In sharp contrast to the crisis in the oil market, and renewed questions about investment in oil and gas projects, one of the world’s leading maritime brokerage and investment banking firms says offshore wind developers are faring well as the Covid-19 pandemic ravages share prices
Echoing comments from financial advisory firm Green Giraffe published by OWJ recently, Clarksons Platou Securities says the bottom line is that ‘investor appetite for offshore wind is undiminished.’
In an analysis of the offshore wind market, Clarksons Platou Securities renewable energy investment banking specialist Viktor von der Fehr said although offshore wind stocks had been hit by the steep fall in share prices because of the Covid-19 pandemic, in the last three months, offshore wind developers have performed well (-16%) compared to the total market (-23%), because of the stability of their cash flows.
“Equinor, with its oil and gas focus, has suffered the most,” said Mr von der Fehr. “Ørsted and Iberdrola are the best performers in the offshore wind group, each having dropped only 1% and 3% in the last three months, respectively.”
Mr von der Fehr said shares in turbine OEMs are down 23% on average in the last three months, matching the broader European stock market. Siemens Gamesa Renewable Energy has outperformed the market, in part due to parent-company Siemens AG increasing its stake in the company, closely followed by Vestas. However, GE has fallen 45% and is suffering from its broader economic exposure, despite its success in winning orders in offshore wind for its new 12-MW turbine.
The investment banker said the offshore wind supply chain has been hit hardest of all offshore wind segments, with stocks down 30-70% in the last three months. “This may in part reflect the small size and low trading volumes in their respective stocks,” said Mr von der Fehr. “Such stocks often fall out of favour in bear markets.”
He noted that foundation player Sif with its clean balance sheet has performed best, followed by wind turbine installation vessel owner Bonheur (Fred Olsen). In contrast, crew transfer vessel provider Seacor Marine (Windcat) has been hurt by its oil and gas exposure.
“Current capital markets are all about high volatility and low visibility,” said Mr von der Fehr. In contrast, he said, “The equity story for investing in offshore wind remains intact. Operating offshore wind offers exposure to highly attractive market dynamics.”
He said that uncorrelated returns are sheltered from several factors impacting the general economy and noted that offshore wind has ‘unmatched scale of investment opportunity’ and long-term stable cash flows with highly predictable returns.
“Offshore wind is perfectly positioned in the new ESG paradigm,” he concluded. “The transition is already well underway and key economic drivers remain in place.“ The bottom line is continued investor interest in new renewable energy and offshore wind opportunities.