Renewable energy companies enjoyed considerable growth over the last decade, as the cost of solar and wind power technologies declined significantly. ”Renewables’ competitiveness with fossil fuels is strong, driven by considerable innovation, learning and economies of scale,” Lydia Miller, Portfolio Specialist at Dana Investment Advisors states in a recent Green Money Journal column. “We believe that the transition to a low-carbon economy is happening and will continue to happen. This happens over decades, with investors increasingly discounting this long-term trend.”
However, she acknowledges the short-term environment could pose some challenges. While the outlook that renewables’ is positive over the long term, a weaker economic environment is a headwind for all energy companies.
“Energy growth, in whatever form, is severely challenged by COVID-19 and its economic aftershocks and collateral damage. There is simply no getting around this. Challenged economic growth is an energy-demand shock” says, Miller.
Given the changing backdrop, Dana is investing in renewables selectively, she writes.
“We seek entities that have experienced leadership, an excellent track record in project development, better demographic geographies, strong balance sheets, and demonstrated success in funding R&D and bringing these investments to fruition. Those companies capable of navigating the current demand shock and playing the long game, can succeed. The need for innovating and delivering reliable and affordable clean energy solutions has never been greater, and we expect the gap between the strongest players and all others to grow larger through a more challenged economic backdrop.”
You can find Lydia Miller’s full column in Green Money here.