Goldman Sachs said in a research note Thursday the recent energy sector pullback should be viewed as a reason to buy since that strategy has worked well since late 2020. Thinking along those lines, we did add to one of our three oil exploration and production (E & P) stocks twice this month. However, we’re currently debating whether we need that much exposure to an industry so tied to the economy. West Texas Intermediate crude and energy stocks have been under intense pressure in recent weeks on the back of heightened recession fears. While debated for months, worries about the economy and how it might impact oil demand have increased following fallout from the banking crisis and concern about the Federal Reserve hiking interest rates too much. @CL.1 YTD mountain West Texas Intermediate crude YTD performance At a high level, Goldman concedes that recession risks are “more elevated than in the past.” How could they not be following the second and third largest bank blowups in U.S. history and the ripple effect across the financial industry. However, Goldman only puts 35% odds on a recession, leading analysts to reason that an economic hard landing won’t likely break oil’s buy-the-dip streak. The Goldman note pointed out that six major energy pullbacks — three in 2021 and three in 2022 — each translated into “a meaningful buying opportunity.” But, given the elevated uncertainty, the analysts are focused on what they view as quality producers with attractive valuations, meaning those with “strong balance sheets, deeper inventories and lower cost assets.” Based on that criteria, Goldman has Pioneer Natural Resources (PXD) on its “Americas Conviction List” with a buy rating. Similar to Goldman, the analysts at Citi also like Pioneer, saying it’s in a position to realize increased well productivity starting in the second half of 2023 and see increased capital efficiency into 2023. In research note Thursday, Citi upgraded PXD to a buy rating and boosted its price target to $210 per share from $193. The stock closed Thursday just above $189 per share. The Club likes and owns Pioneer, too. It’s the E & P we’ve been buying lately — adding 25 shares on March 13 and 25 more shares Monday . Both were small buys in down markets, bringing our total ownership position to 175 shares for an overall portfolio weighting of 1.3% as of Thursday’s close. The Goldman and Citi updates are certainly welcome as they clearly support our view that Pioneer’s low crude break-even levels and strong cash flow profile are supportive of continued shareholder returns, especially should energy demand rebound from current levels. As for our two other E & P stocks, we’re leaning toward booting Devon Energy (DVN) and keeping Coterra Energy (CTRA), which we bought more of in early February on a collapse in natural gas prices. Both of them carry less than a 1% weighting in our portfolio. Coterra, unlike the others, is about 50/50 oil and nat gas. Influencing our inclination to hold on to Coterra is management’s recent guidance to prioritize buybacks over the company’s base dividend and variable dividend in their mission to return at least 50% of free cash flow to shareholders. The team believes Coterra shares are among the most attractive opportunities in the market. That’s what makes a good buyback. A large variable dividend is nice, but it’s a onetime payout based on recent free cash flow generation with no guarantee that the size will remain the same to the next payout. By repurchasing shares, management is increasing the ownership stake for existing shareholders forever, barring any future equity sales, which we see no need for. If you own more of the company then the next time WTI prices increase, you stand to make much more money should management determine that a larger variable payout is warranted because you have a greater right to the free cash flow than you would have if fewer shares were repurchased. Recognizing the ups-and-downs of owning energy stocks, we still believe they should be part of any diversified portfolio. When we first moved into the energy sector in late 2021, we viewed the holdings as a hedge. The thinking: Should energy prices continue to climb, we would make money while our other holdings — those that have energy as an input cost — took a hit as the higher prices would pressure margins. Recently, we’re starting to see the opposite dynamic. However, the E & Ps we own do throw off lots of cash to shareholders, basically paying us to be patient as we figure things out. (Jim Cramer’s Charitable Trust is long PXD, DVN, CTRA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
A work-over rig performs maintenance on an oil well in the Permian Basin oil production area near Wink, Texas August 22, 2018.
Nick Oxford | Reuters
Goldman Sachs said in a research note Thursday the recent energy sector pullback should be viewed as a reason to buy since that strategy has worked well since late 2020. Thinking along those lines, we did add to one of our three oil exploration and production (E&P) stocks twice this month. However, we’re currently debating whether we need that much exposure to an industry so tied to the economy.
Wind energy powered 20% of all electricity consumed in Europe (19% in the EU) in 2024, and the EU has set a goal to grow this share to 34% by 2030 and more than 50% by 2050.
To stay on track, the EU needs to install 30 GW of new wind farms annually, but it only managed 13 GW in 2024 – 11.4 GW onshore and 1.4 GW offshore. This is what’s holding the EU back from achieving its wind growth goals.
Three big problems holding Europe’s wind power back
Europe’s wind power growth is stalling for three key reasons:
Permitting delays. Many governments haven’t implemented the EU’s new permitting rules, making it harder for projects to move forward.
Grid connection bottlenecks. Over 500 GW(!) of potential wind capacity is stuck in grid connection queues.
Slow electrification. Europe’s economy isn’t electrifying fast enough to drive demand for more renewable energy.
Brussels-based trade association WindEurope CEO Giles Dickson summed it up: “The EU must urgently tackle all three problems. More wind means cheaper power, which means increased competitiveness.”
Permitting: Germany sets the standard
Permitting remains a massive roadblock, despite new EU rules aimed at streamlining the process. In fact, the situation worsened in 2024 in many countries. The bright spot? Germany. By embracing the EU’s permitting rules — with measures like binding deadlines and treating wind energy as a public interest priority — Germany approved a record 15 GW of new onshore wind in 2024. That’s seven times more than five years ago.
If other governments follow Germany’s lead, Europe could unlock the full potential of wind energy and bolster energy security.
Grid connections: a growing crisis
Access to the electricity grid is now the biggest obstacle to deploying wind energy. And it’s not just about long queues — Europe’s grid infrastructure isn’t expanding fast enough to keep up with demand. A glaring example is Germany’s 900-megawatt (MW) Borkum Riffgrund 3 offshore wind farm. The turbines are ready to go, but the grid connection won’t be in place until 2026.
This issue isn’t isolated. Governments need to accelerate grid expansion if they’re serious about meeting renewable energy targets.
Electrification: falling behind
Wind energy’s growth is also tied to how quickly Europe electrifies its economy. Right now, electricity accounts for just 23% of the EU’s total energy consumption. That needs to jump to 61% by 2050 to align with climate goals. However, electrification efforts in key sectors like transportation, heating, and industry are moving too slowly.
European Commission president Ursula von der Leyen has tasked Energy Commissioner Dan Jørgensen with crafting an Electrification Action Plan. That can’t come soon enough.
More wind farms awarded, but challenges persist
On a positive note, governments across Europe awarded a record 37 GW of new wind capacity (29 GW in the EU) in 2024. But without faster permitting, better grid connections, and increased electrification, these awards won’t translate into the clean energy-producing wind farms Europe desperately needs.
Investments and corporate interest
Investments in wind energy totaled €31 billion in 2024, financing 19 GW of new capacity. While onshore wind investments remained strong at €24 billion, offshore wind funding saw a dip. Final investment decisions for offshore projects remain challenging due to slow permitting and grid delays.
Corporate consumers continue to show strong interest in wind energy. Half of all electricity contracted under Power Purchase Agreements (PPAs) in 2024 was wind. Dedicated wind PPAs were 4 GW out of a total of 12 GW of renewable PPAs.
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In the Electrek Podcast, we discuss the most popular news in the world of sustainable transport and energy. In this week’s episode, we discuss the official unveiling of the new Tesla Model Y, Mazda 6e, Aptera solar car production-intent, and more.
As a reminder, we’ll have an accompanying post, like this one, on the site with an embedded link to the live stream. Head to the YouTube channel to get your questions and comments in.
After the show ends at around 5 p.m. ET, the video will be archived on YouTube and the audio on all your favorite podcast apps:
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Here’s the live stream for today’s episode starting at 4:00 p.m. ET (or the video after 5 p.m. ET):
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The Chinese EV leader is launching a new flagship electric sedan. BYD’s new Han L EV leaked in China on Friday, revealing a potential Tesla Model S Plaid challenger.
What we know about the BYD Han L EV so far
We knew it was coming soon after BYD teased the Han L on social media a few days ago. Now, we are learning more about what to expect.
BYD’s new electric sedan appeared in China’s latest Ministry of Industry and Information Tech (MIIT) filing, a catalog of new vehicles that will soon be sold.
The filing revealed four versions, including two EV and two PHEV models. The Han L EV will be available in single- and dual-motor configurations. With a peak power of 580 kW (777 hp), the single-motor model packs more power than expected.
BYD’s dual-motor Han L gains an additional 230 kW (308 hp) front-mounted motor. As CnEVPost pointed out, the vehicle’s back has a “2.7S” badge, which suggests a 0 to 100 km/h (0 to 62 mph) sprint time of just 2.7 seconds.
To put that into perspective, the Tesla Model S Plaid can accelerate from 0 to 100 km in 2.1 seconds. In China, the Model S Plaid starts at RBM 814,900, or over $110,000. Speaking of Tesla, the EV leader just unveiled its highly anticipated Model Y “Juniper” refresh in China on Thursday. It starts at RMB 263,500 ($36,000).
BYD already sells the Han EV in China, starting at around RMB 200,000. However, the single front motor, with a peak power of 180 kW, is much less potent than the “L” model. The Han EV can accelerate from 0 to 100 km/h in 7.9 seconds.
At 5,050 mm long, 1,960 mm wide, and 1,505 mm tall with a wheelbase of 2,970 mm, BYD’s new Han L is roughly the size of the Model Y (4,970 mm long, 1,964 mm wide, 1,445 mm tall, wheelbase of 2,960 mm).
Other than that it will use a lithium iron phosphate (LFP) pack from BYD’s FinDreams unit, no other battery specs were revealed. Check back soon for the full rundown.