The most important development in recent months is that people are realizing that energy is no longer free. It is more expensive than it used to be and is likely to continue to be priced higher in the future. So there are good reasons to invest in renewable energies such as solar and wind power, energy efficiency and energy saving. In our view, solar energy is the area that can score the fastest. Another trend is the use of offshore wind energy. The market share of biofuels, on the other hand, is still relatively low.
Many companies in the renewable energy sector are now at a point where they have to demonstrate projects, products and financial results. Five or ten years ago, most of these companies were very young and became popular but expensive businesses. Now they have to show that they are able to deliver the technologies for the energy transition.
Companies with technologies of the future
One such company is Vestas, which manufactures wind turbines for wind farms. This technology replaces fossil fuel power plants and thus avoids emissions. Another company that uses innovations for climate protection is Kingspan. The Irish company specializes in the production of heat-insulating building linings and produces, among other things, insulation panels. These panels consist of steel and foam as filling. This provides very good insulation, so that heat no longer penetrates. As a result, the building consumes significantly less energy. Again, the focus is on avoiding emissions, and less electricity is also needed in the building. The third example is Scatec, an independent power producer. In addition to wind and hydroelectric power plants, the Norwegian company primarily operates solar farms, mainly in emerging countries. The company feeds the clean electricity into the grid, for example in South Africa. The more such power plants Scatec can build in South Africa, the fewer coal-fired power plants the country will need.
Sunrun: Private solar power systems
In addition to the power plants mentioned above, there are also small solar power systems such as those built and operated by Sunrun. Instead of building huge power plants, the company installs them on the roofs of private homes in the USA. They, too, serve to harness the clean energy from solar panels and replace a polluting power plant. The advantage here is that not all the electricity has to be run through the power grid, where some is lost, but can be stored in a battery, for example. Many shares in the solar industry have performed relatively well over the last 12 months. We are less optimistic than the market about the level of subsidies that many of these companies will be able to retain (as increased profitability competes), and have therefore reduced our solar exposure by about 2% over the last 12 months.
