The Transformation of the Energy Landscape: A Slow but Steady Transition

The transition to clean energy is progressing, albeit more slowly than many had predicted. While renewable energies are the focus of future energy supply, established energy sources like natural gas and nuclear power remain relevant. Therefore, it is worthwhile for investors to consider companies such as GE Vernova, Baker Hughes, and Cameco. According to a report by McKinsey, the shift towards renewable energies is stalling due to rising costs, complexity, and technological challenges. Despite progress, fossil fuels are expected to account for 52% of global energy demand in 2050, as opposed to the 39% aimed for in McKinsey's "sustainable transformation" scenario. However, these challenges also present opportunities. GE Vernova, for instance, has recorded significant growth rates due to the increasing demand for natural gas. Since its spin-off from General Electric, the company's stock value has doubled. The company combines business areas such as gas turbines, wind power, and power grid solutions, benefiting from heightened demand in the energy sector. Similarly, Baker Hughes appears to be benefiting from this development. In particular, its natural gas and industrial technology business is experiencing strong growth. CEO Lorenzo Simonelli forecasts that the demand for natural gas will increase by almost 20% by 2040, driven by applications in data centers and the crypto and AI industries. Besides natural gas, nuclear energy impresses with its reliability. An example is the agreement between Microsoft and Constellation Energy to reactivate the Three Mile Island nuclear power plant. This underscores the interest in stable energy sources to support the enormous data center performance. Vistra saw a surge in its stock in anticipation of similar agreements, and Cameco considers itself well-positioned to benefit from the increased investment needs in nuclear power plants. The willingness of cloud service providers to invest in secure and carbon-free energy sources could bolster Cameco's demand in the long term.