Power generator Drax (980p target), Centrica (112p target price) and SSE (2000p target) are the key UK utility beneficiaries of the new energy strategy unveiled by the government today, says Barclays.
Nuclear energy in particular is poised to become a huge investment theme following the policy update, according to the bank’s analysts.
Boris Johnson’s proposals target 25Gw of new nuclear capacity by 2050, or 25% of Grid supply, compared to 4.5Gw currently.
The statement also included details of nuclear plans, technology types and plans for waste fuel disposal, including underground.
Eight new reactors are planned this decade alone with new small reactors or mini-nukes to form part of the pipeline.
Sizewell C, a 3.2GW reactor to cost c.£20bn, and Wylfa (2.7GW) are likely to get the go ahead as soon as possible believes the bank.
“We believe nuclear will become a huge theme.”
Offshore wind targets were also raised to 50Gw by 2030, against 40Gw previously.
The UK recently allocated offshore wind leases with 25Gw in ScotWind and 8Gw in England and Wales.
“With 10Gw already commissioned, 7Gw under construction, and a further 12Gw of sites under development this 50GW target is eminently achievable – albeit it would need some floating wind farms in the mix – the Govt estimates this at 5GW.”
Hydrogen capacity targets were also doubled from 5GW to 10GW hydrogen by 2030, with at least half from green hydrogen – utilising excess offshore wind power.
Shares in SSE rose by 0.4% to 1,812p, British Gas owner Centrica by 1.4% to 81.7p and Drax 1% to 840.5p.