Fuelling Modern Life – Importance of investing in Energy

Fuelling Modern Life – Importance of investing in Energy

Chandigarh: Energy has become essential in modern lifestyle. We cannot think of our household or lives without modern electrical gadgets and appliances like laptops, refrigerators, microwaves, air conditioners, induction stoves, washing machines, cars and two-wheelers. This increased dependency on electrical devices has led to increased energy demand. Energy is not only restricted to households but also plays a key role in diverse segments and is a important driver for industrial growth. Vikas Bhattu, Founder & Director of Wealthvault Research and Analytics Private Limited said that Beyond homes, industries like healthcare, FMCG, textiles, chemicals, agriculture, financial services, oil and gas and so on rely heavily on energy.  Energy supports vital functions like internet services, data transmission, telecommunication and broadcasting stations.

For investors interested in the energy sector, ICICI Prudential Mutual Fund currently has a New Fund Offer (NFO) underway, focused on the energy sector, open from July 02 to July 16, 2024. The scheme’s investment universe includes companies involved in green energy, oil and gas sector, power and related sectors.

Industries within the Energy Sector

The Energy sector has three main components – Oil and gas industry, power industry and renewable energy industry.

Oil and Gas Value Chain – It consists of upstream, midstream and downstream companies. Upstream explores and extracts oil and gas. Midstream processes, transports, and stores. Downstream refines and markets.

Power Value Chain – It consists of companies involved in generation, transmission and  distribution of power. Power generation uses thermal, gas, hydro, nuclear, and other methods. Transmission moves energy to substations; distribution delivers energy to consumers

Renewable Energy/Green Energy – Renewable energy sources such as solar and wind are becoming increasingly important. Solar involves engineering, procurement and construction (EPC) services, ancillary equipment, and development. Wind includes blade production, towers and nacelles, which house gearboxes, shafts, generators, and brakes.

Further, Energy ancillary firms offer vital services like EPC, operations, maintenance, and automation technologies.

So where does the Opportunity Lie?

India’s energy sector continues to be pivotal in its growth narrative, bolstered by robust structural growth and with energy playing a key role in achieving economic targets. With anticipated increase in energy demand over the next decade, fueled by climate change, expanding manufacturing capabilities, and rising per capita income, underscore its potential as a compelling long-term investment opportunity.