Over the last week the Eagle Global Renewables Infrastructure Index (RENEW) returned (0.46%), in line with the S&P Global Clean Energy Index. The Eagle North American Renewables Infrastructure Index (RENEWNA) returned (1.34%), underperforming the S&P Global Clean Energy Index by 92 basis points.
Macro Mash Up
U.S. Reconciliation Bill. Included in the U.S. House of Representative’s reconciliation bill and supported by the White House is a proposal to expand the Master Limited Partnership (MLP) structure to include clean energy. Qualifying assets under the MLP structure do not pay corporate taxes, instead passing the obligation on to individual investors in the form of tax advantaged distributions.
German Election Results. The center-left (Social Democrats) slightly outpaced the center-right (Union) to secure the most seats in Bundestag. However, a strong third place showing by the Green party means a change of government policy after nearly 16 years of Angela Merkel that will result in more actions taken to combat climate change. This political shift is positive for RWE AG and Encavis AG as the major renewable energy developers and for E.ON SE’s regulated transmission assets.
European carbon prices. European carbon prices continue to move higher, setting a new all-time high on Friday (Sep 27) of €62.88. While working as designed, the sharp increase in carbon prices may put pressure on the European economy as businesses find themselves unable to compete against companies not operating under a carbon tax regime. Making matters worse is the expectation carbon prices will rally even higher as energy intensive winter approaches, where costs will land directly on Main Street.
Japanese Election. The Liberal Democratic Party (LDP) will this week hold its presidential election that will decide its next prime minister. While all four candidates are committed to Japan’s 2050 net-zero goal, frontrunner Taro Kono is expected to bring the most ambitious policy. These expectations are a primary reason why Japanese renewable energy company West Holdings Corp has been among the top performers in the RENEW Index over the last four weeks and year-to-date.
CenterPoint Energy (CNP) analyst day. While much was discussed, we highlight two major initiatives: (1) a target of net zero by 2035 that is well ahead of its peer group and will require significant spending on renewable energy, and (2) a full exit from Midstream oil and natural gas by year-end 2022.
Brookfield Renewables (BEP/BEPC) analyst day. As part of the larger Brookfield family Analyst Day, Brookfield Renewables materially raised their global development pipeline to 31 GW (prior: 18 GW), where the majority will be spent on solar (55%) and wind (28%). This pipeline is more geographically diverse though, split relatively evenly between North America (34%), Europe (29%), Latin America (23%), and Asia Pacific (14%).
Orsted AS (ORSTED) to work with Williams (WMB). Global renewable energy giant ORSTED will explore the development of clean energy opportunities with US natural gas infrastructure company Williams. At the top of the list is cooperation on developing hydrogen, renewable energy, and synthetic natural gas, which would combine Orsted’s development expertise with Williams’ outsized infrastructure footprint.
Breakdown: RENEW Index
Breakdown: RENEWNA Index
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