Don’t miss out on opportunities in the energy sector

The ongoing energy transition can be volatile for businesses in the sector. But in both oil and gas and renewables, there are plenty of opportunities – and investor appetite

It’s hard to avoid the headlines when it comes to energy at the moment, whether you’re considering the impacts of the current situation as a business or an individual. Climate change, a reliance on imported fuels and rising energy bills highlight just how delicate the supply and demand balance for energy is.

So what does it all mean for businesses in oil and gas, as well as businesses in renewables?

As the sector transitions from one energy source to another, it should in theory spur additional investment in energy infrastructure – something finance advisory firm Hutcheon Mearns is already noticing an appetite for amongst investors.

While emphasising that a transition to cleaner energy is of utmost importance, Naill Benzahia, corporate finance manager at Hutcheon Mearns, acknowledges that we won’t get there overnight. He says: “For the foreseeable future, I see fossil fuels and renewables working side by side.

“We’re seeing a bit of a reality check to society with household energy bills going up and consumers feeling the impact of underinvestment in the oil and gas industry and a reliance on imported

fuels. I expect investors will not be adverse to exposure to oil and gas within their portfolios because they recognise how important it is to the near and mid-term energy mix.

“Oil and gas alone is not the long-term solution, but it’s going to be needed to help us transition – the key word there being transition – to renewables or a zero-carbon future.”

Ensuring we can safely, efficiently and cleanly extract fossil fuels is a major part of this, while on the other end of the scale, the economics of

renewables are quickly improving. Adam Maitland, managing director of business finance at Hutcheon Mearns, adds: “Arguably the costs are still significantly higher than existing energy sources. We believe this will continually converge over the coming period to provide energy parity, but the time frame is a little unknown.”

With oil and gas fuelling the near term, and significant investment ongoing in the infrastructure for a net zero society, there is

continued opportunity in the energy sector as a whole. Naill emphasises: “The level of public and private investment into the energy sector is massive, which creates huge opportunity.

“The biggest concern for the larger players in the industry is a potential shortage of skills and materials to action the massive infrastructure shift which is required to achieve a net-zero carbon future, and that can only be a good thing for businesses.”

Energy diversification: Fossil fuels and renewables will exist side by side for the foreseeable future.