By continuing to use this site you consent to the use of cookies on your device. Find out more about our cookie policy and the types of cookies we use by clicking here

Wind Energy Options for the UK Investor

Denmark’s Dong Energy, which is held by a range of UK funds, has won a contract to build the world’s biggest windfarm off the coast of Yorkshire

James Gard 13 September, 2017 | 2:29PM

Wind farm

Two significant pieces of news will have attracted the attention of investors in the renewable energy sector this week.

Firstly, on Monday, the price of offshore wind generation dropped below the price of nuclear power for the first time. The news came after an announcement that Denmark’s Dong Energy has won a contract to build the world’s biggest windfarm off the coast of Yorkshire, England. The price guaranteed for the Hornsea 2 Project was confirmed at £57.50 per megawatt hour, significantly below that of under-construction nuclear plant Hinkley Point.

UK investors wanting direct access to wind power have a few choices among UK-listed companies – FTSE 100 energy firm BP (BP), which has a three-star Morningstar equity analyst rating, meaning it is fairly valued, does have wind farm assets, but they are based in the United States. Four-star rated British Gas-owner Centrica (CNA) sold its remaining stakes in wind power generation assets at the start of this year, although it remains a purchaser of renewable energy power. Four stars indicates that equity analysts believe it is currently trading below fair value.

Similarly rated Amec Foster Wheeler (AMFW) provides engineering support to renewable energy firms through its Amec Wind division. Shell (RDSB) also has a renewable energy division, with wind power assets in the US and the Netherlands.

For the UK investor, there are a range of open-ended and closed-ended funds that have exposure to Dong Energy. These include income, European and renewable energy funds.

Dong makes up just under 1% of the four-star rated Fidelity Global Situations, which has a Morningstar Analyst Rating of Silver.

Newton Continental European Fund has Dong Energy as 2% of its holdings. The fund also has a Morningstar Sustainability Rating of four globes, meaing it scores above average on environmental, social and governance grounds.

Dong makes up more than 3% of Legal & General Real Income Builder. Other income funds backing the stock include Omnis Multi-Asset Income Fund and Newton Multi-Asset Income Fund

Of the investment trusts, Witan (WTAN) – with a Morningstar Analyst Rating of Silver – holds a stake in Dong. As does Jupiter Green (JCG), whose objective is to “to generate long-term capital growth through a diverse portfolio of companies providing environmental solutions”.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article
Security NamePriceChange (%)Morningstar
Rating
Amec Foster Wheeler PLC472.80 GBX0.81
BP PLC456.10 GBX1.18
Centrica PLC190.30 GBX1.60
Jupiter Green Ord181.00 GBX0.00
Royal Dutch Shell PLC B2,178.50 GBX1.07
Witan Ord1,025.00 GBX0.49
About Author

James Gard  is subeditor for Morningstar.co.uk