THE COWEN INSIGHT
We have created our 364-page, 5th annual comprehensive primer on the Sustainable Energy & Industrial Technology sector to assist investors in navigating its complex and varied subverticals. Given the improving unsubsidized economics, healthier demand, and less reliance on government support, we remain bullish on long-term prospects.
As renewable energy becomes the most cost-effective source of generation, utilities are embracing a world of distributed & decarbonated energy.
No single silver bullet will solve the world’s energy crisis. We see room for multiple technologies to succeed, enabling investors to capitalize on next-generation energy technology investments.
The response to COVID-19 presents an opportunity for environmentalists and social activists to join forces. We see a greater focus on resiliency, not just in health care, but also in energy, food, and water, to name a few, playing a central role in any economic stimulus.
ESG investment mandates are helping to aid sentiment as is the secular shift toward a decarbonized economy that is becoming ever more visible in society.
Changes to Sustainable Energy in Recent Years
We see 5 primary ways that sustainable energy has changed in recent years that investors are finally coming around to recognizing:
- Investor preference shift toward ESG
- Consumer preference changes to more sustainable brands and products
- Technical advancements integrating technologies such as hydrogen from low cost electricity, storage with wind/solar, digitized energy management
- “Mainstreaming” of the definition of clean/climate/sustainable technologies
- Financial viability of many companies in the sector without the need for constant capital raises
Utilities are deploying wind and solar due to economic drivers rather than subsidies that were needed in the past. Solar and wind are now the lowest cost forms of electricity in two-thirds of the globe with prices oftentimes lower than new natural gas plants and in many cases existing coal facilities. We are most excited about multi-year investment prospects in the smart grid, wind, and solar markets and see all three sectors incorporating batteries to extract more value.
This edition of our primer includes expanded solar and hydrogen/fuel cell sections as well as a complete update of our existing sections. The updated primer also takes a closer look at the intersection of ESG investing and corporate initiatives regarding climate change.
COVID-19’s Impact to Sustainable Energy – Short-Term Bumps, But Long-Term Gain
We see COVID-19 serving as an accelerator of many trends that were well underway. While the impact to the sector has been mixed with residential solar/smart meter installs delayed, we see the mid and long-term trends continuing unabated. How far governments embed green priorities into COVID-19 recovery plans is a question facing investors now. We see the Green Deal in Europe potentially serving as a roadmap for other regions of the world. The U.S. election will certainly shine a spotlight on the sector as well.
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