Damien VERRIER/iStock via Getty Images
By Abbie Zhang
Even though the performance of clean energy-related companies has recently faced some headwinds due to rising interest rates and inflationary pressures, the clean energy industry is still being driven by continuous policy support. As we approach the midpoint of 2024, we wanted to review the S&P Global Clean Energy Index Series rebalance from April and share some of the key developments from the beginning of the year in the clean energy space.
April Rebalance
Launched in 2007, the S&P Global Clean Energy Index has been the benchmark for measuring clean energy-related companies’ performance 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 global clean energy businesses that are listed on developed market exchanges.
Both indices went through a semiannual rebalance on April 19, 2024. The index methodology categorizes companies into four exposure score buckets ranging from 0 to 1, with a 0.25 increment, to measure their clean energy business purity. Exhibits 1 and 2 show the change in exposure before and after the April rebalance for both indices. For the S&P Global Clean Energy Index, the weighted average exposure score of the index dropped slightly from 0.95 to 0.93. This drop can be attributed to the addition of certain large market 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 in the developed market exchanges (see Exhibit 2).
S&P Global Clean Energy Index Performance YTD in 2024
Underperforming the S&P Global BMI YTD, the S&P Global Clean Energy Select Index was down 19.96% and the S&P Global Clean Energy Index was down 14.90% in USD total return terms, and dispersion was high among constituents of the S&P Global Clean Energy Index. 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%), SJVN (up 48.85%) and Nordex (OTCPK:NRDXF) (up 23.41%) made positive contributions to offset some of the losses. It is worth highlighting that NHPC and SJVN, two Indian companies, have outperformed in 2024. This can be attributed to the Indian government’s ambitious targets in the clean energy sector.[1]
Despite the recent performance challenges, the following developments indicate a positive future for the energy transition.
Key Developments
Clean Energy Is Boosting Economic Growth
In March 2024, the International Energy Agency (IEA) released its inaugural Clean Energy Market Monitor report. This report offers a timely and concise overview of clean energy deployment for select technologies. According to the report, “global clean energy deployment scaled new heights in 2023, with annual additions of solar PV and wind growing 85% and 60% respectively.”[2] The adoption of clean energy contributed approximately USD 320 billion to the global economy, representing 10% of the overall growth in global GDP.[3]
Government Investment in Clean Energy Continues to Increase
In March 2024, the Biden-Harris Administration unveiled a USD 4 billion tax credit initiative supporting more than 100 projects across 35 states. The goal is to boost domestic clean energy manufacturing and curb greenhouse gas emissions in industrial facilities. These projects, eligible for tax credits under the Qualifying Advanced Energy Project Tax Credit (48C), encompass large, medium and small businesses, as well as state and local governments. To qualify for a 30% investment tax credit, all participants must adhere to prevailing wage and apprenticeship requirements.[4]
DOE Releases Roadmap to Accelerate Interconnection for Clean Energy Transition
The U.S. Department of Energy (DOE) has released the new Transmission Interconnection Roadmap, which proposes solutions to accelerate the integration of a clean energy transition.[5] The roadmap sets ambitious targets for enhancing interconnection by 2030 and outlines tools to improve the process of connecting clean energy projects to the grid, supporting the Biden-Harris Administration’s goal of achieving 100% clean electricity by 2035. “DOE’s Grid Deployment Office invests in accelerating interconnection of clean energy generation through the $5 billion Grid Innovation Program, which supports deployment of projects that use innovative approaches to enhance grid resilience and reliability.”[6]
[1] India emerging as advanced energy superpower
[2] Clean Energy Market Monitor – March 2024 – Analysis – IEA
[3] Clean energy is boosting economic growth – Analysis – IEA
[4] Biden-Harris Administration Announces $4 Billion in Tax Credits
[5] DOE Transmission Interconnection Roadmap
[6] DOE Releases First-Ever Roadmap to Accelerate Connecting More Clean Energy Projects
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Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
