diesel production capacity in the U.S. is expected to grow from the current 1 billion gallons to more than 5 billion per year by 2024.
As shown, there is a lot of music playing in the renewable energy theme right now. If you want to get involved in the sector, the Migros Bank Clean Energy Index is the best way to profit from further price increases in the sector, containing 25 members currently. Further, the barometer does not only offers a diversified, but also an active approach. Migros Bank reviews the index components every six months, ensuring that the Clean Energy trend is reflected in the best possible way at all times. The selected companies must, on the one hand, generate substantial sales in the Clean Energy sector and, on the other hand, fulfill a number of qualitative and quantitative criteria. The tracker on the Migros Bank Clean Energy Index, which was launched a good year ago, is managed with a moderate annual fee of 0.95% despite active management. In addition to the companies already listed in the text, the index also includes stocks from Asia and Canada. Currently, the Landis+Gyr Group is a domestic company in the selection.
Management fee: 1.00% p.a.
Index Sponsor: Migros Bank AG
Issuer: Leonteq Securities AG
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