German election a "positive catalyst" for utilities
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GERMAN ELECTION A "POSITIVE CATALYST" FOR UTILITIES
Germany is heading for a federal election in February, after the breakdown of the governing coalition due to differences over how to revive the flagging economy. But a new government could be positive for the utilities sector, Barclays believes.
"Future German energy policy under new government is becoming larger area of market focus (particularly regarding nuclear)," Barclays writes.
"In our view, the case for nuclear energy has become clearer with accelerating power demand, AI/datacentre interest and investment, and increased global support."
Current opinion polling has the conservatives (CDU/CSU) as the likely winners of the election, historically a party viewed as pro-business.
Barclays believes that a conservative-led government could look at a more pro-nuclear strategy.
Germany shut down its remaining nuclear plants last spring, and while RWE and E.ON believe that restarting plants is unlikely, Barclays thinks a new government could provide some clarity on energy policy, including focusing more on small modular reactors (SMRs).
"New German general elections ... should therefore become a new positive catalyst for German utilities," Barclays writes.
The firm has both E.ON and RWE rated at 'overweight'.
(Samuel Indyk)
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