If you’ve never given any thought to the clean technologies sector, you should.
There is a growing interest in renewable energy stocks in Australia that is unlikely to slow down as countries across the globe attempt to move away from our 95% reliance on fossil fuels to generate energy.
Think commercial wind, solar and geothermal projects – think these 3 renewable energy stocks for your watchlist.
AGL Energy Ltd (ASX: AGL)
Integrated energy company AGL Energy Ltd has a diverse power generation portfolio with renewable sources such as hydro, wind, landfill gas, solar and biomass.
Shares in AGL are up 0.5% to $21.40 on the announcement the company has knocked back an offer from Alinta Energy Pty Limited and Hong Kong’s Chow Tai Fook Enterprises to acquire its Liddell Power Station for $250 million.
Liddell is a coal-powered thermal power station located in New South Wales, and AGL says the offer “significantly undervalues” the future potential of cash flow from the site, which is plans to repurpose.
The Liddells site re-fit is part of AGL’s strategy to grow its renewable energy portfolio, with plans to leverage off current shortfalls in the market.
Late last month AGL announced its commitment to build a 252MW gas-fired electricity plant near Newcastle, with an estimated investment of $400 million as part of its commitment to support “modern, clean and reliable energy supply”.
AGL shares have tracked downwards in the last year, from $26.86 at this time last year to sit at $21.40 at the time of writing – 6.5% below its 200-period moving average.
AGL is a sector monster with its current $14.11 billion market cap, and is well-placed to make its renewable energy plans come to life, but with much of its repositioning requiring substantial funding and broad operational efforts, invests are understandably nervous as to whether it can pull off its lofty goals.
Infigen Energy Ltd (ASX: IFN)
On the smaller end of the scale sits $710 million market cap company Infigen Energy Ltd.
A much more speculative pick, Infigen is the developer, owner and operator of generation assets delivering energy solutions to Australian businesses and large retailers, with six wind farms to its name.
Last month Infigen was in talks with global asset manager Brookfield Asset Management after Brookfield acquired 9% of Infigen shares, registering as a strategic investor.
The move by Brookfield pushed Infigen shares up 7.1% to 70c per share, and the upward incline has continued ever since, with Infigen shares at 73c per share at the time of writing
Infigen reported a fall in monthly year-to-date production in February, as January production fell 1%, with its New South Wales based Woodlawn and Capital wind farms falling the most.
Despite this, Infigen managed to lift revenue for its first-half results but all eyes will be on the emerging renewable energy player as full year figures come through in August.
Australian Ethical Investment Limited (ASX: AEF)
A truly unique investment option is Australian Ethical Investment Limited – a fund manager that specialises in environmentally and socially-responsible investments.
Australian Ethical shares sit at $136.16 at the time of writing – a premium price for a $152 million market cap company that prides itself on seeking out investments that are positive in nature and support sustainability.
It’s no surprise the company has shares in geothermal, wind and solar companies and is certainly banking on the renewable energy sector as a promising investment sphere for the future.
Australian Ethical increased its funds under management by 2.2% to $2.65 billion as at March 31, 2018, up from $2.60 billion as at December 31, 2018.
Not all investors are suited to fund managers and certainly not fund managers who are highly selective about the ethical nature of investments, but Australian Equity will be an interesting one to watch as the renewable energy sector begins to gain traction given its high-level of interest in related companies.
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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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