Investors betting that Joe Biden will win the presidential election are buying up clean-energy stocks, sending the share prices of some companies to all-time highs.
The WilderHill Clean Energy Index, a compilation of green-power companies listed on U.S. exchanges, surged to an over nine-year high Wednesday. It has climbed 33% since the beginning of July. Its biggest companies include First Solar Inc. and Tesla Inc.
“A Biden victory would add huge impetus to the transition” to a lower-carbon economy, said Simon Webber, a Schroders portfolio manager for global equities. “The growth outlook for electric vehicles, renewables, hydrogen power, battery storage and many more industries would be turbocharged.”
The iShares Global Clean Energy ETF, which tracks S&P Global’s index of clean energy companies around the world, has risen by nearly 30% in the same time frame. The fund’s assets under management swelled to $1.2 billion from $431 million at the start of the year. Its largest holdings include SolarEdge Technologies Inc., Sunrun Inc. and Plug Power Inc.
“This is catching on since the beginning of the summer, as more of the market is starting to pay attention to the election,” said Max Anderl, head of concentrated alpha equity at UBS Asset Management. “It’s definitely already reflected in the prices of the equity market.”
The election is seen as a major turning point for green investing and climate action. Mr. Biden has pledged to spend $2 trillion to combat climate change with an aim of eliminating carbon emissions from the power grid by 2035 and accelerating the uptake of electric vehicles. If this is implemented, companies working in the low-carbon energy industry, such as solar and wind power, and firms in the electric-vehicle supply chain stand to benefit, investors said.
By comparison, President Trump supports the coal industry and has rolled back a series of environmental policies such as the Clean Air Act and the Clean Power Plan. His administration approved a new program for Arctic oil drilling in a wildlife refuge Monday.
In the polls, Mr. Biden is nine points ahead of Mr. Trump, according to the latest survey by The Wall Street Journal and NBC.
Tax incentives for renewable energy projects such as wind and solar are due to phase out in 2020. Mr. Biden has pledged to extend them and support the acceleration of other projects such as energy-efficient buildings.
Renewable energy plants have also been installed in the U.S. throughout the Trump administration. Costs for technologies such as solar panels, wind turbines and batteries have come down to the point where they are competitive with fossil fuels. But renewable installations are expected to significantly ramp up in the event of a Biden win, analysts said.
“Clearly a Biden administration would be a huge push for the clean-energy industry,” said Tom Buttgenbach, chief executive of 8minute Solar Energy, one of the world’s largest solar plant developers, and an adviser to Mr. Biden’s campaign and both Republican and Democratic Congress members on energy policy. “We would see an acceleration of executing on our pipeline, we think that demand will significantly increase.”
Mr. Buttgenbach is considering taking part of his company public to capitalize on the rise in interest in sustainability-focused investing, a trend he expects to further ramp up under a Biden administration.
Companies that could be affected by the election include those working throughout the electric-vehicle supply chain. Wind-turbine and solar-panel manufacturers and renewable-energy project developers may doubly benefit, as a switch to electrified transport will increase demand for clean power, according to Sam Arie, a UBS equity research analyst.
“The winners will be this new category of companies that is emerging, I call them the wind and solar majors, akin to the oil-and-gas majors we’ve all grown up with,” Mr. Arie said.
Those would be NextEra Energy Inc., the largest electric utility in the U.S., and companies such as Italian utility Enel SpA and Orsted A/S in Europe, he said. Their stocks all traded at or near record highs in July or August.
Also boosting the European stocks is the European Union’s €750 billion ($888 billion) stimulus plan aimed at bolstering the bloc’s economy that was passed last month. Policy makers in Brussels have said investments must comply with its goal of reaching net-zero emissions, which will likely create more demand for clean-energy companies.
Shares of Renewable Energy Group Inc., a producer of biofuels and other green chemicals, soared to an all-time high Monday in New York and have rallied over 30% in August alone. The world’s largest wind-turbine manufacturer, Denmark’s Vestas Wind Systems A/S, is also hovering near its record high, which it also hit Monday. It has surged over 90% since the market’s low point in March, and 11% this month.
Schroders’s Mr. Webber thinks they could still rise further. He is buying up Vestas shares in anticipation of a further boom in the wind industry.
“The market and analysts are still underestimating how much the fundamentals of these companies would change under a Biden administration,” he said.
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