With US Treasuries seeing some of the worst losses in decades this year, Russia’s invasion of Ukraine and the scale of the resulting sanction and increases in energy costs, has the potential to derail the emerging economic recovery as the world exits from Covid-19 restrictions.
Against this volatile backdrop alternatives – including renewables –could offer potential sources of return. On the renewables side, battery storage manufacturers that help with the transition to renewable power could see strong upgrades in revenue generation.
These companies can gain additional revenues from providing capacity availability to the power supply grid. Furthermore, renewable energy companies in general have contributed strongly in the high-power price environment following Russia’s invasion of Ukraine. Power prices remain elevated and while this could partially reverse in the short-term we expect long-term power price assumptions will have to rise as Europe tries to reduce its power dependency away from Russia. This should, we believe, benefit many of the renewable companies.
Paul Flood, portfolio manager, Newton Investment Management.
Doc ID: 975773