HSBC covers twelve of the energy giants

In view of the higher goals related to energy security from the authorities, HCBS now sees opportunities in the stock market in companies that will contribute to the transition to alternative and renewable energy sources.

Storbanken covers a total of 12 listed energy giants.

The top picks are Enel and German RWE, but NextEra, Iberdrola, Ørsted, EDP and Encavis also receive Buy recommendations. Endesa, E.ON, Acciona Energia, Snam, Terna and Engie are suspended. Norwegian companies such as Scatec and Nel are conspicuous by their absence from the list.

In HSBC’s forecasts, it is assumed that Europe will exceed the target set for 2030 for wind and solar capacity of 500 gigawatts (GW) and 600 GW, respectively. Analysts believe that the share of renewable energy will rise to about 72 percent of the energy mix by 2030.

Together with nuclear power, this will increase the energy generated without emissions to 89% by 2030. Electricity demand will double by 2050 and Europe will become a zero-emissions society by 2038.

important US market

The United States is a key market for European renewable energy companies, and the market has trickled across the pond. Support plans from the US authorities, such as the Giant Inflation Reduction Act (IRA) package, have strongly contributed to the growth.

HCBS calculates that the US will account for 40 percent of European developers’ investment in the next three years.

However, not everything will be smooth sailing.

“Even if the trend is clear, there will always be periods and challenging markets. There is also strong competition with many new players. This includes homeowners, businesses, government projects, large and small independent energy producers, financial players as well as oil and gas companies,” HSBC writes.

Danish giant

One company sealed with a Recommendation to Buy is world-leading Danish wind power developer Ørsted. The price target is set at DKK 729, which is up 17 percent. Ørsted has faced headwinds in the past year from inflation, cost increases and disappointing auction rounds as well as delays.

However, these are not structural issues, and HSBC believes Ørsted’s losing auction rounds are a positive sign of discipline.

DNB Markets has recently covered Orsted, but with a clear sell recommendation.

“One has seen an evolution in the offshore wind market in particular, with increasing interest rates, increasing competition, inflation and challenges in the value chain making growth much less profitable,” said analyst Helene Kvilhaug Brøndbo of DNB Markets to Finansavisen. .