UK Renewable Energy 2024 has been launched.
In a reversal of former Tory policies that virtually discouraged the further integration of renewable energy (specifically solar and wind), the new Labour government in the UK has already approved three new solar farms in east England. When completed, these three solar farms will produce enough electricity to power around 400,000 homes.
The new government also lifted a former restriction on onshore wind development which denied any project that received any public pushback. And when I say “any,” I mean “any.” A single person could just oppose it, and that’s all it would take. Some even referred to it as a “de facto” ban on any new onshore wind installation.
Although interestingly, nearly 30% of all the power generated in the UK already comes from wind. And with the new government in place, this could jump to more than 50% by 2030.
The new government is also looking to boost solar’s contribution from around 5% to 15%. If successful, roughly 65% of the country’s electricity would come solely from wind and solar. Add biomass and hydro to the mix, and you’re over 70%.
This is what I mean when I say that UK Renewable Energy 2024 is merely a launching pad for a major bull run on renewables in the UK
UK Renewable Energy 2024 leaves 2023 in the Dust
Of course, renewables in the UK have been chipping away at fossil fuel market share for the past ten years. According to data from UK electricity system operator National Grid, since 2014, the percentage of the UK’s energy from fossil fuels has fallen from 58.1% to 32.2%. This is not trivial. By the end of the decade, fossil fuels will likely supply less than 25% of the country’s electricity needs. The transition away from fossil fuels is well underway in the UK. And of course, that opens up some new opportunities for renewable energy investors.
On the wind front, some of the companies that could benefit from an expansion of UK wind energy assets include:
- Orsted (OTCBB: DNNGY)
- Iberdrola (OTCBB: IBDRY)
- Siemens (OTCBB: SIEGY)
- Cadeler (NYSE: CDLR)
On the solar front, most of the solar developers in the UK are private. And the majority of the solar panels used in UK installations come from China. This has been a sticking point for those looking to expand the country’s solar market. Particularly due to questions surrounding slave labor being used in China to produce these panels. So it’s hard to gauge right now the best way to play this.
Although it should be noted that the new government wants to rewrite planning rules in an effort to increase rooftop solar installations for both existing homes and new home construction. If successful, one company that would definitely benefit is Enphase Energy (NASDAQ: ENPH).
If you’re unfamiliar, Enphase is the largest supplier of microinverter-based solar and battery systems in the world. To date, the company has shipped 70 million microinverters across the globe. It already has exposure to the UK market, and has little in the way of competition.
Now that particular stock has struggled a bit this year after dealing with high interest rates and a slowdown in new home construction. But as the UK government gears up to throw its weight behind the solar industry, Enphase should benefit.
If you don’t already own shares, I would recommend picking some up under $125 a share. To be sure, this is not a quick trade, but rather a long term play based on the continued growth of the global solar market.
By the end of the year, I expect to see Enphase trading at around $135 a share. And by this time next year, up over $160.
