In response to the war in Ukraine, many people have pointed out that Europe must restart using coal-fired power plants and buy more liquified natural gas (LNG) from shale gas sources in the US to replace fossil fuels supplied by Russia. In our view, this narrative is misleading. Doing so would mean climate change mitigation is no longer a priority.
Coal, crude and natural gas did not become any more investible, cleaner, cheaper or less volatile since the invasion of Ukraine. Security of supply is a top priority for all countries – the EU in particular due to its reliance on Russia – and the need to accelerate the transition to clean energy remains undeniable.
Our global power industry was built around large, centralised power stations, mostly powered by coal and natural gas. But all of that is changing. The two key short-term solutions are in the hands of consumers: to embrace energy efficiency and, whenever possible, to produce electricity at the point of consumption.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Until recently, generating electricity “behind the meter” – ie, on the user’s site – has been challenging for technical and economic reasons. But substantial declines in the cost of solar panels and batteries have made these solutions price-competitive.
The companies in our portfolio help the world to decarbonise. They are also digital, decentralised, and deflationary. Renewable energy generation is a greener, more cost-efficient alternative to an ageing and increasingly obsolete centralised electric power system.
A solar future
Meyer Burger Technology (Zurich: MBTN) is a European producer of higher-end solar rooftop panels. The European Commission is aiming to install 15 terawatt-hours’ (TWh) worth of solar rooftops by the end of 2022, which would require seven gigawatts (GWs) of behind-the-meter solar panels to be added to the system. Almost 26GW of solar was added to the grids across the 27 EU member states in 2021, bringing the total installed capacity to nearly 165GW. (Current capacity predominantly consists of utility-scale installations.)
Smarter storage
Stem (NYSE: STEM) is a US-based smart energy storage and energy management software company, which combines hardware, software and artificial intelligence to create storage solutions that maximise renewable energy generation to build a cleaner grid. The company had a market capitalisation of $1.69bn at the end of last month. The clean energy storage market in the US alone is likely to grow over 120 times by 2035, and Stem is very well positioned to profit from this opportunity.
Improving efficiency
Ameresco (NYSE: AMRC) provides energy efficiency solutions, which is irrefutably one of the few short-term answers to the current energy crisis. It operates in the US, Canada and Europe and revenues for its 2021 financial year reached $1.2bn. The company has reiterated guidance for what it expects to be another year of strong growth. Revenues for 2021 are forecast to come in at between $1.83bn and $1.87bn, and adjusted earnings before interest, taxes, depreciation, and amortisation (Ebitda) between $200m and $210m. Energy conservation to generate cost-savings is a top priority worldwide, and Ameresco is a key player in the sector.
-
Digital Services Tax: will Reeves let big tech off lightly to avoid tariffs?Rumours are circulating that the Digital Services Tax on big tech companies could be cut as Rachel Reeves seeks to appeal to president Trump
-
Rachel Reeves set to increase penalties for filing tax returns lateThe Chancellor will announce hikes to penalties for late tax returns in her Spring Statement as she scrambles to raise an extra £1 billion a year. Here’s what you need to know
-
Weight-loss drugs could revolutionise the economy – the investments to buy nowThe new generation of weight-loss drugs are a boon for the overweight, but they also promise to change our relationship with food and revolutionise the economy
-
Find tomorrow’s Asian giants while they are still smaller companiesOpinion Nitin Bajaj, portfolio manager of the Fidelity Asian Values trust, picks three Asian companies to invest in.
-
AI will maintain Moody’s market lead, says Stephen ConnollyOpinion Veteran data provider Moody's has adapted well to the modern world, and is one of Warren Buffett’s longest-held investments
-
Is BlackRock World Mining gearing for a recovery?Opinion After a frustrating year, BlackRock World Mining is positioned for growth and to capitalise on the sector's recovery
-
Should you limit exposure to US tech stocks?An end to the AI boom would shake both US funds and global trackers. Here’s one way to trim exposure to US tech stocks
-
The mystery of America’s gold and why an audit mattersHow much gold does the US actually have? Dominic Frisby explains why it matters
-
Art vs AI: artists’ uprising takes on the botsAI performs impressively, but it’s all based on human work that was taken without payment. The government thinks this is fine. Copyright holders beg to differ
-
The benefits of a stock bubbleOpinion We tend to think of stock bubbles as bad things but, as the dotcom craze shows, good things can come from them, says Matthew Lynn
