Zacks Industry Outlook Highlights Constellation Energy, Crecent Energy and Enlight Renewable Energy
Zacks Industry Outlook Highlights Constellation Energy, Crecent Energy and Enlight Renewable Energy Yahoo Finance
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For Immediate Release
Chicago, IL – October 26, 2023 – Today, Zacks Equity Research discusses Constellation Energy Corp. CEG, Crecent Energy Co. CRGY and Enlight Renewable Energy ENLT.
Industry: Alternative Energy
About the Industry
The Zacks Alternative Energy industry can be fundamentally segregated into two sets of companies. While one group is involved in the generation and distribution of alternative energy and electricity from sources like wind, natural gas, biofuel, hydro and geothermal, the other is engaged in the development, design and installation of renewable projects involving these alternative energy sources.
The industry also includes a handful of stocks that offer fuel cell energy solutions, which have gained popularity as an affordable clean energy of late. Per a report by the American Clean Power Association, as of Jul 31, 2023, more than $270 billion in capital investment was announced for utility-scale clean energy projects and manufacturing facilities since federal incentives were signed into law last August.
3 Trends Shaping the Future of the Alternative Energy Industry
Wind Energy – A Key Growth Catalyst: Among alternative energy sources, wind energy has been making noticeable progress in the United States. Per a report by EIA, wind turbines were the source of about 10.2% of total U.S. utility-scale electricity generation in 2022. Per EIA’s latest Short-Term Energy Outlook published in October 2023, wind generating capacity is projected to increase 8 GW next year, which will play a key role in increasing the share of electricity provided by renewables to 25% in 2024 from 22% in 2023. This reflects a solid opportunity for the U.S. wind market at present, which, in turn, should boost the overall expansion of the alternative energy industry.
Rising Costs & Other Headwinds: The steadily rising cost of renewable installations in recent times has been posing a significant challenge for the clean energy installers. In particular, the rising price of steel, which is used to make the giant wind turbine blades, has been pushing up the cost of wind installation lately.
Apart from steel, the most significant mineral requirements in the wind industry are copper, zinc, manganese, chromium, nickel, molybdenum and rare earths. The average price of these seven metals has risen 93% between January 2020 and March 2023 (as stated by an IMF report). Resultantly, the average per-megawatt cost of a wind turbine has increased 38% over the past two years, per a report by GlobalData.
In addition to these expenses, a rising interest rate environment in the country has pushed up the cost of capital, which may prompt investors to reassess their investment in long-term clean energy projects or may even dissuade them from investing in the short-term. Further, fallout in bilateral relationship with China can have a direct impact on the green energy industry. This is because China accounts for up to 90% of refining capacity for so-called rare earth elements used in electric motors, wind turbine generators and other green energy products, per the Energy Transitions Commission. So, any deterioration in the relationship with China might impact the green energy supply chain in the United States, thereby impacting the alternative energy industry.
EV Market Boom to Boost Clean Energy: With enhanced environmental awareness, more individuals are choosing to switch from gasoline-powered vehicles to EVs each year, thereby boosting the market for EVs. In the United States, favorable government policies and support in terms of subsidies and grants, tax rebates, and other non-financial benefits in the form of carpool lane access, along with declining battery prices, have been boosting the EV market.
The U.S. EV market size is expected to reach $137.43 billion in 2028 at a CAGR of 25.4% from $28.24 billion in 2021, as estimated by Fortune Business Insights firm’s analysis. Such an impressive outlook bolsters the prospects of clean energy stocks, which offer the largest electric vehicle charging network in the United States.
Zacks Industry Rank Reflects Grim Outlook
The Zacks Alternative Energy industry is housed within the broader Zacks Oils-Energy sector. It carries a Zacks Industry Rank #160, which places it in the bottom 36% of more than 250 Zacks industries.
The group’sZacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bleak near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the bottom 50% of the Zacks-ranked industries is due to a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts have lost confidence in this group’s earnings growth potential over the past few months. The industry’s earnings estimate for the current fiscal year has moved down 9.6% to $1.23 per share since Aug 31.
Before we present a few alternative energy stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Lags S&P 500 & Sector
The Alternative Energy Industry has underperformed the Zacks S&P 500 Composite and its sector over the past year. The stocks in this industry have collectively lost 21.9% in the past year compared with the Oils-Energy Sector’s 0.1% decline. The Zacks S&P 500 Composite has gained 10.9% in the same time frame.
Industry’s Current Valuation
On the basis of the trailing 12-month EV/EBITDA ratio, which is commonly used for valuing alternative energy stocks, the industry is currently trading at 8.17 compared with the S&P 500’s 12.63 and the sector’s 3.45.
Over the past five years, the industry has traded as high as 9
SDGs, Targets, and Indicators Analysis
1. Which SDGs are addressed or connected to the issues highlighted in the article?
- SDG 7: Affordable and Clean Energy
- SDG 9: Industry, Innovation, and Infrastructure
- SDG 11: Sustainable Cities and Communities
- SDG 13: Climate Action
The article discusses the alternative energy industry, specifically wind energy and electric vehicles, which are directly related to SDG 7 (Affordable and Clean Energy). The rising costs and challenges faced by the industry are connected to SDG 9 (Industry, Innovation, and Infrastructure). The article also mentions the impact of the alternative energy industry on sustainable cities and communities (SDG 11) and the role of clean energy in addressing climate change (SDG 13).
2. What specific targets under those SDGs can be identified based on the article’s content?
- Target 7.2: Increase substantially the share of renewable energy in the global energy mix.
- Target 9.4: Upgrade infrastructure and retrofit industries to make them sustainable.
- Target 11.6: Reduce the environmental impact of cities.
- Target 13.2: Integrate climate change measures into national policies, strategies, and planning.
The article highlights the growth of wind energy, which contributes to increasing the share of renewable energy in the global energy mix (Target 7.2). It also mentions the challenges faced by the industry, such as rising costs, which require upgrading infrastructure and making industries more sustainable (Target 9.4). The role of alternative energy in sustainable cities and communities (Target 11.6) and addressing climate change (Target 13.2) is also discussed.
3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?
- Indicator 7.2.1: Renewable energy share in the total final energy consumption.
- Indicator 9.4.1: CO2 emissions per unit of value added.
- Indicator 11.6.2: Greenhouse gas emissions per capita.
- Indicator 13.2.1: Number of countries that have integrated climate change measures into policy, planning, and strategies.
The article mentions the projected increase in wind generating capacity, which can be used as an indicator to measure progress towards increasing the share of renewable energy (Indicator 7.2.1). The rising costs and challenges faced by the industry relate to CO2 emissions per unit of value added (Indicator 9.4.1). The impact of the alternative energy industry on reducing greenhouse gas emissions can be measured using Indicator 11.6.2. The integration of climate change measures into national policies and strategies can be measured by tracking the number of countries that have implemented such measures (Indicator 13.2.1).
SDGs, Targets, and Indicators Table
| SDGs | Targets | Indicators |
|---|---|---|
| SDG 7: Affordable and Clean Energy | Target 7.2: Increase substantially the share of renewable energy in the global energy mix. | Indicator 7.2.1: Renewable energy share in the total final energy consumption. |
| SDG 9: Industry, Innovation, and Infrastructure | Target 9.4: Upgrade infrastructure and retrofit industries to make them sustainable. | Indicator 9.4.1: CO2 emissions per unit of value added. |
| SDG 11: Sustainable Cities and Communities | Target 11.6: Reduce the environmental impact of cities. | Indicator 11.6.2: Greenhouse gas emissions per capita. |
| SDG 13: Climate Action | Target 13.2: Integrate climate change measures into national policies, strategies, and planning. | Indicator 13.2.1: Number of countries that have integrated climate change measures into policy, planning, and strategies. |
Behold! This splendid article springs forth from the wellspring of knowledge, shaped by a wondrous proprietary AI technology that delved into a vast ocean of data, illuminating the path towards the Sustainable Development Goals. Remember that all rights are reserved by SDG Investors LLC, empowering us to champion progress together.
Source: finance.yahoo.com
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