Investor interest in renewable energy is rising as the Iran war underscores the importance of energy security.
On the 3rd (local time), global financial research and investment analysis firm Morningstar said that $3 billion (about 4.4 trillion won) flowed into global exchange-traded funds (ETFs) related to renewable energy in April, lifting total net worth to $43 billion (about 63 trillion won). That was the largest monthly net inflow since January 2021.
The S&P Global Clean Energy Transition Index, which tracks global renewable energy corporations, also outperformed the S&P Global Oil Index over the same period. With negotiations stuck, the S&P Global Clean Energy Transition Index's gains have widened this month, the Financial Times (FT) reported.
Industry officials say the war has become a direct catalyst for expanding investment in renewable energy. With oil prices soaring to a record high in four years, analysts say energy security through securing renewables has emerged as a key issue.
In fact, since the outbreak of war, Brent crude, the international oil price benchmark, has surged from about $70 a barrel to $126 last week, marking a record high in four years. It has since fallen to around $106 after the United States announced the launch of a convoy operation to protect neutral ships stranded in the Strait of Hormuz.
Charles de Boisséson, global head of equity strategy at Société Générale, said, "On the surface, it may look like a renewable rebound, but in reality it is investment in energy security," adding, "Even though policy backtracking and uncertainty in the United States could have dampened clean energy investment, they instead acted as a tailwind."
Experts expect the shift to renewable energy to accelerate further. Deepa Venkateswaran, a clean energy analyst at Bernstein, said that while the surge in energy prices may be a short-term boon for fossil-fuel corporations, "in the long term it will lead to reduced demand," adding, "The need for renewables and electrification is greater than ever."
In the United States, the need to secure all forms of energy, including renewables, is also growing to support the build-out of artificial intelligence (AI) infrastructure. Nordea Asset Management Chief Investment Officer (CIO) Kasper Elmgreen said, "In the United States, the key challenge is how to provide enough power to AI data centers," adding, "It's an all-of-the-above situation that requires both expanding generation capacity and investing in the grid."
Shares of related corporations are also on the rise. Bank of America in late March upgraded its rating on Danish offshore energy corporation Ørsted to "overweight," saying, "The Middle East war will accelerate Europe's break from dependence on fossil fuels, and offshore wind will be a major beneficiary." The company's stock, which was hit last year when the Donald Trump administration halted U.S. wind projects, has risen 37% so far this year.
Nordex, a wind-turbine maker listed on the Frankfurt stock exchange, is up 67% so far this year. Acciona, the largest shareholder of Nordex and a Spanish renewable energy corporation, is up 33%. Shares of Germany's Siemens Energy, which supplies gas power equipment and grid technology, have also risen 50%.