Investing in UK Renewable Energy Stocks
Thanks to the transition to greener energy solutions and the ultimate goal of net-zero emissions by 2050, growth in renewable energy is forecast to increase in the coming years, which should benefit companies operating within the sector. In this article, we highlight 2 UK renewable energy stocks which could benefit from this transition.
UK Renewable Energy Stocks to Watch
In 2022, as Western nations unleashed a barrage of sanctions against world leading energy producer Russia, “energy security” became a hot topic around the world, and is likely to continue to be in 2024.
This desire for economies to become more energy self-sufficient, combined with the undeniably negative effect fossil fuels have had on our planet, seem to make the transition to renewable energy sources even more inevitable than it already was.
But which companies stand to benefit from this transition? In the following sections, we will look at 2 UK renewable energy stocks for investors to consider in 2024.
Greencoat UK Wind
Greencoat UK Wind is a closed-ended investment company which, as the name implies, invests in wind farms in the United Kingdom whilst providing investors with a dividend that increases in line with inflation.
The FTSE 250 constituent currently has 45 wind farm investments throughout the United Kingdom and is constantly on the lookout for new additions for its portfolio, recently acquiring a 12.5% stake in the Hornsea 1 wind farm – the largest offshore wind farm in the world.
In the first six months of 2022, the company’s portfolio generated 2,175GWh of renewable energy, enough to power 1.5 million homes. In the same time period, Greencoat reported revenue of £492 million and net cash generation of £329 million. At the time of writing, the stock pays a handsome dividend which yields 4.83%.
However, when investing in wind energy, it’s important to remember that generation capabilities are weather dependent. If the wind doesn’t blow, turbines don’t turn and, consequently, wind power alone may not be enough to satisfy consumer demand.
SSE
SSE is a multinational energy company which operates throughout the UK and Ireland and is a constituent of the UK’s premier stock index, the FTSE 100. At the time of writing, this stock has an attractive dividend yield of 5.12%, well above the FTSE 100 average of 3.55%.
SSE Renewables has a portfolio with a generation capacity of 4GW, consisting of onshore wind, offshore wind and hydro across the UK and Ireland, and is investing heavily to add further renewable capacity. The company has committed £12.5 billion over the next four years to investment in renewable energy and the electricity infrastructure necessary for net-zero.
Nevertheless, despite the increasing focus on renewable energy, it still accounts for only a small percentage of the company’s operating profit. In the six months ended 30 September 2022, SSE’s adjusted operating profit was reported at £716m, but just £22.5m of this was generated by SSE Renewables.
Conversely, more than 50% of the company’s adjusted operating profit was generated from its electricity transmission and distribution businesses, and 35% by SSE Thermal & gas storage.
How to Invest in UK Renewable Energy Stocks
With Admirals, you can buy shares in SSE and over 4,500 other listed companies and more than 200 Exchange-Traded Funds (ETFs) from around the world. In order to start investing in UK renewable energy stocks, firstly register for an Invest.MT5 account and then follow these steps:
- Log in to the Trader’s Room
- Find your account details in the Dashboard and then click ‘Invest’ to open the MetaTrader WebTrader
- Search for the desired stock in the Market Watch and drag its symbol into the chart space to open a price chart
- Click the ‘New Order’ button at the top of the chart to bring up the order window, where you can select the number of shares you wish to purchase before sending your order to the market!
Investing with Admirals
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