ASX renewable vs coal shares: Which will win?

New data suggests demand for coal-fired power is falling. Should you load up on ASX renewable shares like Tilt Renewables Ltd (ASX: TLT)?
The post ASX renewable vs coal shares: Which will win? appeared first on Motley Fool Australia. –

renewables fund solar energy farm with sun setting over mountain

ASX renewable shares could be in high demand very soon. According to an article in the Australian Financial Review, demand for clean energy is surging while coal prices have fallen to a new record low.

That appears to be at odds with what we’ve seen in ASX coal shares this week. The Whitehaven Coal Ltd (ASX: WHC) share price has seesawed in recent days but is up 14.7% in the last 5 days.

ASX renewable shares like Tilt Renewables Ltd (ASX: TLT) have also been climbing in recent days. The Kiwi wind and solar company’s value has edged 3.7% higher this year to outpace the S&P/ASX 200 Index (ASX: XJO).

So, which ASX shares will win the battle between renewable energy and coal in 2020 and beyond?

Why ASX renewable shares could be worth buying

New data from the Open National Electricity Market project shows that demand for coal-fired power generation is falling. That’s driven by solar farm generation and rooftop solar in places like Queensland.

In the short term, that could hit profits for coal miners like Whitehaven. However, the longer-term outlook could also be characterised by less investment in coal mining going forward.

The future does appear to be brighter for ASX renewables shares. If demand continues to rise and investment in the sector increases, that is good news for capturing further profits.

There will inevitably be more competition as the market matures. However, a company like Tilt, or major shareholder Infratil Ltd (ASX: IFT), could have a significant first-mover advantage.

Add to that a growing interest in environmental, social and governance (ESG) investing, and ASX renewable shares could be worth a look.

ESG investing can be hit and miss, but it’s hard to believe the Aussie super funds won’t want to increasingly invest in renewables. That means a $2.9 trillion pot of money could be looking for more shares to invest in for clean energy exposure.

Foolish takeaway

There is still a good investment case for coal shares like Whitehaven. For one thing, they do pay out significant dividends compared to many of their ASX 200 peers.

However, the long-term future of renewables is starting to take shape. That could mean ASX renewable shares are back in the buy zone in 2020.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post ASX renewable vs coal shares: Which will win? appeared first on Motley Fool Australia.

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