Renewables come to fore as Iran conflict continues
Neil Doherty, executive director at IFM Investors
Renewable energy and battery storage can potentially provide a strategic hedge against volatility in fossil fuel prices as their operations are not directly linked to movements in global commodity prices.
The price of natural gas has tended to shift materially due to difficult-to-control factors, including cold weather freezing well-heads (impacting domestic production) at the same time that additional heating would be required; pipeline constraints during periods of heavy demand; and geopolitical disruptions.
In contrast, renewables do not rely on fossil fuels as a critical energy input, providing a natural hedge against commodity price volatility during periods where renewables are able to satisfy electricity demand on their own. BESS can take this one step further by shifting periods of excess renewable energy supply into periods of low renewable supply.
Nader Hakimi Fard, portfolio manager at Storebrand Asset Management
The Iran conflict highlights the structural fragility of fossil fuel dependency and reinforces our conviction that renewables represent a national security imperative with more favourable long-term economics.
We invest across wind, solar and geothermal generation – but selectivity matters as much as the source. In solar, we focus on a combination of differentiated technologies with structural pricing power and global technology leaders with the scale and cost position to endure industry consolidation.
Wind offers compelling lifecycle economics including maturing service revenue models deliver recurring income beyond initial build-out, and offshore installation capacity constraints give incumbent operators durable advantages.
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Geothermal provides baseload renewable power that is naturally immune to the intermittency challenge — an underappreciated quality as grids absorb ever more variable supply. We exited hydrogen pure-plays a few years ago but would re-enter if the economics and commercialisation pathways become clearer.
What unites our positions is a conviction that the energy sources of the future should be domestically generated, scalable and operate independent of geopolitical chokepoints.
Paul Schofield, head of global equities at Royal London Asset Management
Rising oil prices linked to the Iran conflict have refocused investor attention on energy security, reinforcing the appeal of diversified and domestic energy systems. What has changed relative to past oil shocks is that many renewables are now genuinely cost competitive, which strengthens the investment case even if supply cannot be ramped up overnight.
Investors are favouring renewable assets with scale, policy support, and visible cashflows. In Asia, Chinese solar, wind and nuclear stocks have seen the strongest inflows, reflecting confidence in domestic supply chains and government backed energy security objectives.
Elsewhere, investors have tended to prefer regulated utilities, grid infrastructure, and electrification related assets over earlier stage transition technologies.
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While some renewable stocks have seen profit taking after a very strong start to the year (as interest rate cut expectations have faded) the underlying rationale remains structural: reduced reliance on imported fossil fuels, more resilient energy systems, and alignment between security, affordability, and decarbonisation goals.
Pascal Dudle, head of impact & thematic investing, and portfolio manager of the Vontobel Fund – Global Environmental Change
The global economy remains fragile in the wake of oil price shocks, and the current conflict reinforces again that energy security remains a key priority. This should accelerate investments in domestic electricity generation, in particular with renewables, given lower operating costs, improved self-sufficiency, and lower carbon emissions.
Photovoltaic (PV), battery storage and onshore wind are well positioned due to their low technology risks, scalability, and competitive economics.
However, the transition to renewables also creates significant pressure on the existing infrastructure, whose aging grids are becoming structural bottlenecks. It is also heavily reliant on critical minerals for producing wind turbines, solar panels, batteries, or a vast network of cables and transmission lines.
Ultimately, the transition depends on a broad ecosystem of enabling resources, mitigating solutions, as well as technological and industrial capabilities, to ensure that energy sovereignty, resilience, and decarbonization can evolve together.