Is the energy transition overhyped or underrated?

Jacob Mitchell, CIO at Antipodes Partners, took on the energy transition mega-trend during the Livewire Live global equities panel session entitled "Overhyped or Underrated?" You can read more about that panel in this wire from my Livewire colleague, Glenn Freeman. 

Most energy transition sceptics tend to point to the cost of executing this transition. It is, in their view, too much to pay for something (climate change) which may never occur. But for Mitchell, this is one trend that is actually underrated in terms of the investment required.

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"You need to invest a couple of percentage points of GDP into the grid. And what's more, you need to do that for the next couple of decades", he said but reminded investors that "the waiting period is a long time."

As investors, that means finding companies that are able to both execute and profit from these long-term policy tailwinds. In the following clip, Mitchell will nominate a company in which the Antipodes team has a long-term holding, and that they believe stands to benefit from the long and winding transition.

And while he regards offshore wind power as the most efficient solution for boosting the grid, it's not as simple as making any investment. 

"It’s rolling out renewables in a market where I think you will get a response because many of the utilities are regulated asset based, integrated utilities. So they don’t take a price risk on the project. So they get paid whatever, so long as they deliver the power. They get a regulated return," Mitchell said. 

If these integrated utilities are not taking the price risk on renewables, then who is? Watch the video below for his full insights. 

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