Global wind energy midyear outlook
Bloomberg Intelligence
This analysis is by Bloomberg Intelligence Senior Analyst Rob Barnett, with contributing analysis by Alessio Mastrandrea. It appeared first on the Bloomberg Terminal.
Global wind installations are poised to set a record in 2024, at about 125 gigawatts for the first time vs. about 117 GW in 2023, and we believe a double-digit growth pace is achievable in 2025-26. More than half of this year’s capacity additions are likely to be in China, with the country’s largest turbine manufacturer, Goldwind, set to boost top-line expansion 10%, based on consensus. Growth expectations are a tad higher for European manufacturer Vestas, and we see potential upside to analysts’ 2025-26 numbers for most equipment suppliers. The peer group’s profit, led by Vestas, could rebound significantly amid lower steel prices and higher turbine prices.
Three keys for 2H: Global solar energy
Key Drivers
Wind stocks trail broader market, energy peers on elections hit
Wind-energy shares fell about 3% in 2024, based on the median company in BI’s wind-theme basket, against a 6% uptick for the MSCI World Energy Index and 10% for Bloomberg’s World Index. Wind-valuation metrics trail the broader market amid a pullback in share prices and muted profit expectations for some companies.
Tepid sales pace likely held back shares
Underperformance of wind-energy shares so far in 2024 vs. the Bloomberg World Large & Mid Cap Index can probably be attributed to concerns over elections in Europe and the US. Orders are nevertheless off to a strong start in 1H amid expectations for rapid growth in 2024, with policy support likely to buoy wind-turbine demand. These drivers may help boost the fairly tepid consensus sales growth for most manufacturers in 2024-26, despite efforts to reduce demand for coal and other fossil fuels as part of governments’ net-zero ambitions.
Since its IPO, GE Vernova’s shares modestly outperformed the median company in BI’s wind theme basket so far in 2024, possibly due to the expectations of rising profitability this year.
BI Wind Theme Basket vs. BI World Index
Wind valuations fall below broader market
Wind-valuation metrics have dipped below the broader market and the median company in our wind-theme basket has a forward 12-month EV-to-Ebitda multiple of 9.3x vs. 12x for Bloomberg’s World Index. While Vestas’ valuation appears high by comparison (EV-to-Ebitda multiple of about 12x), it has fallen to about one standard deviation below its five-year average and we believe this is primarily due to increased profit expectations following the easing of steel prices and supply chain disruption.
Steel prices are down about 50% compared with the March 2022 peak, and with manufacturers locking in decade-high turbine prices, 2024 Ebitda at some companies could surpass consensus expectations.
BI Wind Theme Basket: EV-to-Ebitda Multiples
Valuation metrics: Wind-turbine manufacturing peers
Blended 12-Month EV-to-Ebitda Multiples
Top performers and laggards: BI wind-theme basket
YTD Performance as of May 31 Via MRR<GO>
Vestas, Goldwind, peers race to revitalize wind-market growth
Global wind additions could top 125 gigawatts (GW) in 2024 after rebounding to 117 GW last year, and there’s scope for that figure to soar to about 170 GW by 2028, with favorable policies including the Inflation Reduction Act and REPowerEU. Such a scenario could drive a significant surge in the orders of Vestas, Goldwind and peers.
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