How Does Investing In Solar Help The Australian Energy Sector?
Solar energy was once the cool new kid on the block. It was the technology everyone kept talking about but didn’t really understand - much like the movie ‘Inception’. We’ve come a long way from those days, and solar is no longer the fresh new kid in the hood. It’s a growing sector. You may or may not be surprised to know that, from 2018 to 2019, Australia’s solar industry’s average annual growth rate was 41.7%, In fact, in 2020, 24% of Australia’s total electricity generation was from renewable energy sources, and as seen from the graph below, solar has been steadily growing since 2009.
Australian Electricity Generation from Renewable Sources
Solar Energy along with E-vehicles, Geothermal, and Hydropower, have been listed by Project Drawdown as some of the key technologies needed to help us transition over to renewable energies. In an effort to help the world reach a point where levels of greenhouse gases in the atmosphere start to steadily decline. Bloom targets these investment areas in our portfolio (see full product disclosure here for more information).
So, is Australia positioned to become a solar energy powerhouse?
There’s a reason we’ve been slip, slop, slapping since the 80’s, our environments are perfectly positioned to harness the sun's power.
The Australian environment is ideal for solar farms and solar innovation. Due to its predominantly unusable, arid, flat land underneath the beaming sun, it has the highest solar radiation per square metre of any continent in the world.
Australia's large-scale renewable energy target to meet 33,000 gigawatt-hours of renewable energy by 2020 was also considered a highly successful policy, as it drove unprecedented levels of investment in large-scale solar installations.
Australia’s highly competitive solar market encourages companies to constantly evolve and innovate their products, further advancing the solar industry as a whole.
Ok, but how does the Solar industry work?
The solar industry can be broken down into three different areas:
1. Solar research & component manufacturing
Solar panels are pretty complex, and consist of three main components; photovoltaic cells, inverters and poly or monocrystalline panels. Manufacturing these components is crucial, because without one component, you can’t build a solar panel. Various solar components are also constantly being improved through research, such as the solar hot water diversion and battery storage research that Mercury & Contact Energy conduct in New Zealand.
2. Solar panel installers
Residential or rooftop solar panel installation can be a great start for individuals wanting to help Australia transition to green energy. Data from the Clean Energy Council demonstrates how small-scale solar (systems up to 100kw) were responsible for 23.5% of Australia’s total clean energy generation in 2020. Some energy companies, such as Meridian, partner with solar panel installers to aid their customers on their solar panel installation journey.
3. Large-scale solar farms
Solar farms in Australia supplied 13.4% of Australia’s electricity needs in the year of 2021, producing 20 times the amount of large-scale solar energy compared to that of 2016. These statistics represent the huge growth that large-scale solar farms have experienced, allowing companies such as Meridian, Genex Power and New Energy to grow with the industry.
With these different ways to invest in solar in mind, we’ve listed 5 examples of solar stocks currently listed on the Australian Stock exchange ASX:
1. Meridian (ASX: MEZ)
Meridian Energy is a renewable energy provider across Australia & New Zealand. To achieve its goal of producing cleaner energy for the world, Meridian generates 100% of its electricity from renewable sources, namely: wind, solar & hydropower. Using a vertically integrated business model, Meridian is active in generating and retailing electricity.
Category: Solar farms & solar panel installation
Gross Revenue FY2021: AUD $4.27B
Market Capitalisation February 2022: AUD $5.72B
(Source: Meridian)
2. Genex Power (ASX: GNX)
Genex Power is focused on developing a portfolio of renewable energy generation and storage projects in Australia. Not only does their portfolio focus on solar storage and production, but it also focuses on hydro, wind, and large-scale batteries. By 2025 Genex Power’s goal is for its portfolio to provide clean energy to over 350,000 homes, offsetting almost 2 megatonnes of CO2 per annum.
Category: Solar farms
Gross Revenue FY2021: AUD $21.65M
Market Capitalisation February 2022: AUD $187.23M
(Source: GenexPower)
3. New Energy Solar (ASX: NEW)
New Energy Solar is an Australian-based company that acquires, owns, and manages large-scale solar generation facilities. Since its inception in 2015, New Energy Solar has sought to create a positive social impact through its generation of green energy whilst continuing to grow financially through selling this energy. Although New Energy Solar already facilitates solar energy production through solar plants, the company hopes to diversify into other renewable energy sources such as wind, hydroelectricity, and geothermal power while investing in battery and energy storage technologies.
Category: Solar farms
Gross Revenue FY2021: AUD $21M
Market Capitalisation February 2022: AUD $274M
(Source: New Energy Solar)
4. Mercury (ASX: MCY)
Mercury is a New Zealand-based renewable energy provider that generates electricity from 100% renewable sources, including hydro, geothermal, and soon wind. Mercury has also been partnered with the Waikato Catchment Ecological Enhancement Trust, providing $5.5 million in funding over the last 13 years. Lastly, they are also a member of the EV100 and committed to converting their vehicle fleet to electronic or plug-in hybrids by 2030.
Category: Solar research
Gross Revenue FY2021: AUD $2.04M
Market Capitalisation February 2022: AUD $7.383B
(Source: Mercury)
5. Contact Energy (ASX: CEN)
Contact Energy is a New Zealand-based company built a flexible and largely renewable portfolio of electricity generation assets since 1996. Contact offers electricity, natural gas, and bottled LPG through 11 hydro, geothermal and gas-fired power stations, powering over half a million homes across New Zealand. Due to these renewable energy generation assets, Contact has decreased its generated greenhouse gas emissions by 57% since 2012.
Category: Solar research
Gross Revenue FY2021: AUD $2.57M
Market Capitalisation February 2022: AUD $1.85B
(Source: Contact Energy)
Due to Mercury and Contact Energy being located in New Zealand and limited by environmental factors, they, unfortunately, don't mass produce green energy through solar farms. However, they do contribute to the solar industry through various solar innovations, research, and trials, including solar hot water diversion and battery energy storage.
Making an impact:
Making an impact can seem like a daunting and sometimes impossible task. Largely because there isn’t an end goal or finish line that you cross, and then boom, you’ve made an impact! It’s a continuous journey, and one starting point is Impact Investing.
Outside investing companies listed publicly on the stock market, investing in solar infrastructure (like solar farms or small-to-medium scale solar installations - think Shopping centres putting solar on their roof) can also make a big impact.
Solar Projects managed by 3E Group and Green Squares Energy Trust are making big waves in Australia. 3E is emerging as one of Australia's leading services design and installation companies by providing cost-effective, sustainable energy solutions for their clients.
Similarly, Green Squares provides its clients with independent consulting when contracting renewable energy, efficiency and transport electrification. Through these actions, both 3E Group, and Green Square Energy, are reducing the output of greenhouse gas emissions produced by their client’s everyday operations as they switch them to green energy solutions such as solar.
Unfortunately, the entry point to invest in solar infrastructure projects like these is generally $100k, plus you have to be a sophisticated or wholesaler investor (a.k.a wealthy investor) - a little out of reach for most. However, you can access these investments through Bloom’s impact fund, from as little as $500 and $500 for trusts.
Research is key, and you can investigate the companies further through the links provided. You can also sign up for the Bloom Impact Investing app, where you can invest in a climate impact fund containing solar investments (both listed companies and infrastructure projects), see how much C02 the projects are saving and hear stories from the companies you invest in.
Join the Bloom community if you want to learn more about sustainable investments. We have an upcoming array of events where you can learn how to make a positive climate impact with your investment. Or download the app and start investing in a better future today.
You can make an impact!
Do you want your money to work for not against nature? Then download the Bloom app and start using your investments to fight climate change.
Don't forget, you can also join the Bloom community if you want to learn more about sustainable investing We have an upcoming array of events where you can learn how to make a positive impact on your finances.
Please note:
This blog post has been prepared by Bloom Impact Investing to provide readers with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. We do not express any view about the accuracy or completeness of the information that is not prepared by us and no liability is accepted for any errors it may contain. The information contained in this blog is of a general nature only, does not take into account your objectives, financial situation, or needs, and is not to be taken into account as containing any personal investment advice or recommendation. No warranty is provided as to the accuracy, reliability, and completeness of the information in this publication and you rely on this information at your own risk. Any past performance information in the publication is not a reliable indicator of future performance.
Note: The Bloom Climate Impact Fund is an actively managed fund. Accordingly, the investments described in this article may not be an exact reflection of the Bloom Climate Impact Fund holdings.
The information in this post is prepared by Bloom Impact Investment Services Pty Ltd (ACN 651 965 098 AR 001294778), who is an authorised representative of Cache Investment Management Pty Ltd (ACN 624 306 430 AFSL 514 360) (Cache). Any financial products described in this post will be issued by Melbourne Securities Corporation Limited (ACN 160 326 545, AFSL 428 289), as disclosed in the relevant product disclosure statement. All information is general information only and does not take into account your personal circumstances, financial situation or needs. Before making a financial decision, you should read the relevant Product Disclosure Statement and Target Market Determination and consider whether the product is right for you and whether you should obtain advice from a professional financial adviser.