Stocks that could benefit from the new UK energy plan

A few weeks ago, the UK government announced the plan to reinforce the energy independence of the country after the conflict between Russia and Ukraine. Among other things, the plan calls for new offshore wind and nuclear platforms, as well as more ambitious targets for “green” hydrogen. So let's take a look at each of those areas and the stocks of those companies that could benefit.

Nuclear

The energy plan aims to triple nuclear power capacity to 24 gigawatts by 2050, with small modular reactors (SMR) that form a key part of the nuclear project portfolio. SMRs are small nuclear reactors that can be built on production lines since their design is standardized y modular. That makes them a lot cheaper and faster to produce than traditional large-scale reactors, which are notoriously more complex y expensive. But here's the problem: SMR technology is still in development and has not yet gained formal regulatory approval.

In the United Kingdom, an industrial consortium led by Rolls-Royce They are the pioneers in the development of technology. Last year it raised £400m for submit your SMR design to the rigorous UK nuclear regulation process. If approved, the consortium could end up as the only group authorized to build and sell SMR at a time when the government seeks to accelerate the country's nuclear energy capacity. That could generate unexpected income all with Rolls-Royce and help give its share price a much-needed boost: it has dropped as low as 65% the quoted value in the last five years.

But it goes without saying that investing in a single company with ongoing regulation in the sector can be risky. So another (and possibly the safest) way to turn the UK's ambitious nuclear plans into an investment opportunity is to invest in nuclear-related stocks. uranium. The triplication of the capacity of nuclear energy in the United Kingdom and the nuclear expansion in other places it will naturally lead to a increase in the demand of uranium, which is the «fuel» of a nuclear plant. He Global X Uranium ETF (URA) invests in a wide range of companies involved in uranium mining and nuclear component manufacturing.

Offshore wind energy 

The energy plan aims to quintuple la capacity de offshore wind power a 50 gigawatts all with 2050, compared to the previous goal of 40 gigawatts. This will benefit two industries: offshore wind energy developers and wind turbine manufacturers. In the first, Orsted is the largest producer of offshore wind energy in the world and has a large presence in the UK. Other big players include SSE Renewables y RWE. 2022/05/curso-formacion-inversion-financial-27.png Best offshore wind energy producers in the United Kingdom. Source: Wood Mackenzie On the latter, the majority of existing offshore wind projects in the UK use wind turbines of Vestas o Siemens Games. The successful operating histories of these companies show us that developers will likely stick to them in the future as well.

Hydrogen

The new energy plan doubles the objective of hydrogen previous government with a target of projects worth 10 gigawatts all with 2030, with at least half coming from “green” hydrogen. Hydrogen can become a key form of store energy in a world increasingly reliant on inconsistent wind and solar energy. He surplus de electricity generated from these renewable sources can be used for the electrolysis, where water molecules are split into hydrogen and oxygen atoms using electricity. The hydrogen produced (called "green" hydrogen since it is produced using renewable sources) can be stored and used to produce electricity cleanly using fuel cells when the sun is not shining and the wind is not blowing. And unlike conventional batteries, hydrogen can be stored for months without losing much energy.

We have different ways to invest in the hydrogen sector. ITM power, NEL y Cummins They make electrolyzers, and the latter also makes hydrogen fuel cells. Companies like Bloom Energy, Ballard Power Systems, Plug power, Ceres Power y powercell. However, a word of caution: many of these companies are not yet profitable. So we can use this list as a starting point of stocks to watch. Alternatively, we can gain exposure with the Global X Hydrogen ETF (HYDR), which invests in companies that will benefit from the advancement of the global hydrogen industry.