The UK remains one of the leaders in the world in terms of clean energy technology and is forging ahead with plans to achieve net zero carbon emissions. But all this will require that the infrastructure is there to harness and more importantly to store the green energy we generate. Many forms of clean energy are intermittent – e.g. wind farms only generate power when the wind blows.
Clean energy is going to require companies all over the world to develop facilities and infrastructure to support the growth in this new energy economy. Here are five we have come across over the last few months.
#1. SSE (LSE:SSE)
Founded in 1998, SSE is one of the biggest energy companies in the UK and Ireland. SSE Renewables is “the renewable development division of SSE”, developing and operating onshore and offshore wind farms and hydroelectric generation on a large-scale. Through SSE Renewables, the corporation is investing heavily in green energy initiatives and plans to increase its capital expenditure from £7.5 billion to £12 billion over the next five years to fund its transition towards renewable energy. The subsidiary is aiming to treble its renewable energy output from 2019 levels to 30TWh by 2030, which would make significant contributions to achieving its goal of net zero emissions by 2050. SSE’s position as one of the most prominent power companies in Britain gives it a unique edge over its peers, with the company looking to maintain strong financial growth in the near future.
#2. Net Zero Infrastructure (LSE:NZI)
Net Zero Infrastructure was listed as a cash shell on the London Stock Exchange last year. The company’s objective is to acquire one or more targets in the green energy infrastructure space. It recognised that a green energy economy in the UK would have to rely on companies that could provide the necessary ‘nuts and bolts’ to keep it running and make sure power was delivered to the right places and on time. There are many private companies in the UK already that are active in this space. Potential targets include energy parks and hubs, battery storage opportunities, carbon capture and hydrogen fuel production. The company is led by CEO Mike Ellwood, a former banker with a long track record in corporate finance, draws on additional green energy sector expertise from Alejandro Ciruelos, who is managing director of Sustainable Development Capital LLP.
#3. Greencoat UK Wind (LSE:UKW)
As one of the largest wind farm owners and operators listed on the London market, Greencoat UK Wind appears to be an interesting investment opportunity. The favourable macros surrounding the wind energy market combined with the fact that Greencoat UK Wind is one of the biggest players in its industry indicates the company is in a great position to take advantage of private investor funding which is likely to increase in the near future. Its competitive advantage in this sense will make it easier to attract crucial funding. In addition, the company has specifically stated that it intends to continue to increase its dividends (already at 7.18p) in line with RPI inflation, further increasing its appeal to retail investors. It is, however, important to note that the Greencoat UK Wind’s lenient stance on borrowing means the company will allow the total of its short-term acquisition financing and long-term debt levels to be up to 40% of its Gross Asset Value.
#4. Minnova Corp (TSXV:MCI)
Minnova Corp is a Canadian-listed mining company that is making the transition towards becoming a green energy infrastructure play. It has acquired 100% of the share capital of DUMA Engineering in Manitoba to get access to its biomass gasification technology. DUMA was awarded IRAP funding by the National Research Council of Canada last year to develop technology which would allow green hydrogen to be produced cost effectively. The company has the ability to store hydrogen on site already and also has completed purchase of a partially refurbished 22km 25k Va power line. The initial annual production target is a minimum of 1.4m kg of green hydrogen which can be scaled up as customer demand increases. Minnova says it is targeting its first H2 production facility in southern Manitoba which it plans to plug into the wider Manitoba grid as well as inter-provincial and possibly even interstate pipelines.
#5. AFC Energy (LSE:AFC)
Based in Surrey, UK, AFC Energy is a developer of alkaline fuel cells which use hydrogen to generate energy. In 2021, AFC Energy announced the launch of a strategic partnership with ABB to develop the next generation of high power sustainable electric vehicle (EV) charging solutions for grid constrained locations. The company is also expected to supply many fuel cell systems to its clients in the upcoming quarters, which suggests its revenues and profitability are likely to grow over this period. The combination of stable financial growth and operations in a market with explosive potential indicates AFC Energy’s share price has a much higher ceiling than its current 42.5p level.
