President Biden is proposing as much as $2 billion in infrastructure spending over the next decade, which would be a massive investment in modernizing roads, bridges, and the electrical grid. For investors, a huge investment like this can not only grow the market for renewable energy stocks, it can fundamentally change our energy future.
We asked three of our Foolish contributors for their top picks if an infrastructure bill passes, and some of the biggest names in renewable energy popped to the top of the list. Here’s why Atlantica Sustainable Infrastructure (NASDAQ:AY), Equinor (NYSE:EQNR), and Bloom Energy (NYSE:BE) could be big winners for renewable energy investors over the next decade.
A parallel business model
Howard Smith (Atlantica Sustainable Infrastructure): President Biden has laid out his infrastructure package proposal, and it includes $100 billion to improve the nation’s electric grid and $27 billion as a “clean energy and sustainability accelerator.” While any final version of an infrastructure bill may not match exactly what Biden proposes, it seems likely that expanding the use of clean energy will be a focus.
Atlantica Sustainable Infrastructure’s business model has had that same focus. The company calls itself “a sustainable infrastructure company with a majority of our business in renewable energy assets.” About 70% of Atlantica’s revenue came from renewable energy assets in the first quarter ended March 31, 2021. The balance was split among efficient natural gas, transmission and transportation, as well as water infrastructure. Biden’s plan includes funds to grow those same assets, including $111 billion designated for water infrastructure improvements.
Atlantica’s business is doing well even without a boost from federal infrastructure spending. In the first quarter of 2021, the company closed the acquisition of a contracted renewable energy plant in California and a Chilean solar energy plant. It also announced an agreement for 49% interest in a 600 megawatt (MW) portfolio of wind assets in Illinois, Texas, Oregon, and Minnesota. That’s a relatively large addition to the 1,600 MW of renewable assets in which the company currently has full or partial ownership in operation. It also believes there is room to create added opportunity from the portfolio. On the first-quarter 2021 conference call, Atlantica CEO Santiago Seage told investors the added wind capacity will contribute to “further increasing and diversifying our presence in renewable energy in North America.”
Importantly for investors wanting income, in the first quarter, cash available for distribution grew 7.6% over the prior year period with revenue growing almost 12%. That helps support the dividend the company has been steadily increasing over the last three years.
Atlantica Sustainable doesn’t just operate in North America. It also grew its…
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