Udetanshu .

Insights from latest EY Renewable Energy Country Attractiveness Index (RECAI)… Funding remains below what is needed to meet the COP28 target of tripling renewable capacity by 2030 (despite 2023 record US$1.8 trillion investment in clean energy). This ongoing underinvestment in infrastructure has significantly gridlocked the network and impacting developer pipelines. Projects are locked in grid queues. Money is tied up that would otherwise be circulating through the system to drive growth. However, opportunities exist to accelerate progress. Battery energy storage systems, for example, can be part of the solution to network challenges, offering significant revenue opportunities for sophisticated investors. RECAI suggests four factors to guide investment. Full report here: EY.com/RECAI #BetterWorkingWorld #RenewableEnergy #Sustainability

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Great to see David Stevenson has added SDCL Energy Efficiency Income Trust (SEEIT) to his core alternatives funds list and profiled the trust in his recent Adventurous Investor column. In David's words: “I’ve long thought the market undervalues SDCL Energy Efficiency Income Trust (SEIT). Over the last few years, it has done pretty much everything to prove that its discount – which at one point hit 42% - is wrong. It sold assets at or above their net asset value. It runs an extensive share buyback programme. It has a covered dividend from relatively dull assets. Its net yield, even now, is a compelling 9.5%. Its managers have bought shares, and so have the directors…I am moving the SDCL fund to my core alternatives funds list with a target share price of 80p by summer next year – remember that you’ll also pick up that yield in the meantime. For income investors, this should be a core holding.” Read the full article on David Stevenson's Substack: Investment Ideas: SDCL added to the core alternative funds list, Helios Towers impresses, and NuBank hits 100m (substack.com)

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#DYK: cooking remains vastly underfunded, receiving less than 1% of what’s needed. In CCA’s latest edition of #VantagePoint, learn how #CarbonFinance can help unlock funding to accelerate access to #CleanCooking and promote a just and inclusive #EnergyTransition. 🔗 https://ow.ly/I2b150Rm8yh Margaret Kim, Gold Standard

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The Oxford Institute for Energy Studies delves into harnessing Distributed Energy Resources (DERs) in developing nations, drawing insights from global leaders' experiences. The paper outlines three stages of DER integration, each requiring distinct technological, regulatory, and market advancements. Initially, Stage 1 involves limited DER adoption, with larger consumers focusing on cost reduction and reliability enhancement. As DER penetration increases in Stage 2, smaller consumers embrace rooftop solar PV and electric vehicles, necessitating aggregators and enhanced incentives. Finally, Stage 3 represents widespread DER adoption across user types and regions, driven by market forces rather than policy support. This phase demands advanced operational tools, effective grid access regimes, and active involvement of Distribution System Operators (DSOs) to optimize system operations. As developing countries navigate DER integration, understanding these stages and implementing corresponding frameworks becomes paramount. What strategies do you believe are crucial for developing nations to effectively harness the potential of DERs and ensure sustainable energy transitions? #energy #ders #sustainability #energytransition

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The #energytransition spotlight is now on #batterytechnology, essential for sustaining the growth of #renewables and #electricvehicles. Recent insights from the International Energy Agency (IEA) underscore a surge in #battery deployment, crucial for counteracting the intermittent nature of #solar and #wind energy and supporting the rapid adoption of #electricvehicles. Projections indicate robust continued growth in #batterystorage, establishing it as a fundamental component of future #energysystems.

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In this week's edition of the Corporate Bond Wrap: Enel Group’s coupon step-up on €10.2bn of its sustainability-linked bond debt was admirable, particularly as the company could have claimed force majeure after two governments essentially forced it to miss its targets, but it will not be enough to save the once-popular structure. “It’s a market failure and a shame,” said Stephan Kippe, CFA, head of ESG research at Commerzbank AG in Frankfurt. “Transition is the most important space for sustainability-aligned capital allocation, and SLBs would be an ideal tool for that.” While Enel’s step-up proves the system works – investors will be compensated more if a company misses its sustainability targets – many others claim it also highlights the flaws in SLBs. A 25bp coupon step-up barely registers for investors at a time of 4.5% base rates in Europe, and unfriendly EU regulation means many investors are at best indifferent to SLBs. There is a chance of change from the revision of SFDR, but it will take time and is far from certain to improve things: https://lnkd.in/eNcK-zBb Elsewhere in Europe, deal execution in May is looking chaotic. May is always a month of public holidays, but the way they fall in different countries this year, plus data dumps and even some major industry events, means that deals will be shunted into smaller issuance windows than usual. Next week is a holiday in the UK on Monday and in France on Wednesday, with some issuers weighing up whether they should risk zipping in and out of the market on Tuesday intraday. The week of May 13 is the only completely free week of the month. “That week is going to be pretty busy,” said a syndicate banker in London, echoing three of his rivals. “There’s always the chance that someone won’t have done their work, and a deal gets pulled.” https://lnkd.in/egTGfc-q #corporatebonds

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SP Angel Energy analyst David Mirzai discusses the influence of global politics on energy policy and pricing, as well as what we look for in new investment stories and managements in the latest All Points West Podcast

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India's #coal-fired electricity generation and #power sector #emissions hit record highs during the first quarter as above-average temperatures spurred higher air conditioner use and economic expansion drove greater overall power consumption. As temperatures have been rising in April and May, India's coal burn will likely have climbed higher still during the second quarter. More in today's column: https://lnkd.in/giP_r2jg

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The share of renewable energy capacity in India (excluding large hydro and nuclear) has increased significantly from 12.1% in March 2014 to 32.5% in March 2024. But this doesn’t reflect the real picture in terms of actual generation mix as the availability and the plant load factor (PLF) of conventional thermal plants are of a different order as compared to renewable units. Take the expected power generation in May which is set to touch a new high of 164 billion units (CMIE). The share of conventional sources in actual generation still stands at 87% while the share of renewable energy is only 13%. In order to make a perceptible shift as a nation to “net zero”, the share of actual generation from renewable sources has to go up steadily and materially. Surely, the closure of fossil fuel based plants is not an option, given the increasing energy requirements of our country. But this is still possible through a combination of two things: 1. Acceleration of the renewable energy capacity additions through innovative financing methods including a sizeable increase in external funding 2. Development of effective energy storage systems (ESS) covering battery, pumped hydro (PHS) and also green hydrogen from where energy can be tapped as and when demand rises. Both these things should receive high priority in India’s energy policy going forward. #powergeneration #renewableenergy #netzero #climaterisks #esg Acuité Ratings & Research Limited ESG Risk Assessments & Insights Sankar Chakraborti

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Energy scenarios are hypothetical. Ben Brunnen writes in the Financial Post that their use as a tool to direct macro-level energy investment policies and regulations can create country-level exposure to significant disruptions in energy supply, affordability and security. Read more: https://lnkd.in/gqmeu2ur

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South African API 4 coal prices flipped to a premium, compared with European API 2 equivalents, prompted by steady Asian demand offsetting dampened coal generation fundamentals in Europe. But this firmness in South African pricing could soon push European prices higher again as buyers in northwest Europe require high-calorific value (CV) cargoes, of which South Africa is a key supplier. South African prices have been supported by poor rail performance into the Richards Bay Coal Terminal (RBCT) for much of the past few years. National rail carrier Transnet's (TFR) constant underperformance has been pushing up coal prices and ultimately weighs on the cost of production and dampens demand. "Because of the TFR's performance, producers never know what they can offer and when, until the coal physically turns up," a source said. Nonetheless, market participants agree that a "fairly steady demand on Indian side is keeping the API 4 propped up". Read the full analysis here: https://lnkd.in/eP5BbMnc

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Annual #carbonpricing revenues reached historic levels in 2023. Find out what that means for the energy transition, alongside the other latest #energy news here. https://lnkd.in/eMefSZgy

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National Grid is raising £7bn in a rights issue to fund electricity grid expansion in the UK and USA. This is the biggest rights issue in London since 2009, but is there enough here for equity investors? The new capital will help to fund 10% annual asset base growth, and 6-8% growth in earnings, but the growth in the dividend will be in line with CPIH. Clearly this is a fluid number, but currently is at 3%. There is a strong argument that the growth in the dividend should be more aligned with the growth in the underlying business.

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New Oxford Institute for Energy Studies paper looks at hedging and tail risk in electricity markets 👉 Link to OIES paper: https://lnkd.in/esNGu4NK 💡 Summary: 🔹 Traditionally, electricity markets have faced difficulties in implementing long-term hedging strategies due to factors like retailer creditworthiness, market structure, and a general lack of consumer interest in long-term contracts   🔹 The volatility inherent in prices of thermal fuels (coal, natural gas, oil) and the varying risk attitudes of suppliers and consumers significantly affect the willingness to engage in long-term hedges   🔹 Also thermal fuel markets exhibit "fat tails" and "tail dependence," which are statistical properties indicating that extreme values are more likely than would be expected in a normal distribution and that extreme conditions in one market can affect others, complicating long-term risk management   🔹 Introducing more low-carbon resources such as wind, solar, and energy storage into the energy mix can provide "tail-diversity," reducing the reliance on thermal fuels and improving the conditions for long-term hedging   🔹 Thoughtful market design and policy considerations are critical for managing risks in long-term contracts, emphasizing the importance of integrating demand-side flexibility and ensuring supply reliability   🔹 Energy storage plays a crucial role in stabilising grids with high renewable penetration, enabling more effective hedging strategies by balancing supply and demand dynamically    🔹 As the energy mix transitions to include more renewables, the overall hedgeability of electricity portfolios improves, despite increased spot price volatility from renewable sources   🔹 The diversification effects from low-carbon resources can lower the costs that generators need to charge for long-term hedges by mitigating the tail risks associated with thermal fuels   🔹 With the ongoing energy transition, risk management strategies in electricity markets may need to shift focus from managing legacy fuel price risks to addressing new challenges, such as policy uncertainty and the impacts of extreme weather events on renewable-heavy grids #electricity #electricitymarkets #hedging #riskmanagement #grid #storage #thermal #renewables #energytransition

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New publication out in Energy Economics by our colleague Eunice Oppon, Ph.D The paper evaluates the sustainability of a climate change mitigation strategy—enhanced weathering (EW) using integrated indices to assess and compare EW performance among selected top CO2 emitting countries .You can read more on the findings and access the full article via the link here:  https://lnkd.in/e2w9M4nr

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Renewables are crucial for power system flexibility because they allow the grid to adapt to changes in demand and supply, maintaining reliability and quality of service. This adaptability is essential for integrating variable energy sources like wind and solar, enhancing grid modernization and reliability.

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