The so-called “clean tech” universe is attracting more dollars as investors bet on the energy transition, and Cowen put together a list of top picks to play the theme.
The firm said that the pandemic, while initially halting renewable energy installments, ultimately accelerated transitions that were underway, thanks in part to government stimulus packages. Wind and solar installations are now essentially back to pre-pandemic growth levels.
“We see the group set for continued outperformance in the years ahead as growth is no longer predicated on subsidies and government policy,” the firm wrote Monday in a note to clients. “Sentiment greatly improved in 2020 despite COVID-19 challenges, and 2021′s prospects remain positive despite recent pullbacks in valuation.”
Cowen said that while compiling the list, now in its sixth year, it noticed changes in how investors approach sustainable energy. For one, a shift toward ESG or environmental, social and governance factors, has driven dollars into the sector. Consumer preferences are also shifting toward more sustainable brands and products.
The firm also said many of these companies now look financially viable even without subsidies. This is against the backdrop of solar and wind’s declining costs, which has made them the cheapest form of new electricity in two-thirds of the world.
“We see a marriage evolving of economic stimulus and ‘green’ stimulus around the world benefiting our sector, and gradually increasing investor interest in what are becoming more mainstream as opposed to ‘alternative’ technologies,” the firm said.