6 energy stocks to hold despite stranded gas projects worth billions

Highlights

• Companies building new UK gas power plants are at a risk of losing £2.6 billion, according to a recent report by Carbon Tracker.
• A majority of the gas plants, which are being planned or are under construction in Europe and the US, won’t breakeven as per the report.
• Coal power plants are being replaced by gas in many countries while the UK is transitioning towards renewables.

A recent report has stated that companies that are building new UK gas power plants are at a risk of losing US $ 3.5 billion dollars (£2.6 billion) as they will be obligated to leave them before clawing back their investment. A majority of the gas plants which are being planned or are under construction in Europe and the US won’t breakeven, and it will happen rather earlier if the recent high prices prevail, as per the report compiled by the financial think tank Carbon Tracker. Approximately, US $24 billion (£17.5 billion) will potentially be stranded in these new plants in the US alone.

Coal power plants have been replaced by gas in many countries over the past decade for reducing carbon emissions from their power sectors. However, the UK has practically reached its limit to cut emissions this way. Coal contributed towards a quarter of electricity needs of Britain around half a decade ago, which went down to just 1.6% of the electricity mix in 2020. Now, the focus is on the elimination of gas from the electricity mix. Recently, the Boris Johnson Government pledged that electricity will be entirely green in the UK by 2035.

Carbon Tracker senior analyst Jonathan Sims said that gas units may not run for their full life spans as they are incompatible with the climate targets in the long run, and thus the investors backing gas instead of renewables are putting themselves at risk while ignoring the higher returns from the clean energy sector.

Around 22% of the 835 operational gas plants in Europe were already making losses as per 2019 data used by Carbon Tracker. This doesn’t consider the recent surge in gas prices.

RELATED READ: Govt to give loans amid energy crisis: 5 stocks to buy now

Let’s take a look at some of the energy stocks you can hold considering the present scenario.

Royal Dutch Shell Plc (LON: RDSA)

Royal Dutch Shell Plc, also known as Shell, is a global oil and gas company. Its current market cap is £65,236.38 million, and it gave a return of 88.74% in 1 year. The previous close price of Royal Dutch Shell Plc’s shares was GBX £1,790.00 as of 18 October 2021.

BP plc (LON: BP)

BP plc is a UK-based oil and gas company with current market capitalisation of £72,218.85 million. It has given a return of 72.23% in 1 year. The previous close price of BP plc’s shares was GBX 361.45 as of 18 October 2021.

Ceres Power Holdings plc (LON: CWR)

Ceres Power Holdings plc is a UK-based company aiming to tackle the problems of climate change by providing clean energy. Its current market capitalisation stands at £2,039.08 million and it has given a return of 58.42% in 1 year. The previous close price of Ceres Power Holdings plc’s shares was GBX 1,070.00 as of 18 October 2021.

RELATED READ: Top 5 FTSE green stocks to buy as UN climate talks kick off

AFC Energy plc (LON: AFC)

AFC Energy plc is a clean energy champion and provides hydrogen fuel cell power systems. Its current market cap stands at £392.95 million, and it has given a return of 212.79% in 1 year. AFC Energy PLC’s shares were trading at GBX 53.50 as of 18 October 2021.

ITM Power Plc (LON: ITM)

ITM Power Plc manufactures hydro energy solutions based on Proton Exchange Membrane (PEM) technology, which is related to green energy. Its current market cap stands at £2,550.65 million, and it has given a return of 70.71% in 1 year. The previous close price of ITM Power Plc’s shares was GBX 463.20 as of 18 October 2021.

EQTEC PLC (LON: EQT)

EQTEC PLC is a global bioscience energy company and specialises in gasification technology. It has a green economy mark on the LSE and its current market capitalisation is £107.04 million, and it has given a return of 132.19% in 1 year. The previous close price of EQTEC PLC’s shares was GBX 1.25 as of 18 October 2021.

RELATED READ: Top Global Solar Energy Stocks To Watch