Goldman Sachs upgrades EDPR to Buy and reiterates Buy for RWE, citing improved pricing and return environments in US renewables. Re-shoring costs and strong power demand are driving structural re-pricing across the sector.
Key Takeaways
- 1.Rising US power demand, reduced competition, and re-shoring inflation support higher project returns (10-11% IRRs).
- 2.EDPR is upgraded to Buy due to significant US renewable exposure and potential for a re-rating.
- 3.Legacy renewable asset valuations are increasing due to rising replacement costs (capex/MW).
Table of Contents
- Re-pricing the US Renewable industry: EDPR upgraded to Buy (EDP up to Neutral)
- The cost of US re-shoring
- US renewables: stronger pricing and returns
- Replacement costs on the rise: the value of legacy is going up
- Upgrading EDPR to Buy on US tailwinds
- Reiterating our Buy rating on RWE. EDP upgraded to Neutral
- Enel and Naturgy: a timely strategic pivot?
- Valuation and key risks
- Disclosure Appendix
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Authors
Alberto GandolfiCarly DavenportBrian Lee, CFAMafalda PombeiroDhwani Khenwar
Securities
EDPRRWEEnergias de PortugalENEI.MI
Themes
US Renewable Energy Re-pricingImpact of Artificial Intelligence on Power DemandSupply Chain Re-shoring Inflation
Regions
EuropeUnited StatesSpainPortugal