02:03 PM EDT, 10/31/2024 (MT Newswires) -- The market seems concerned about the potential impact of a Trump election victory on the renewable power stocks in Canada, notes National Bank. However, analyst Rupert Merer does not see any real threats to the businesses. Even if the worst case scenario for the industry comes true, it could still be a positive for some Canadian independent power producers (IPPs), Merer writes.

The worst case scenario in the U.S. for companies building renewable power infrastructure could be a cut to the tax credits made available under the U.S. IRA and an increase to import tariffs that could impact solar panels and transformers (among other things). The net result could be to cause delays and drive up the cost of construction for new infrastructure.

It is also not clear that Trump would cut tax credits on renewables, Merer points out, given that most wind and solar plants are built in states that back the Republican Party. Trump is also backed by Elon Musk and others that are pro-power development to support electrification and data centers.

Renewable IPPs in National's coverage are at record low valuations again, where National is forecasting an average implied IRR of 10.9%. The sector appears to be impacted primarily by high bond yields (which have ticked up again recently) and negative sentiment towards renewables related to the potential outcome of the U.S. election.

Based on return to target, top picks remain Innergex Renewable (INE.TO), Northland Power (NPI.TO), Polaris Renewable Energy ( RAMPF ) and Boralex ( BRLXF ) . Innergex is trading at the most significant discount to its fundamental value, has little U.S. presence in its development pipeline and has material spot exposure in the U.S, Merer adds.

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