Renewable energy equities outperform fossil stocks

Solar and wind energy stocks are outperforming oil and gas on equity markets, which can mainly be explained by lower prices on renewables.

Photo: Jens Dresling/Ritzau Scanpix

Green energy equities are faring far better than their fossil counterparts this year.

This is first and foremost due to recent years of major cost reductions on wind and solar power, both of which also benefited from low interest rates for project financing, reports Financial Times.

The exchange traded fund iShares Global Clean Energy, which deals with renewables, has appreciated by 32 percent thus far in 2019 and thereby completely outdoes the oil-dominated ETF Vanguard Energy, which only gained 1 percent in value during the same period.

"Decarbonization is the largest investment the world has ever had to make in peacetime and the yield curve is giving us an extremely attractive environment in which to make that investment," says Deirdre Cooper, who heads investment fund Investec Global Environment, to the UK media.

Renewable energy is benefiting from plummeting costs that have rendered, for instance, solar and wind power cheaper than coal and natural gas on many markets, writes Financial Times.

According to figures complied by Bloomberg New Energy Finance, the price of solar power has dived 85 percent since 2010, while the price of wind energy has fallen 50 percent during the same period.

This green party stands in sharp contrast to the state of affairs with oil companies, which fail to attract backing despite high direct returns.

This can, for instance, be seen with French oil and gas supermajor Total, which last week announced that it would pay out higher dividends in the coming years, but whose equity has since plateaued.

English Edit: Daniel Frank Christensen

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