Renewable/Green energy funds

d_barratt

Hi all,

I currently hold investments in four funds; Baillie Gifford American, Rathbone Global Opportunities, Santander Equity income and Liontrust Income.

I hold these in S+S ISA’s spread across myself and my wife, but am now also thinking about allocating some funds to an ‘experimental’ part of my portfolio.

I feel the renewable/green energy sector is set for significant growth so have my eye on that, so I’m keen to receive some recommendations as to some of the best funds in this sector. 

Thanks in advance.

Another_Saver

The main problem is that your options are basically infrastructure/utilities. Energy prices are going one way - down. Energy quantity demand is rising only in emerging markets. Infrastructure is static. It needs maintenance, it can be improved, it can be added to, but cannot change and grow as other co's can. Your capital depreciates. I worry this is comparable with Rail mania in the mid 19th century. A terrible investment, but a boon for economies and customers.

Anyway here's a few ideas:
INRG - global green index fund.

A generic ESG/SRI index fund.

United utilities - always gonna need water.

Within the FTSE 250 we have Greencoat UK wind, Renewables infrastructure group, John Laing, Foresight, Nextenergy and GCP.

doe808

https://www.trustnet.com/factsheets/o/ob3e/vt-gravis-clean-energy-income-c-acc-gbp

Dont hold myself, but have looked at it in the past (didnt go for it due to overlaps with another fund I do hold)

MarkFromCornwall

Another_Saver said:

 Infrastructure is static. It needs maintenance, it can be improved, it can be added to, but cannot change and grow as other co's can.

Surely the move to electric cars will require significant infrastructure upgrades?  Also the problems with intermittent wind and intermittent sunshine will require solutions such as massive battery storage or more pumped storage hydro like Dinorwig or trans-national cables.

Another_Saver

MarkFromCornwall said:

Another_Saver said:

 Infrastructure is static. It needs maintenance, it can be improved, it can be added to, but cannot change and grow as other co's can.

Surely the move to electric cars will require significant infrastructure upgrades?  Also the problems with intermittent wind and intermittent sunshine will require solutions such as massive battery storage or more pumped storage hydro like Dinorwig or trans-national cables.

Yes, those are new capital costs so not something you can benefit from unless you fund them directly. Green investments will not simply pick up the growth of the green industrial revolution/new deal. Saying "oh but loads of capital is needed to fund this thing" is not an opportunity to make good returns.

AnotherJoe

MarkFromCornwall said:

Another_Saver said:

 Infrastructure is static. It needs maintenance, it can be improved, it can be added to, but cannot change and grow as other co's can.

Surely the move to electric cars will require significant infrastructure upgrades?  Also the problems with intermittent wind and intermittent sunshine will require solutions such as massive battery storage or more pumped storage hydro like Dinorwig or trans-national cables.

Not to the distribution network it wont  *

But as you say,  replacement of fossil fuels with Solar Wind and Batteries is coming / inevitable and that will require a lot of infrastructure spend on the generation side. I hold INRG for solar and wind (maybe batteries, not sure) and Orsted for wind. Plus TRIG as a more smoothed path to electrification,  its an operator so its returns are much more modest. Better hold these sorts of things than Shell or Exxon etc. And with beautiful irony,  the company thats being dropped out of the S&P100 to make way for Tesla is, yep, an oil company

* for multiple reasons. Including, refining petrol uses a lot of electricity. That will go. Most cars will charge overnight when demand is very low so no infrastructure upgrade needed there.  A common mode now to install charging stations is with a big battery to store cheap overnight electricity and again, theres plenty of that around but is also means fewer expensive cabling to the chargers.

Moe_The_Bartender

In this space, I have the VT Gravis fund referred to by doe808, INRG and this one which combines green energy, infrastructure and a bit of real estate:

https://www.fundslibrary.co.uk/FundsLibrary.DataRetrieval/Documents.aspx/?type=packet_fund_class_doc_factsheet_private&id=768943b3-3ea6-4cff-9065-f4ca8321cdf6&user=Gg%2bKT8oVbZxOrFdnAX%2fogU8XdzyVXVnFY90miXHJ37V3b%2ffA%2b7Wkv6iORQf%2bDAvK&r=1

and this one
https://www.fundslibrary.co.uk/FundsLibrary.DataRetrieval/Documents.aspx/?type=packet_fund_class_doc_factsheet_private&id=4cf92102-fdc5-4736-ae45-430ba34860ad&user=wzy1zXwryJEfRCrzKJgRWgOUAzMCh8FhPcusPZmhNIkELC7YweIERNZn6IGgB32R&r=1

I also have Vestas Wind as a single share. I wouldn’t normally have as many holdings in one sector but these hang together very well in my opinion.

Apodemus

AnotherJoe said:

* for multiple reasons. Including, refining petrol uses a lot of electricity. That will go. Most cars will charge overnight when demand is very low so no infrastructure upgrade needed there.  A common mode now to install charging stations is with a big battery to store cheap overnight electricity and again, theres plenty of that around but is also means fewer expensive cabling to the chargers.

I'm not sure that is entirely true. A new Tesla has a 100kWh battery, while the current average household electricity consumption is about 11kWh per day. Even if the Tesla only receives the equivalent of one full charge a week, that is roughly the same as ten days household consumption. That is fine if there are only one or two Teslas in the street, but at present the average house in UK has 1.3 cars. If all these have to be charged, just once a week at home, the added demand (even overnight) per street is quite considerable and in many places will be beyond the capacity of the network at the local level. ...and this is before factoring in a shift from oil and gas across to electricity for domestic heating. Adding this additional demand to the existing network might just be doable if we all accept smart-meter control over our usage, to limit (or smooth out) consumption, but I suspect we will not all be happy to have a remote algorithm making prioritisation decisions between my dishwasher and your Tesla!

 While the urban parts of the country may indeed not need grid strengthening and be manageable, many rural villages are on 11kV lines and simply have no capacity at present for installation of public access chargers, never mind a huge growth in domestic demand. These areas are also where daily car mileages often approach EV limits, so the frequency with which users charge overnight can be expected to be higher. Clearly there needs to be an investment in grid capacity to these communities or a greater commitment to localised energy networks (which would be my preference).

 In the longer term, I think you are right, that improving battery storage solutions to domestic charging will be affordable, but in the short-term we are going to have a messy interim period where we will be struggling to use old grid technology to meet demands that it was never intended for.

NottinghamKnight

NG have big plans to upgrade the transmission and distribution network, but the haggle with OFGEM is dragging on, not least because the power companies have taken the mick with dividends, massive debt, securitisation and similar financial manipulation since the nineties. Renewables generation is so biased to Scotland that power needs to be moved to the south, not a cheap process and SSE have bids in place for £2.5 billion over the next five years for example. These aren't technically complex problems but they may be expensive ones, everyone loves the idea of being 'green' (what is the carbon footprint of the generation and infrastructure proposed, including maintenance and the design life may well be 60 years) but guess what no one wants to pay for it. 

LHW99

NottinghamKnight said:

NG have big plans to upgrade the transmission and distribution network, but the haggle with OFGEM is dragging on, not least because the power companies have taken the mick with dividends, massive debt, securitisation and similar financial manipulation since the nineties. Renewables generation is so biased to Scotland that power needs to be moved to the south, not a cheap process and SSE have bids in place for £2.5 billion over the next five years for example. These aren't technically complex problems but they may be expensive ones, everyone loves the idea of being 'green' (what is the carbon footprint of the generation and infrastructure proposed, including maintenance and the design life may well be 60 years) but guess what no one wants to pay for it. 

A very important point not considered as often as it should be by environmental lobby groups. This article is for Australia, but the paragraphs on embodied emissions are very interesting

https://www.abc.net.au/tv/carboncops/factsheets/cc_embodied_emissions.pdf

DrEskimo

Apodemus said:

AnotherJoe said:

* for multiple reasons. Including, refining petrol uses a lot of electricity. That will go. Most cars will charge overnight when demand is very low so no infrastructure upgrade needed there.  A common mode now to install charging stations is with a big battery to store cheap overnight electricity and again, theres plenty of that around but is also means fewer expensive cabling to the chargers.

I'm not sure that is entirely true. A new Tesla has a 100kWh battery, while the current average household electricity consumption is about 11kWh per day. Even if the Tesla only receives the equivalent of one full charge a week, that is roughly the same as ten days household consumption. That is fine if there are only one or two Teslas in the street, but at present the average house in UK has 1.3 cars. If all these have to be charged, just once a week at home, the added demand (even overnight) per street is quite considerable and in many places will be beyond the capacity of the network at the local level

The typical EV does about 4miles/kWh, so your hypothetical scenario assumes the average household is doing 400miles per week. The average annual mileage is around 8,000, so that would be a weekly mileage of about 150miles, or about 40kWh.

Your slightly overestimating the increase in demand.