// INDUSTRY UNLOCKED //

UNIQUELY , THE SECTOR HAS SUFFERED FROM BEING UNABLE TO PASS ON HIGHER COSTS WITH ELECTRICITY SETTLEMENT PRICES THAT ARE OFTEN AGREED UPON MANY YEARS INTO THE FUTURE .

immature supply chain . The Orsted stock is down 28 % over the year .

The sector has also suffered from a perfect but temporary storm of ; i ) high valuations , ii ) dramatic interest rate hikes by central banks , iii ) a surge in production and material inflation . However , renewable energy is down , not out . Things are about to change , and the sector could finally start seeing some tailwind .

The last two years ’ ‘ renewable energy correction ’ with declining stock prices has improved the sector ’ s valuation , which no longer trades with significant premiums . For example , the iShares

Global Clean Energy ETF is now trading at price / earnings multiple of around 15x , aligning with the broader European market . However , it is still higher than the oil and gas sector , which also lacks perpetuity earnings potential .

Lower interest rates will also support renewable energy . The last few years have made financing capital-intensive renewable energy projects expensive . Institutional investors such as pension funds have had attractive alternatives investing in bonds that offer them a stable cash flow profile similar to that of many renewable energy projects .

However , with the global central banks having passed the top of the interest cycle , help for the sector is on its way . With the US central bank , the Federal Reserve , projecting that the interest rate in the longer run could move towards a natural level of around 2.8 %, the sector is set to benefit from around ten

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