Mixing political preference with portfolio strategy is often hazardous to your wealth, cautions Roger Conrad, sector expert and editor of Conrad's Utility Forecaster.
Nonetheless, elections have consequences, especially for highly regulated industries like electric utilities. And former vice president Joe Biden’s prospective energy plans have loomed large for this sector for some time.
To change American energy policy, a prospective Biden administration would have to work with industry. The irony is the electricity sector is already well down the road it wants to take.
For example, a number of utilities have already pledged to reach net zero CO2 emissions within the 2040 to 2050 time frame.
That includes the companies that historically have been the largest users of coal such as American Electric Power (AEP), Dominion Energy (D), Duke Energy (DUK), Southern Company (SO) and Xcel Energy (XEL).
A prospective Biden Administration could actually get most of the way to its clean energy goals simply by letting industry do the job for it, and otherwise staying out of the way.
Offshore wind development is one great example. Indeed, swift action by a prospective Biden administration could accelerate activity quickly.
Doing so would greatly accelerate long-term earnings growth for lead developers like Avangrid Inc (AGR) and EverSource Energy (ES).
And it would also allow the industry overall to scale up much faster, cutting all-in costs. That would provide a major lift for Dominion Energy, which as of now has the only operating offshore wind project in US waters.
As America’s largest producer of wind and solar, it’s hardly surprising that shares of NextEra Energy (NEE) have gained steam as Biden has risen in polls. And so have shares of pure play renewable generators like Atlantica Sustainable Infrastructure PLC (AY).
