By: Ron Pernick
Welcome to our quarterly overview of stock index performance and key developments impacting the state of clean tech.
NASDAQ-CLEAN EDGE STOCK INDEX PERFORMANCE:
Clean Edge's four major stock indexes continued to outperform benchmark indexes during 2019, beating both the S&P 500 and IXE (energy select sector index) year to date (YTD). On a total return basis, CELS (U.S. clean energy) was up 20.51%, QGRD (global smart grid infrastructure) was up 25.64%, GWE (global wind) was up 18.78%, and HHO (U.S. water) increased 25.40%, compared to the S&P 500's 18.54% increase and IXE's 13.13% increase. Over the past 12 months (total return basis through the end of June), the Nasdaq Clean Edge Green Energy Index (CELS) beat out oil and gas, with CELS up 9.91%, compared to IXE's 13.25% decline.
During Q2 2019, QGRD (electric grid) was the top Nasdaq Clean Edge index performer, rising 11.98%, followed by HHO (water) up 7.67%, CELS (clean energy) up 5.62%, and GWE (wind) up 3.58%. During the same time frame, the S&P 500 increased 4.3% and IXE declined 2.75%.
Best and Worst Performers (Ranked by Q2 Price Return)
The top five performers in the Clean Edge Nasdaq Green Energy Index (CELS) for Q2 include four companies focused on solar power (or with major solar industry exposure), reflecting strong quarterly performance for the broader solar sector. The biggest decliners include companies involved in electric vehicles and materials.
| CELS | |||
|---|---|---|---|
Best | Worst | ||
Enphase Energy | 97.5% | NIO Inc. | -50.0% |
SolarEdge Technologies | 65.8% | Livent Corporation | -43.6% |
SunPower | 64.2% | American Superconductor | -27.8% |
Vivint Solar | 46.9% | Renewable Energy Group | -27.8% |
Ballard Power | 35.5% | Tesla | -20.2% |
Top performers in the global wind index (GWE) include both diversified corporates with wind divisions and pure plays focused on wind energy deployment, including onshore and offshore wind development leaders.
| GWE | |||
|---|---|---|---|
Best | Worst | ||
Woodward, Inc. | 19.3% | American Superconductor | -27.8% |
Toray Industries, Inc. | 19.0% | Xinjiang Goldwind Science & Technology Co | -24.1% |
Gurit Holding AG | 14.3% | China High Speed Transmission Equipment Group | -23.5% |
Orsted A/S | 14.1% | Nordex SE | -15.7% |
Iberdrola S.A. | 13.5% | TPI Composites, Inc. | -13.6% |
Top performers for global grid (QGRD) include a strong showing for three inverter companies (technology that converts DC power to AC for grid compatibility and smarter energy management) at the very top.
| QGRD | |||
|---|---|---|---|
Best | Worst | ||
Enphase Energy | 97.5% | American Superconductor | -27.8% |
SolarEdge Technologies | 65.8% | Veoneer | -24.3% |
SMA Solar Technology | 43.0% | Tesla | -20.2% |
Control4 Corporation | 40.3% | NVIDIA | -8.5% |
Adesto Technologies | 34.7% | nVent Electric | -8.1% |
U.S. water (HHO) biggest gainers include U.S.-based metering company Itron and water engineering design firm Tetra Tech in the top two spots.
| HHO | |||
|---|---|---|---|
Best | Worst | ||
Itron | 34.1% | Primo Water Corporation | -20.4% |
Tetra Tech | 31.8% | Pentair | -16.4% |
AECOM | 27.6% | Lindsay Corporation | -15.1% |
Advanced Drainage Systems | 27.2% | A.O. Smith Corporation | -11.6% |
IDEXX Laboratories | 23.1% | Agilent Technologies | -7.1% |
MAJOR CLEAN TECH DEVELOPMENTS IN Q2:
During the second quarter of 2019, we observed a number of developments and trends impacting the shift toward clean energy and water, advanced transportation, smart grid, and broader sustainability. They include:
Plant-Based Meat Takes Off
It started at the beginning of the quarter, when Burger King issued an April Fool's whopper! While the company may have tricked unsuspecting meat eaters into thinking they were consuming a traditional beef Whopper instead of a plant-based Impossible burger, it's been anything but a joke since. In addition to the Impossible Foods and Burger King tie-up and national expansion plans, we witnessed the successful IPO of Beyond Meat Inc. Beyond has seen its valuation rise more than 500% since its debut in May. Expect Big Ag players like Conagra and Tyson to join the food fight in a significant way!
Renewable Energy Breaks Records on Both Sides of the Pond
Perhaps the greatest test of the success of clean energy is in how much it displaces incumbent fossil fuel sources. Well, the transition seemed underway in significant and symbolic ways this quarter. For the first time in modern history, the UK operated without any coal. That's right – Britain marked one full week without coal power (and now longer), for the first time since 1882. And across the pond, in another sign of the energy transition, the U.S. saw renewable energy surpass coal for the first full month ever. Expect this to become increasingly common as coal plants are retired and wind, solar, and storage continue their ascent.
State Legislative Sessions Get Serious about Clean Energy
While federal action on climate under the Trump Administration is an oxymoron, state leaders haven't been holding back. In what will likely be remembered as the most active period for state clean-energy initiatives ever, Q2 2019 resulted in significant energy-transition wins. Washington state legislators passed innovative 100 percent clean electricity legislation in April. Similarly, Nevada and Colorado both joined the ranks of clean-energy leaders by setting their own 100% goals. Then, near the end of June, New York's Senate passed what PV Magazine called perhaps "the biggest, baddest, renewable energy mandate in the nation."
And it didn't end there. Maine Governor Janet Mills signed three bills that should result in the state getting 80% of its electricity from renewables by 2030. Similarly, the Maryland General Assembly approved a 50 percent renewable energy target for 2030.
And while blue states are clearly leading on policy and deployment commitments, red states with rich wind and solar resources aren't all being left behind. Texas, for example, currently gets 16% of in-state generation from wind power, with a lot more on the way. One key to the state's success: Texas RE advocates learned not to say "climate change" in making their case for renewables.
Innovative Financing Schemes Continue to Emerge in a Big Way
Another major trend this quarter was the continued emergence of new and innovative financing methods for clean-energy deployment. Once again proving the popularity of green bonds, wind giant Ørsted issued green bonds totaling nearly U.S. $1.2 billion to fund major European wind projects, including the Hornsea Two development in the North Sea (set to be the world's largest offshore wind farm). Elsewhere in Europe, Norway's sovereign wealth fund – in a move away from oil and gas and toward renewables – announced plans to permit investments in RE projects not listed on stock markets (potentially opening up significantly more investment opportunities for the fund). And while passage is probably a long shot, a newly re-introduced bipartisan U.S. federal bill would allow renewable energy companies access to the master limited partnership (MLP) structure, helping to level the playing field with oil and gas players that have long exploited MLP structures for financial gain.
Disclaimer:
The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular financial product or an overall investment strategy. Clean Edge, Inc., does not make any recommendation to buy or sell any financial product or any representation about the financial condition of any company or fund.