New distributed energy investments

The trend towards local energy generation is growing and we have found two opportunities in this area. Though similar, they are quite different in their maturity.

Pacific Energy (ASX: PEA) owns and operates two hydro generation facilities in Victoria and supplies power to remote locations, mainly mining sites, including the Kalgoorlie power station. The remote generation facilities have been based on diesel, but the company is moving towards solar and battery with diesel used as backup. Financials are impressive, with a PE of 15, dividend yield of 3.5% and cashflow yield of 13%. These financial ratios are growing and new projects are in the wings.

ReNu Energy (ASX: RNE) is much earlier in its development. It supplies hybrid energy systems for remote locations, including solar, battery and biogas. While considered speculative (the company is pre-profit), it has considerable cash reserves to fund expansion. But ReNu has just announced its first significant contract to build and operate solar, battery and embedded network systems across four shopping centres in the SCA Property Group. Further such contracts with SCA Property are anticipated. For those with long memories, ReNu is the old Geodynamics with a new board, new management and revised activities.