Morgan Stanley’s Rob Pulleyn reviews global energy demand figures and his growth estimates. Demand has tripled since 1980 and Rob believes that by 2030 we will continue to see strong growth, 26% faster (especially ex China). Rob believes that this boost to demand will mean an increase in energy prices of 20-25% vs 2019 and therefore an improvement in returns for power generation companies that would drive them to record margins.
We have already seen a 15%+ increase in long-term power contract prices this year, given expectations of demand versus capacity, which he believes is slowing. Rob believes the beneficiaries of this development will be power-plays, grid operators, equipment supply and integrated utilities… among them Rob highlights Tenaga, Vistra, Kansai Electric, Tata Power, RWE, EDP, Orstead, Longyuan (H-share), Reliance, First Solar, GE Vernova, Mistsubishi heavy, Siemens Energy. Rob believes we could see up to a +20% increase in consensus earnings for the companies benefiting from this growth and a 90-290bps increase in ROE for the major OWs.
