Surge in Power Demand, Green Energy Transition Fuel Investor Opportunities, PGIM Research Finds

52

A surge in power demand driven by artificial intelligence, the rising energy needs of a growing middle class in emerging markets, increasing geopolitical tensions, and the global push for decarbonization are significantly reshaping the global energy system. This evolving landscape offers investors both opportunities and hidden risks across various sectors and asset classes, with wide-ranging portfolio implications, according to new research from PGIM, the $1.3 trillion global investment management arm of Prudential Financial, Inc.

In “Fueling the Future: Investing Across the Global Energy Landscape,” the latest installment in PGIM’s Megatrends research series, 30 investment professionals from PGIM’s fixed income, equity, real estate, and private alternatives divisions share their strategies for navigating the shift towards electrification and a low-carbon energy mix.

The research highlights that, despite the urgency of the Paris Climate Agreement and ambitious green energy plans, the global energy transition cannot happen uniformly or instantaneously. A simplistic strategy categorizing investments as either “brown” villains or “green” heroes will not effectively meet environmental or fiduciary goals.

“No source of energy and electricity is perfect,” said Shehriyar Antia, PGIM’s head of Thematic Research. “Whether an investor has decarbonization objectives or not, it’s critical they understand which companies will power us through the energy transition and which technologies may not live up to the hype.”