When it comes to the energy sector, most investors’ minds would immediately focus on oil, gas and LNG. That’s not surprising considering the large number of companies listed on the ASX that are exposed to these commodities, however, it’s possible that the next big energy boom won’t be in any of these three…
In a very interesting piece of research by Deutsche Bank, the authors have suggested that within 20 years the global solar energy market will generate an incredible cumulative $5 trillion in revenues!
The detailed study reportedly has numerous fascinating findings including a forecast that 25% of India’s energy needs will be sourced from solar by 2022 and that cost-competitive solar power energy storage is just around the corner, which the investment bank described as the “next killer app.”
There are a number of takeaways from Deutsche Bank’s report:
Be wary of the outlook for coal mines. The beaten-down state of the sector might entice some investors who expect a return to a higher price level, however if the Deutsche analysts’ predictions are accurate then there could be further headwinds facing the sector.
Companies with leading solar technologies such as Silex Systems Ltd (ASX: SLX) could be well positioned to become major providers to the industry if widespread adoption occurs.
When it comes to a company with that “killer app” – a rechargeable, cost-effective battery – Redflow Ltd (ASX: RFX) could be just the ticket. After years in development, the group recently sold its first commercial large-scale zinc-bromide flow battery system.
AGL Energy Ltd (ASX: AGL) has already invested over $3 billion in renewable energy including landfill gas, biomass, biogas, solar, wind and hydroelectricity. This investment has made AGL a leading provider of renewables in general and specifically solar where the group has a 155 megawatt (MW) solar farm at Nyngan and a 53 MW farm at Broken Hill.
While no doubt there will be many twists and turns over the coming decades as companies jockey for position in an evolving energy landscape, investors who accurately identify winning companies early on stand to reap the greatest rewards.
How to play the Australian LNG revolution
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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned.