Alger: The surprising cost of energy

Alger: The surprising cost of energy

31 maart 2021

Energietransitie
Windenergie.jpg

This is a piece written by Alger – a La Française partner firm. La Française AM Finance Services, in accordance with the terms of an agreement signed with Alger Management, Ltd, is a distributor of the Alger SICAV in Europe.

As technology improves, renewable energy continues to become more affordable. The  current cost of various forms of energy may surprise you, with potential implications for your portfolio.

  • The so-called levelized cost of energy (LCOE) allows us to compare the costs of various energy sources over the lifetime of equipment that generates power. It provides an apples-to-apples cost comparison per unit of energy output, incorporating not only the ongoing expense of energy generation but the capital costs as well.
  • Solar systems operated by utility companies and wind energy are now less expensive on average than traditional sources of energy such as natural gas and coal. This has changed over time due to advancement in technology, as Lazard estimates the LCOE of wind and solar have declined 27% and 43%,  respectively, over the past five years. We believe further declines are likely.
  • We believe that opportunity exists in companies exposed to renewable energy growth such  as producers of wind turbine blades, biofuels, inverters, batteries, and companies that install  solar equipment.

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