Power production in the United States will look very different in 2050 than it does now, and that means there are opportunities for investors, according to Wells Fargo. The passage of the Inflation Protection Act , which contains $369 billion in climate provisions, prompted the firm to adjust its 2050 outlook to include a higher assumed electricity demand, a faster renewables ramp and higher nuclear market share. Wells Fargo estimates that wind and solar will produce 65% of the nation’s power in 2050 and bumped its forecast to $1.4 trillion in investment opportunity in installed renewable capacity — including batteries — from $1.2 trillion. The firm also doubled its predictions for nuclear power’s share to 15% from 8%. In addition, the IRA accelerated the green hydrogen economy by five to 10 years, with meaningful uptake possible by the late 2020s, analyst Neil Kalton said in a note Tuesday. “We believe a bull case clean green hydrogen scenario represents a > $1.5T TAM opportunity for new renewables not including electrolyzer, storage and transportation costs. Clean hydrogen also represents a growth opportunity for nuclear plant owners,” he wrote. Here are some of its top picks on the theme. Overall, NextEra Energy is uniquely positioned to capitalize on capital investment opportunities in utilities and clean energy, Kalton said. The utility company has a strong earnings-per-share growth outlook, which is being driven by infrastructure investment and non-regulated renewable development, he pointed out. His $105 price target implies nearly 25% upside from Monday’s close. The firm’s top nuclear stock is Constellation Energy , the largest nuclear owner in the U.S. The company is well positioned to take advantage of the long-term trend towards decarbonization, Kalton wrote. He doesn’t think the stock price adequately reflects the potential long-term value of the nuclear fleet. His price target of $106 implies 26% upside for Constellation Energy, which spun off from Exelon last February. Among the firm’s picks for clean energy stocks is First Solar . The IRA is a game changer for the solar company, Kalton said. “While the low hanging fruit tied to IRA is discounted in the stock at this point, the potential for continued capacity expansions over the coming years could drive further upside in the stock,” he said. His price target of $188 per share implies 18% upside from Monday’s close. — CNBC’s Michael Bloom contributed reporting.
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