In the U.S., electricity per kilowatt-hour is at an all-time high, and the Energy Information Association (EIA) expects a 4% rise in summer demand.
Inputs that matter: OilPrice.com reports, "Uncertainty about the pace of renewable energy growth with the U.S. presidential election approaching has pushed investors to withdraw money from funds invested in renewables stocks—so much that these funds booked the biggest quarterly withdrawal ever in the first quarter of the year."
- According to LSEG Lipper data cited by Reuters, exchange-traded funds that invest in stocks of renewable energy firms saw a combined outflow of $4.8 billion during the first quarter.
- In addition to policy uncertainty in the U.S. energy sector caused by the November election, high interest rates are also curbing renewable growth and inflows into renewable energy funds.
- The S&P Global Clean Energy Index (INDEXSP: SPGTCLEN), which tracks the performance of wind and solar power firms, has been down by almost 10% year to date.
- This compares to a 16% jump in the S&P 500 Energy Index, which has risen amid a rally in oil and gas stocks so far this year.
The opportunity: According to Colorado Politics, "The Biden administration and dozens of other countries have pledged to triple the capacity of nuclear power worldwide in their battle against climate change, and some are adopting policy changes to lessen Russia's influence over the supply chain."
- Energy Fuels, which is starting production near the Grand Canyon and prepping two more mines in Colorado and Wyoming, was awarded a contract in 2022 to sell $18.5 million in uranium concentrates to the U.S. government to help establish the nation's strategic reserve for when supplies might be disrupted.
Zoom in: The Daily Mail explains, "Native Americans in Utah are in an uproar after a uranium mine near a sacred site discovered a massive reserve of the radioactive material."
- Increased Uranium prices have returned workers to the La Sal Complex, situated 32 miles outside of Moab, after the facility opened and closed and opened again over the years.
Between the lines: Newsweek details, "Capital expenditures have surged to a record-breaking nearly $171 billion in 2023 for the most significant electric and gas utilities, according to Deloitte, indicating a trend that may not reverse soon."
- "The Federal Reserve's warning of a 'higher for longer' interest rate environment aimed at curbing inflation resonates within the energy sector."
Follow the money: These higher borrowing costs come at a time when utilities are investing heavily to modernize and transition towards more sustainable energy sources.
- "Much of the increase over time is due to inflation and has often lagged inflation," Jim Thomson, U.S. Power, Utilities & Renewables leader at Deloitte Consulting, explained to Newsweek.
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Read More
- https://fred.stlouisfed.org/series/APU000072610
- https://www.marketplace.org/2024/04/10/electricity-bills-could-hit-your-pocketbook-even-more-this-summer/
- https://www.coloradopolitics.com/news/uranium-mined-near-grand-canyon-as-prices-soar-amid-push-for-nuclear-power-out-west/article_101af1b6-f213-11ee-8b16-0bca5781ee2e.html
- https://www.dailymail.co.uk/news/article-13295541/Native-Americans-uproar-huge-uranium-sacred-ancient-burial-site-discovers-massive-reserve-precious-element-used-make-NUKES-sparking-fears-poisonous-water-radiation-leaks.html
- https://oilprice.com/Latest-Energy-News/World-News/Investors-Dump-Renewable-Energy-Funds-Amid-US-Policy-Uncertainty.html
- https://www.newsweek.com/electricity-rates-record-high-us-costs-energy-bills-inflation-interest-rates-1850199