Clean Energy_2025 Outlook

Key Points Industry or Company Involved - Clean Energy Sector Core Views and Arguments - Long-term Load Growth and Decarbonization: - US generation expected to double by 2050 due to onshoring, electrification, data centers, and population growth. - Increased renewables mix driven by declining costs, government policies, and corporate net zero commitments. - Renewables Unsubsidized LCOE Remains Compelling: - Onshore wind, offshore wind, fixed-axis PV, tracking PV, battery storage, coal, gas, coal + CCS, gas + CCS, hydrogen, and nuclear all have compelling unsubsidized LCOE. - 2024 Year in Review: - Solar: Strong demand with above-average project timing delays. - Wind: Flattish growth, market fragmenting. - Storage: Remains highest growth area of renewables. - Gas turbines: Order activity implies beginning of new demand cycle. - 2025 Outlook: - Interconnection/permitting queues remain challenging. - JPM forecasts 100bp of US risk-free interest rate declines through summer-25. - Solar: Global deployments to grow ~11% y/y. - Wind: Global deployments to grow ~17% y/y. - Storage: Global deployments to grow ~35% y/y, excluding declines in China. - US Election Impact: - Expect volatility in the stocks until policy visibility improves. - JPM base case assumptions: IRA repeal unlikely, ITC/PTC likely remains, and 45X Advanced Manufacturing credits likely safe. - Trading Multiples at Multi-Year Lows: - Positive catalysts could lead to bounce off multi-year lows. - IRA certainty, permitting/interconnection progress, and direct/indirect data center project announcements as potential catalysts. - Top Picks: - Brookfield Renewable (BEP and BEPC) - First Solar (FSLR) - Hannon Armstrong (HASI) - Nextracker (NXT) Other Important but Potentially Overlooked Content - US Electricity Generation Capacity: - Source: US Energy Information Administration, J.P. Morgan. - Renewables Unsubsidized LCOE Remains Compelling: - Source: Bloomberg Finance L.P. - 2024 Year in Review: - Source: J.P. Morgan Estimates, Bloomberg Finance L.P. - 2025 Outlook: - Source: J.P. Morgan - US Election Impact: - Source: J.P. Morgan - Trading Multiples at Multi-Year Lows: - Source: J.P. Morgan Estimates, Bloomberg Finance L.P. Pricing as of 12/10/24. - Top Picks: - Source: J.P. Morgan - US Clean Energy Stock Coverage: - Source: J.P. Morgan - Disclosures: - Source: J.P. Morgan - Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe: - Source: J.P. Morgan - J.P. Morgan Equity Research Ratings Distribution, as of October 05, 2024: - Source: J.P. Morgan - Equity Valuation and Risks: - Source: J.P. Morgan - Other Disclosures: - Source: J.P. Morgan - Legal Entities Disclosures and Country-/Region-Specific Disclosures: - Source: J.P. Morgan - General: - Source: J.P. Morgan - Confidentiality and Security Notice: - Source: J.P. Morgan - Copyright: - Source: J.P. Morgan