Generation RENEW:  Add “Renewable Energy” To Cart 

 

Do you think Jeff Bezos uses Amazon.com to buy solar panels and windmills for his distribution facilities?  Does he do his own product research, or does he just select something from the “Amazon’s Choice” list? Perhaps his cart looks similar to the one below but with much larger numbers, and therein lies the point. Big technology companies like Amazon, Google, and Facebook have changed the world in remarkable ways, but what is less known is the enormous amounts of power their servers and distribution centers require. This is where demand meets supply, since these corporates are increasingly “demanding” their power come from renewable energy.

 

 

In December, Bloomberg New Energy Finance (BNEF) reported that recent contracts signed by Amazon for renewable energy have pushed them past Google as the world’s top corporate clean energy buyer. The numbers are astounding, with Amazon approaching 6.9 gigawatts (GW) of renewable energy capacity. Add in demand from Google (6.4 GW) and Facebook (5.7 GW) and you’re at 19 GW. Putting this into perspective, the world’s largest supplier of renewable energy (Nextera Energy) boasts 19 GW of capacity, equivalent to the demand of the above three digital giants. It goes beyond this though.

 

Source:  Bloomberg New Energy Finance (BNEF)

 

Other corporate highlights include Apple pledging to become carbon neutral within the next ten years. Google has been reported to have purchased an equivalent amount of wind and solar energy for its EU data centers to power half a million homes annually. However, the most aggressive clean energy plan may be from Microsoft.  While it is currently only the fourth largest corporate purchaser of green energy, it plans to become carbon negative by 2030 and to offset all the emissions it has produced since its founding (1975) by 2050. 

 

Source:  Microsoft

 

Initiatives like the RE100 are helping drive the transition to 100% renewable energy by “bringing together the world’s most influential businesses”, and there are now over 280 companies that have made this commitment. That’s a lot of demand to support incremental investment in renewable energy. In fact, using data gathered by BNEF, RE100 electricity demand fell just shy of 330 TWh in 2020 of which 42% was supplied by clean energy.  Through 2030, electricity demand from these companies is forecast to reach 455 TWh that according to the pledge, at some point over the coming decades, will need to be supplied entirely by clean energy. 

 

Source:  Bloomberg New Energy Finance (BNEF)

 

We’ve said over and over the vast majority of capital invested in renewable energy will be towards infrastructure.  Whether it’s BNEF’s prediction of $9 trillion (below) or McKinsey’s range of $13-$27 trillion, the number is always in the trillions and not the billions. The runway for growth is very long for the renewable infrastructure megatrend.

 

Source:  Bloomberg New Energy Finance (BNEF)

 

 

RENEW Performance Tracker 

Source:  Bloomberg.  *Please review disclosure information at the end of this post

 

 

Renewables Roundup

 

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Michael Cerasoli, CFA

Michael leads the Renewables effort at Eagle Global Advisors, including the development of active and passive strategies, and portfolio management. He is also the Co-Head of the Energy Infrastructure team and Co-Chair of the Energy Infrastructure Investment Committee.  He shares Portfolio Manager responsibilities for the firm’s four separate Energy Infrastructure strategies. Prior to joining Eagle in May 2014 Michael was employed by Goldman, Sachs & Co. for ten years where he covered Midstream for seven years and small/mid cap Oil Services for three.  Prior to Goldman, Michael worked for three years as a sell-side equity trader at various Wall Street firms. He earned bachelor’s degrees in Economics and History from Union College, and an MBA from the Hagan School of Business at Iona College. Michael holds the Chartered Financial Analyst designation.

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Curt Pabst

Curt is a Managing Director in the Energy Infrastructure Business, a member of the Energy Infrastructure Investment Committee, and co-head of the Renewable Energy Business at Eagle Global. Prior to joining Eagle, Curt held a similar position at an Midstream Energy-dedicated asset management firm in Dallas, Texas. He has 39 years of investment experience. He has served as a partner/principal in both a hedge fund of funds and a venture capital fund. Curt earned his BA in Economics from Grinnell College and a professional certification in Energy Innovation and Emerging Technologies from Stanford University.

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