Should investors follow Mukesh Ambani’s push for green energy stocks?


AAsia’s richest man, billionaire Mukesh Ambani, spearheads more than $ 10 billion in investments in green energy stocks and clean energy projects over the next three years , through its Indian multinational and conglomerate Fortune Global 500, Reliance Industries [RELIANCE].

The petrochemical, oil, gas and telecommunications giant struck deals with four green energy stocks in a week. It currently generates more than half of its revenues in refining and petrochemicals, but now clearly advocates a clean energy program.

Reliance has also set up the 5,000-acre Giga Dhirubhai Ambani Green Energy complex in Jamnagar, which includes giga factories for integrated photovoltaic solar modules, electrolysers, fuel cells and energy storage, reports mint. Mukesh Ambani also predicts that Reliance will deploy 100 GW of solar power by 2030.

With energy shortages rocking global economies and the International Energy Agency (IEA) warning that clean energy spending must triple to meet targets, are green energy actions a must for investors?

“Increased Spending on Clean Energy Transitions Paves the Way Forward” – IEA Annual Energy Outlook Report

Mukesh Ambani’s Reliance buys green energy shares

Reliance chairman, chief executive and major shareholder Mukesh Ambani has made quick, but carefully planned forays into his green energy equity investments.

$ 771 million purchase of REC Solar enables Reliance to leverage its capabilities in solar panels and polysilicon, and gain instant access to global customer base, reports mint. Its $ 29 million purchase of German solar panel maker NexWafe [NexWafe], means that it can use its technology to supply photovoltaic panels at competitive prices. And to install these panels, Reliance can now benefit from its 40% stake in Indian companies Sterling and Wilson Solar. [SWSOLAR], whose price had jumped 45.00% in six months, at the close of Friday, October 15, in anticipation of the transaction.

Goldman Sachs was positive about the clean energy transition, saying, “Acquiring REC would provide Reliance with a global footprint to benefit from the growing global demand for modules, which we plan to double by. by 2025 ”, adding that she expects“ the solar plant will grow from the current operating rate of 5.5 GW to 31.5 GW by 2030. ”

The company has also obtained technology for hydrogen electrolysers – which produce green hydrogen – through its partnership with privately-held Stiesdal. The Danish firm’s technology should allow significant cost reductions.

And Mukesh Ambani is not the only one to invest heavily in renewable energies, with Gautam Adani’s Adani group [ADANIENT] plans to invest $ 20 billion over 10 years in the renewable energy sector, reports Bloomberg.

Should investors now turn to green energy stocks?

In addition to increasing global investment in green energy, exemplified by Mukesh Ambani’s acquisitions of Reliance, factors such as global energy shortages and the IEA’s warning that green energy spending must triple are making clean energy an essential sector for investors?

In recent weeks, oil and natural gas prices have hit multi-year highs as demand increases and a supply shortage pushes prices higher. Asia has been hit by widespread energy shortages, as demand for fossil fuels accelerates. With less than a month to go before the UN climate change conference COP26 in Glasgow, the IEA’s annual energy outlook report said last week that the economic recovery from the pandemic is “not sustainable” , with too much emphasis on fossil fuels.

The report says “increased spending on clean energy transitions is the way forward, but it has to happen quickly or global energy markets will face a bumpy road.” The IEA says investments in renewables must triple by 2030 to effectively tackle climate change and control volatile energy markets.


Enphase Energy [ENPH] share price increase over the past month

He adds that “the world is not investing enough to meet its future energy needs” and “falls far short of what is needed to sustainably meet the growing demand for energy services”. And ahead of the key climate summit in November, added that “clear signals and guidance from policymakers is essential.”

Solar, wind, hydropower and bioenergy must account for a much larger share of future energy investments, according to the IEA, in the battle to cap rising temperatures at 1.5 ° C, as predicted by the IEA. ‘Paris Agreement of 2015. In 2020, renewable energies represented only 12% of the world’s energy supply, with coal, natural gas and oil accounting for nearly 80%, reports Reuters.

Obviously, there is still a long way to go, but also a huge unrealized potential in the area of ​​clean energy. Last week, our performance analyzer showed that ETFs Solar (+ 7.07%) and Clean Energy (+ 7.05%) were the second and third best performers of the 34 tracked themes, represented by ETF Invesco Solar. [TAN] and the iShares Global Clean Energy ETF [ICLN]. Enphase Energy [ENPH], with the second largest weighting among green energy stocks in the two ETFs, jumped 17.67% over the past month, to the close on Monday, October 18.

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