Green energy isn't just good for the environment – it could also be big business.
As part of this year's Federal Budget, Australian Treasurer Jim Chalmers announced that the government is planning to invest a whopping $22.7 billion in decarbonisation through its 'Future Made in Australia' package.
Given Australia's abundant sunlight and windswept coastlines, the government believes we could quickly grow into a 'renewable energy superpower'. Now, it wants to light a fuse under our fledgling green energy sector.
But Australia isn't alone – governments all over the world are investing in renewables. According to the World Economic Forum, America has invested an eye-popping US$559 billion in clean energy since 2020, and Germany's not too far behind at US$339 billion.
This could make green energy a real growth sector to invest in over the next decade.
Although – a little surprisingly – when it comes to genuine green energy ASX stocks, there aren't too many Australian companies available to choose from.
Sure, Origin Energy Ltd (ASX: ORG) can talk up its solar and wind energy credentials, but it still owns Eraring, Australia's largest coal-fired power plant. And AGL Energy Limited (ASX: AGL) may offer some renewables, but it's also Australia's biggest carbon emitter.
This might leave investors seeking green energy exposure feeling a little downtrodden. But don't despair – the Kiwis have got us covered. There are not one, not two, but three New Zealand-based 100% green energy companies currently trading on the ASX.
Mercury NZ Ltd (ASX: MCY)
First up is Mercury NZ. It is a diversified utilities company that supplies electricity, as well as broadband and mobile services to its customers. All its electricity comes from renewable sources, including hydro, geothermal, and wind.
In its 1H24 results, covering the six months ended 31 December 2023, total revenues jumped by 23% versus 1H23 to NZ$1.6 billion. However, higher operating expenses, mainly driven by depreciation on its new wind farms at Turitea and Kaiwera Downs and higher borrowing costs, drove net profit after tax (NPAT) 27% lower (to NZ$174 million).
Despite the drop in net income, management remains bullish about the company's growth prospects and is investing heavily in new energy assets. In September 2023, the company committed NZ$220 million to expand its geothermal station at Ngā Tamariki and is also planning to significantly increase capacity at its Kaiwera Downs wind farm.
Meridian Energy Ltd (ASX: MEZ)
Meridian Energy is New Zealand's largest energy producer, and it generates all of its energy from renewable sources.
The company owns and operates six power stations in the Waitaki Hydro Scheme, with a further two owned and operated by Genesis Energy Ltd (ASX: GNE) – yet another New Zealand energy company ASX investors can buy shares in (although it also owns the Huntley Power Station, NZ's largest coal-fired power plant). Together, the eight power stations in the Hydro Scheme supply 16% of New Zealand's electricity.
Meridian also owns and operates the underground Manapouri Power Station, the largest hydropower station in New Zealand. In addition to its hydro assets, Meridian also has a significant number of wind farms – plus, it offers solar energy plans where it buys back excess energy from households and businesses with solar panels installed.
Infratil Ltd (ASX: IFT)
Completing our New Zealand-based trifecta is Infratil. It's an interesting addition to this list as it's actually an investment company that owns a number of green energy assets, along with investments in healthcare, digital infrastructure (like data centres and telecommunications networks), and even Wellington International Airport.
Infratil takes a long-term approach to its investment choices, which makes it a good stock to look at for growth investors. It taps into many emerging growth investing themes, from artificial intelligence to an ageing population to (of course) green energy and decarbonisation.
Infratil has a globally diversified portfolio of renewable energy investments, including a 51% stake in hydroelectricity generator Manawa Energy Ltd (NZE: MNW), a 95% stake in Singapore-based wind and solar energy company Gurīn Energy, and a 40% stake in Swiss-based company Galileo, which has operations all across Europe.
