The shares of the solar energy companies were also affected by the increase in interest rates, but it is estimated that the sun will return to caress them in the capital markets as well (Photo: ShutterStock)
The climate crisis and the Russia-Ukraine war accelerated the activity of countries around the world, in the race to achieve energy security, and with it also the investments in renewable energies, mainly solar and wind.
According to the International Energy Agency's (IEA) electricity market report from last March, energy from solar, wind or nuclear sources will provide, on average, more than 90% of the increase in global demand for electricity until 2025. This means that the world is reducing the consumption of polluting energy such as fossil
fuels and accelerates the development and consumption of renewable energies (natural gas, which has become one of Israel's sources of income, is a solution for the intermediate stage, being less polluting than fuel and coal).. The total
increase in global demand until this year is expected, according to the report, to be about 3% The total global electricity consumption today, equal in value to the annual electricity consumption of Great Britain and Germany together.
About 70% of the increase is expected to come from China, which is responsible for half of the world's electricity consumption - and will produce about a third of it itself.
To understand the investment amounts, you can look at the USA, where alone about 370 billion dollars will be invested in clean energy projects thanks to the Inflation Reduction Act - designed to curb inflation by reducing the deficit, and to provide certainty for prescription drug prices and investment in production renewable energies), according to the World Economic Forum.
The type of renewable energy that will be responsible for the majority of production is solar energy, which, according to the International Energy Agency, will be the source of more than half of the "new electricity" production this year (2023), and it is also the main energy companies are focusing on Israeli energy.
The table of solar energy companies traded on the Tel Aviv Stock Exchange (photo: Walla! system, no)
However, examining the shares of the largest Israeli companies in the field, alongside their financial reports, necessarily reflects the opportunities that the world places before them.
The leading company in the sector, and the only one in it that is also traded dually on Wall Street, is Enlight, which is traded on the Tel Aviv and Nasdaq stock exchanges with a value of approximately NIS 7 billion, after its share has fallen 15.66% since the beginning of the year (see table). This is despite the focus of the company's activities today is the USA.
At the same time, the share of Nofer Energy, which is traded on the Tel Aviv Stock Exchange with a value of approximately 2.8 billion shekels, also fell during the same period, after its share fell by approximately 9.4%, and this for no reason that those in the capital market know how to estimate or explain.
This decrease occurred when the Tel Aviv 90, 125 and Cleantech indices fell for the same period by approximately 5.2%, 1.8% and 12.9% respectively.
More in Walla!
Virtual reality therapy: a treatment for coping with anxiety
In collaboration with zap doctors
Gilad Yeavetz, one of the founders of Enlight and the CEO of the company. The only one in the field that is also traded on Wall Street (Photo: Yehats)
On the
other hand, the kibbutz's energy company, Mashek Energy, which is traded on the Tel Aviv Stock Exchange at a value of about NIS 2.2 billion, jumped by about 8.2% for the same period.
It should be noted that the bulk of the company's value, as well as its current activity, is related to its purchase of the Dalia power plant, which operates to generate electricity from natural gas.
So what are investors missing - and how does the local energy sector relate to the global one?
Gilad Ben Zvi, energy analyst at Leader Capital Markets: "Without considering one company as another, the activity of the renewable energy sector in Israel is generally focused on Europe and the USA, which benefited the companies after the energy crisis created by the Russia-Ukraine war.
The crisis led to an increase in electricity prices, mainly in Europe, while production costs at the beginning of the crisis were not yet affected.
In this way the companies could benefit from the upside created in the price.
This is also the reason why the examination of the electricity revenues of some companies showed an increase compared to previous years.
But the beginning of 2022 was also the beginning of the European regulator's statements about intervention to lower the cost of living, of which the interest rate intended to curb inflation is only a part.
Some countries, for example, created ceiling prices for electricity that were about 180 euros per megawatt.
The decision created great volatility in prices and uncertainty regarding the planning of the projects going forward.
For example, electricity purchase agreements, which are usually very easy and convenient to price and in the past were closed for a period of about 10 years on average, began to be shortened to one to three years, because the traders did not want to commit to the high prices in the long term."
Gilad Ben Zvi, analyst at "Leader Capital Markets" (Photo: Leader Capital Markets)
The land of limited possibilities
Ben Tzvi adds: "The reaction of the chain was that those energy players who wanted to establish more and more platforms began to hesitate in light of the ever-growing pricing problem. Into all of this was also dragged the interest rate, which began to significantly affect production costs and all of this led to a decrease in the scope of investments in the field in Europe. And while companies
, Not only Israeli women, began to reduce their focus on Europe, in the cold USA exactly the opposite, after the American government enacted laws to encourage the field.
But even focusing on the USA was found to have limitations.
For example, it was discovered that it takes a relatively long time to connect to new facilities, which is on average about 5-6 years from the moment a facility is registered in the queue for connection until it is actually connected to the electricity grid, and with all the changes that have been experienced In the last year and mentioned above, this explains the volatility of the viability of the projects.
In addition, as more players entered the market, returns on capital became more competitive, and investors became less attached to the growing competition.
All of these, by and large, created the negative sentiment for the sector.
Along with all this, it should be noted that the estimates are that there will be upward corrections, since the world is going in the direction of renewable energy.
Every territory around the world today understands that it must quickly consolidate the possibility of energy independence, and that it can no longer rely on others.
Since these are activities that are profitable going forward, as time goes by the companies will start to show more income from electricity production, and assuming they will be able to meet their forecasts going forward - the change will also be seen, and they will also be able to survive in the existing business environment."
Of money
consumption
financial decisions
Tags
solar energy
Wall Street
The Stock Exchange in Tel Aviv
