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Written by Abby Zhang
Although the performance of clean energy-related companies has recently faced some headwinds from rising interest rates and inflationary pressures, the clean energy industry remains driven by ongoing policy support. like As we approach the middle of 2024, we wanted to review the rebalancing of the S&P Global Clean Energy Index series from April and share some of the key developments from the beginning of the year in the clean energy space.
Rebalancing in April
Launched in 2007, the S&P Global Clean Energy Index has served as the benchmark for measuring the performance of clean energy-related companies over the past 16 years. In April 2021, we launched the S&P Global Clean Energy Select Index to measure the 30 largest companies in the global clean energy business listed on developed market exchanges.
Both indicators have passed Semi-annual rebalancing on April 19, 2024. The index methodology classifies companies into four exposure score groups ranging from 0 to 1, with increments of 0.25, to measure the purity of their clean energy businesses. Figures 1 and 2 show the change in exposure before and after the April rebalancing for both indices. For the S&P World Clean Energy Index, the index’s weighted average exposure score decreased slightly from 0.95 to 0.93. This decrease can be attributed to the addition of some large-cap companies with an exposure score of 0.75 to the index, such as Iberdrola SA, Consolidated Edison and PT Barito Renewables Energy. As a result, the index weight for companies with an exposure score of 1 decreased. The S&P Global Clean Energy Select Index consists of 30 companies with an exposure score of 1 listed on developed market exchanges (see Figure 2).
Performance of the S&P Global Clean Energy Index year-to-date through 2024
S&P Global Clean Energy Select Index is down 19.96% The S&P Global Clean Energy Select Index is down 14.90% in terms of total return in US dollars and has underperformed the S&P Global BMI since the beginning of the year Dispersion has been high among S&P Global Clean Energy Index components . Sunnova Energy International (NOVA) (-72.39%), Plug Power (PLUG) (-48.67%), and Sunrun (RUN) (-47.58%) were among the lagging performers, while NHPC (up 50.64%) was , and SJVN (up 48.85%). %) and Nordex (OTCPK:NRDXF) (up 23.41%) made positive contributions to offset some losses. It is worth noting that NHPC and SJVN, two Indian companies, have outperformed in 2024. This can be attributed to the Indian government’s ambitious goals in the clean energy sector(1).
Despite recent performance challenges, the following developments point to a positive future for the energy transition.
Key developments
Clean energy promotes economic growth
In March 2024, the International Energy Agency (IEA) released its inaugural Clean Energy Market Monitoring Report. This report provides a concise and timely overview of clean energy deployment for selected technologies. According to the report, “Global clean energy deployment reached new heights in 2023, with annual additions of solar PV and wind power growing by 85% and 60%, respectively.”(2) Clean energy adoption has contributed approximately US$320 billion to the global economy, contributing It represents 10% of the total growth in global GDP.(3)
Government investment in clean energy continues to increase
In March 2024, the Biden-Harris administration unveiled a $4 billion tax credit initiative to support more than 100 projects in 35 states. The goal is to promote domestic clean energy manufacturing and reduce greenhouse gas emissions in industrial facilities. These projects, which are eligible for tax credits under the Qualified Advanced Energy Projects Tax Credit (48C), include large, medium and small businesses, as well as state and local governments. To qualify for the 30% investment tax credit, all participants must comply with prevailing wage and vocational training requirements.(4)
The Department of Energy issues a roadmap to accelerate interconnection for the transition to clean energy
The US Department of Energy (DOE) has released a new Interconnection Roadmap, which proposes solutions to accelerate the integration of the clean energy transition.(5) The Roadmap sets ambitious goals for enhancing interconnection by 2030 and identifies tools to improve the process of connecting clean energy projects to the grid, enabling Supports the Biden-Harris Administration’s goal of achieving 100% clean electricity by 2035. “The Department of Energy’s Office of Grid Deployment is investing in accelerating the interconnection of clean energy generation through the $5 billion Grid Innovation Program, which supports project deployment. Which uses innovative methods to enhance network resilience and reliability.”(6)
(1) India’s emergence as an advanced energy superpower
(2) Clean Energy Market Monitor – March 2024 – Analysis – International Energy Agency
(3) Clean energy promotes economic growth – analysis – International Energy Agency
(4) The Biden-Harris administration announced $4 billion in tax breaks
(5) Ministry of Energy interconnection roadmap
(6) The Department of Energy issued its first-ever roadmap to accelerate the connectivity of more clean energy projects
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Editor’s note: The summary points for this article were selected by Seeking Alpha editors.
