Green utilities in Europe have been faring better than their conventional competitors and better still than other economic sectors in the financial crisis triggered by the COVID-19 pandemic.
“Utilities in the region are holding up better than other industries in the health crisis,” Bloomberg reports, in a post republished by the Institute for Energy Economics and Financial Analysis (IEEFA). “While the Stoxx 600 Index of European shares fell 21% since the start of the year, the utilities component of that measure has declined only 14%. Within that, renewable power producers are outperforming their less green rivals.”
“When we run scenarios around the impact of COVID-19, we find that networks and renewables segments are largely insulated,” said Deepa Venkateswaran, a managing director at Sanford C. Bernstein & Co. LLC. “We see the long-term renewables growth trends unchanged. For integrated and power price-exposed companies, market reactions are in line with our deeply depressed worst-case estimates.”
Bloomberg says the power purchase agreements and feed-in tariffs available to renewable energy developers make the trend particularly clear in Europe.
“Those deals have left the greener utilities insulated from the slump in power prices that followed lockdowns in major markets,” the news agency writes. As a result, “the best performers are the greenest utilities, including the Danish offshore wind developer Ørsted A/S along with Italy’s Enel SpA, and Energias de Portugal SA. Others more dependent on wholesale power prices include Centrica Plc, Engie SA, and Electricité de France SA, each of which has scaled back dividends and withdrawn earnings guidance because of the jolt from the virus.”
Bloomberg says analysts see the pandemic and the resulting economic crunch marginally delaying the renewable energy transition, but not derailing it. “Project delays may occur due to supply chain disruption, but equally there could be positives, as renewables operators may even see reduced competition in bids by more challenged and leveraged players,” said RBC Europe analyst John Musk.