Shares of Brookfield Renewable Corporation (BEPC -1.15%) were running higher last month even though there was no company-specific news on the green energy infrastructure company.
Instead, the jump was related to rising oil prices as Russia invaded Ukraine and European countries looked to wean themselves off Russian oil and gas. According to data from S&P Global Market Intelligence, Brookfield Renewable finished the month up 17%.
As you can see from the chart below, the gains came in the first half of the month as oil prices soared, with West Texas Intermediate jumping from $95 at the end of February to $123 by March 8.
Though oil prices have cooled off modestly since the spike at the beginning of March, they remain elevated, with a gallon of gas still near record levels, above $4/gallon in the U.S. With the jump in oil prices and the geopolitical fallout from the war, including plans to boycott Russian oil and gas, it's clear why Brookfield shares were gaining.
Any event that accelerates the transition of power generation away from fossil fuels and toward renewable sources will be beneficial for Brookfield.
As the company spells out in its annual report, "Our main competition in the U.S., European, Colombian, and Brazilian electricity markets in which we operate are coal, nuclear, oil, and natural gas electricity generators," and "The market price of commodities, such as natural gas and coal, are important drivers of energy pricing and competition in most energy markets."
Europe is currently the largest renewable energy market in the world, and the impact of the war seems likely to spur increased investments in renewable energy projects. However, the immediate concern may be replacing Russian oil and gas with fossil fuels from other countries.
Europe is currently one of Brookfield's smaller markets as it operates just 682 megawatts of wind capacity there, but rising demand on the continent and elsewhere favors expansion.
Brookfield is coming off a strong year that included 16.6% growth in normalized funds from operations per unit to $1.69. It expanded its power generation by 8% to 57,000 gigawatt-hours, and it commissioned around 1,000 megawatts of new capacity.
The company continues to target 12% to 15% annual returns, and it's made a number of acquisitions around the world to fuel its growth. With the general tailwinds in renewable energy and a push from the evolving Russian boycott as well as high oil prices, Brookfield looks poised to keep delivering solid growth.