The renewable energy sector is far more than just a fleeting trend; it's shaping our future. As the world confronts the devastating consequences of climate change, the shift towards clean energy solutions is not just preferable it's essential.
When Michael De Cesare, Portfolio Manager of our Socially Responsible Investment Fund, travelled to the US to connect with Longdroad Energy, it wasn't just another visit. As Michael reflects, "The trip to the US to meet Longroad’s leadership was highly rewarding. Visiting management and touring their assets adds another thick layer of education. It enables us to build confidence in our belief that a company has a strong outlook and that it could possibly outperform the broader market.
Longroad Energy, renowned for its dedication to solar, wind, and storage projects, plays an essential role in the sustainable energy landscape. Their impressive strategy outlines 72 projects across 20 states, slated for realisation by 2028. Beyond their vast presence, they're targeting a growth rate of 37% annually in generation capacity. This trajectory paints a picture of a company that's both ambitious and forward-looking.
The visit provided a profound insight into Longroad Energy's operations. Michael’s conversations with CEO Paul Gaynor unveiled the complexities of inverters and other pivotal energy storage technologies. Michael says, "The scale of the projects is amazing, like the Sun Streams solar project in the Arizona desert, is awe-inspiring, an immense sea of glistening glass with advanced solar cells beneath."
In addition, the preparations for the imminent delivery of lithium battery storage units caught Michael's attention. He says, "A notable change versus recent times is that most contracts now include lithium-ion batteries for storage. This provides the flexibility to push it onto the transmission grid at optimal times." He also notes the critical role battery storage plays in countries aiming to reduce their carbon emissions.
The meetings didn't end there. His meeting with operations manager Trinidad Pantoja showcased the depth of his engagement, further underscoring the importance of first-hand experiences in understanding the nuances of investment avenues.
Longroad Energy's pioneering efforts in wind and solar energy are a testament to the boundless potential of green energy solutions. Michael observes a distinct "Demand vs Supply imbalance," that many companies are now looking to use more green energy to help reduce pollution, which has increased the demand for renewable energy. However, there isn't enough supply to meet this growing need. This situation is positive for businesses in the renewable energy field because it means they have a lot of interested customers and can potentially increase their profits.
At Nikko AM, our commitment extends beyond environmental benefits. While advocating for a sustainable world is paramount, we also recognise the immense economic potential of the renewable sector. Our mission remains two-pronged: fostering a greener planet and
maximising returns for our customers.
Michael's visit deepened our understanding of the renewable energy landscape. Drawing from his insights, we appreciate the nuances of an investment approach where, instead of sitting passively, we actively concentrate on companies we see potential in. It's not about dismissing the broader market, but rather about being discerning and thoughtful in our selections.
As the renewable energy sector continues its upward trajectory, Nikko AM remains strong in its dedication. Championing sustainable solutions and prioritising maximum returns, we trust in the power of active investing to illuminate our path forward. After all, in the quest for a sustainable future, every detail and every visit counts.
Disclaimer: The information contained in this ebook is intended as a guide only andcontent in this blog article is not to be taken as financial advice. Disclaimer:
Any references to particular securities are for illustrative purposes only and are as at the date of publication of this material. This is not a recommendation in relation to any named securities and no warranty or guarantee is provided.
Nikko Asset Management New Zealand Limited (Company No. 606057, FSP22562) is the licensed Investment Manager of Nikko AM NZ Investment Scheme, Nikko AM NZ Wholesale Investment Scheme and the Nikko AM KiwiSaver Scheme. This material has been prepared without taking into account a potential investor’s objectives, financial situation or needs and is not intended to constitute personal financial advice, and must not be relied on as such. Recipients of this material, who are not wholesale investors, or the named client, or their duly appointed agent, should consult a Financial Advice Provider (FAP) and the relevant Product Disclosure Statement or Fund Fact Sheet (available on our website www.nikkoam.co.nz). If you are a Financial Advice Provider (FAP) and would like to find out more, please contact our distributions team.
