September 1, 2020
The UK and other markets have been working to move away from coal-driven energy production for a while now and we expect to see more coal generation come off the market as more renewable energy comes on. Part of the reason so much time passed without coal being part of the electricity-generating mix in the UK earlier this year was because the impact of Covid-19 sharply reduced demand. Yet at the height of the pandemic, there was sufficient electricity supply from other providers and generators, including renewable sources such as wind and solar.
Against this backdrop, and following the impact of the Covid-19 pandemic, the UK government now looks set to boost the struggling economy through fiscal spending, and we expect a large part of that infrastructure spend to go towards the green economy and extra support for the development of renewables in the future.
As we gain greater renewable capabilities, we also expect to see the development of more sophisticated battery technologies which should enable more flexible power storage that could allow us to store electricity and bring it back to the market as and when required.
Throughout this year and the whole pandemic, we believe renewables have continued to provide very stable revenues to investors. While we have seen a lot of dividend cuts across wider equity markets, renewables firms have continued to pay stable dividends throughout this turbulent period.
Paul Flood, portfolio manager, Newton Investment Management