Energy, investing in electricity grids and renewables to dodge another Hormuz

It is hard to look for a positive element in the current historical phase. There is one, however: the return of investment in renewable energy. Donald Trump at the time of his inauguration as US president launched an anathema against the clean energy world, which suffered a tremendous blow. The Hormuz blockade is now reviving the vital importance of the sector.

"Renewable energies are again the focus of attention. Not primarily as 'green' investments, but as strategic risk-reduction instruments. Indeed, solar and wind power can be developed locally and help reduce geopolitical dependencies': this is the position of Hannes Loacker, manager of Raiffeisen Capital Management, who highlights the interest in companies that diversify energy sources in order to avoid situations such as those in Hormuz.

Even before renewables producers, however, the networks that transport energy are crucial. 'Grid constraints have become the main bottleneck for the energy transition, with connection queues stretching for years,' Loacker notes. 'At least 120 Gw of planned renewable plants are located in areas without sufficient grid capacity, particularly in Portugal, Poland, the Netherlands and Spain. Moreover, more than 40 per cent of Europe's distribution grids are 40 years old or older, creating a significant structural replacement cycle'. Hence a focus on industry stocks. 'If we want to look beyond Terna and E.On,' adds the Austrian manager, 'the European landscape offers several interesting examples in this sector, although it is worth noting that some of these companies are not pure operators but also own, for example, renewable energy plants. In the UK, two important reference points are National Grid and Sse. Moving to Germany, a major player is Rwe, while in Spain the names Red Eléctrica and Iberdrola stand out.

Along the same lines are the analysts of Barclays, who produced a report on a possible acceleration of the electrification process in Europe, which wants to regain energy sovereignty with renewables.

"Growing geopolitical instability is transforming electrification from a simple climate objective to a strategic economic and energy security tool," Barclays analysts wrote in their 26 May report. "In this scenario, the biggest beneficiaries may not only be renewable energy producers, but also grid operators, integrated utilities, cable manufacturers, infrastructure companies, logistics companies and groups specialising in building energy efficiency.