What is the impact of divesting from fossil fuels and investing in renewable energy?
Since the industrial revolution, humanity has gone from muscle power and biomass burning for energy to fossil fuels (coal, oil, and gas). The burning of fossil fuels has been the main force behind the rapid development of technology and economies, but it has come at the cost of an increase in atmospheric carbon dioxide and air pollution.
As a solution to this global issue, there has been a push to change direction from fossil fuels to renewable energy. And according to Forbes, the value of oil, gas, and coal reserves is set to drop due to the rise in government climate and energy security targets. This is paired with a higher risk of investing in fossil fuels caused by clean technologies (cleantech) competition.
The cleantech competition includes renewable energies such as wind, solar, hydro, and geothermal energy. The Australian Renewable Energy Agency defines renewable energy as energy that is:
“produced using natural resources that are constantly replaced and never run out.”
Renewable energy also creates a dramatically smaller carbon footprint compared to its predecessor, fossil fuels.
How do renewable energy investments compare?
The energy in Australia is changing with a growing interest in renewable energy. Due to government policy incentives, elevated electricity prices, and a decline in renewable generation technology costs, the market for renewable energy has been growing. The graph below shows a steady increase in renewable energy sources for electricity generation.
The Deloitte Australia Cleantech (DACT) Index, tracking 87 Australian stocks across a range of cleantech sectors (such as vehicle technologies, wind, water, green buildings etc.) has experienced a 22.3% growth over the past three years and 39.7% growth over the past five years. In comparison, the ASX200 has experienced a 19.9% three-year growth and 36.0% five-year growth. This demonstrates the continued resilience and development in the cleantech sector over the long term.
In fact, over the last ten years, the Energy segment of the ASX 300, which includes some of Australia’s largest coal and gas producers, was the worst performer, significantly underperforming the market.
Where can I start impact investing?
Bloom Impact Investing is an impact investment app that will allow users to invest in one green fund that delivers true environmental impact. Our fund includes carefully curated climate impact projects, cleantech stocks, green bonds and Greentech companies, rigorously researched to ensure you only get the creme de la creme of climate impact investing. Several of the companies and projects listed in this blog are also included in the Bloom fund, so you can start investing in innovative cleantech companies from as little as $100, or $5000 for Trusts and Companies. (Please refer to the relevant PDS for more information).
All of the company information below was collected in December 2022 from Simply Wall Street. Below is a guide on what each company profile contains and 3 financial figures showcasing a summary of the fundamentals.
COMPANY NAME - exchange (ticker)
Here, there will be information on the company and what services and/or products they provide to consumers and industries.
Company performance:
Market Cap: The dollar value of their stock multiplied by the total number of pending shares
Earnings (TTM): The company's wages or money earned trailing over 12 months.
Revenue (TTM): The company's total profits generated operations like sales trailing over 12 months.
Read on for the growing trends of climate impact investing and company spotlights.
☀️ Solar Stocks
Enphase Energy NASDAQ: ENPH
Enphase Energy brings reliable energy systems to manage home solar generation with the flexibility to adapt to home expansions, smart homes, and smart grid integrations. Their point of difference is made with the Enphase Microinverter, the most advanced inverter technology on the market with higher production and unmatched intelligence.
Enphase Energy's performance.
Market Cap US$45.65b
Earnings (TTM) US$296.20m
Revenue (TTM) US$2.02b
Meridian ASX: MEZ
In its goal to minimise climate risk and toxic pollution, Meridian has become Australasia’s largest 100% renewable energy generator through its power portfolio of solar and wind farms and hydro plants. Meridian also owns Meridian Energy Australia, which was recently bought out by Shell. It owns and operates the Mt Millar wind farm in South Australia and the Mt Mercer wind farm near Ballarat in Victoria. Meridian is supporting the decarbonisation of our transport system by partnering with companies like Paddon Rally Group (EV Rally) and ElectricAir (Electric helicopters), who have also committed to launching a network of EV chargers throughout New Zealand to help people switch to electric cars.
Meridian Energy's performance.
Market Cap NZ$12.85b
Earnings (TTM) NZ$451.00m
Revenue (TTM) NZ$3.70b
NZ: New Zealand Dollar
Canadian Solar NASDAQ: CSIQ
Canadian Solar Inc is a publicly-traded company headquartered in Guelph, Canada, that manufactures solar PV modules and runs large-scale projects. Since its creation in 2001, Canadian Solar has become one of the world’s largest solar technology and renewable energy manufacturers. Over the past 20 years, Canadian Solar has successfully delivered over 59 GW of premium-quality solar photovoltaic modules to customers across the world and has developed, built, and connected over 6.1 GWp in over 20 countries across the world.
Canadian Solar's performance.
Market Cap US$2.33b
Earnings (TTM) US$188.10m
Revenue (TTM) US$7.03b
SolarEdge Technologies NASDAQ: SEDG
SolarEdge Technologies designs, develops, and sells inverter systems for solar photovoltaic (PV) installations worldwide. It offers inverters, power optimisers, communication devices, and smart energy management solutions and a cloud-based monitoring platform that collects and processes information from the power optimisers and inverters, as well as monitors and manages the solar PV system. The company also provides residential, commercial, and large-scale photovoltaics, energy storage and backup, electric vehicle charging, and home energy management solutions, as well as grid services, lithium-ion cells and battery packs, and uninterrupted power supply solutions, as well as virtual power plants, which helps to manage the load on the grid and grid stability.
SolarEdge's performance.
Market Cap US$17.55b
Earnings (TTM) US$113.90m
Revenue (TTM) US$2.77b
🌬️ Wind Stocks
EDP Renovaveis ELI: EDPR
EDP Renovaveis (which translates to EDP Renewables) is a Spanish-based renewable energy company. With a presence in 17 international markets, EDPR has established itself at the global forefront of the renewable energy sector. As reported at the end of 2020, EDPR has generated a whopping 28.5 terawatt-hours of renewable energy and has committed to further growth in their renewable energy operations. In their most recent 2021 Business Plan, EDPR outlines plans for an additional 4 gigawatts per year through 2025 (EDP Renováveis, 2020).
EDP Renovaveis' performance.
Market Cap €21.16b
Earnings (TTM) €923.44m
Revenue (TTM) €2.08b
€: Currency sign for the Euro
Vestas CPSE: VWS
Vestas Wind Systems is a Danish manufacturer, seller, installer, and servicer of wind turbines that was founded in 1945. Vestas is leading the world in renewable wind energy, with +145 gigawatts of wind turbines in 85 countries. They design, manufacture, install and service these wind turbines across the globe, using data to interpret, exploit and forecast wind resources in order to deliver the best wind power solutions in the industry.
Vestas' performance.
Market Cap kr.190.73b
Earnings (TTM) -kr.7.38b
Revenue (TTM) kr.105.95b
kr: Swedish Krona
Goldwind SZSE:002202
Xinjiang Goldwind Science & Technology, also known as Goldwind, is a Chinese company that offers wind energy solutions. These solutions span wind turbine generator development, manufacture and storage, wind farm development, and other wind power services. Using both onshore and offshore wind power solutions, Goldwind can produce and sell wind energy, while also facilitating the construction, maintenance, operation, and sale of wind farms. In addition, the company offers wind power-related consultancy services and has more recently become involved in solar power generation and water treatment.
Goldwind's performance.
Market Cap CN¥46.53b
Earnings (TTM) CN¥2.45b
Revenue (TTM) CN¥42.91b
CN¥: Chinese Yuan
Siemens Gamesa Renewable Energy BME: SGRE
Siemens Gamesa is a renewable energy company with a specific interest in wind energy. Since 1982 they have held steadfast to their belief in the potential of wind energy in the fight against climate change.
Siemens Gamesa's performance.
Market Cap €12.25b
Earnings (TTM) -€940.00m
Revenue (TTM) €9.81b
€: Currency sign for the Euro
🌊 Hydro Stocks
SSE PLC - LSE: SSE
SSE PLC, one of the UK’s largest electricity network companies, operates by developing a low-carbon infrastructure. This infrastructure includes wind, hydropower, electricity transmission, distribution grids, and efficient gas-fired generation.
SSE's performance.
Market Cap UK£18.49b
Earnings (TTM) UK£1.03b
Revenue (TTM) UK£10.69b
UK£: Pound Sterling
Genex Power ASX: GNX
With a renewable energy portfolio across Queensland, Genex Power generates its electricity from hydro, solar, and wind. Their hydro project was also a world first in repurposing an abandoned gold mine.
Genex Power's performance.
Market Cap AU$228.55m
Earnings (TTM) -AU$4.06m
Revenue (TTM) AU$24.80m
Carnegie ASX: CCE
Carnegie harnesses energy through ocean waves and converts them into electricity with the help from CETO technology. Carnegie’s patented technology has state-of-the-art features for greater efficiency in zero-emission electricity.
Carnegie's performance.
Market Cap AU$31.29m
Earnings (TTM) -AU$2.29m
Revenue (TTM) AU$321.94k
Plug Power NasdaqCM: PLUG
Plug Power is a world leader in end-to-end green hydrogen solutions, including manufacturing, transportation, storing, compressing, and dispensing hydrogen. Power Plug is also the first to create a green hydrogen ecosystem where it oversees everything from energy generation to product distribution.
Plug Power's performance.
Market Cap US$8.72b
Earnings (TTM) -US$693.46m
Revenue (TTM) US$642.60m
♨️ Geothermal Energy Stocks
Currently, Mercury generates 100% of its energy from geothermal and hydro sources. Their 5 geothermal stations stretch across the centre of New Zealand’s North Island and generate power 24/7. Unlike hydro and wind energies (both future projects for Mercury), geothermal energy isn’t reliant on the weather.
Mercury's performance.
Market Cap NZ$7.69b
Earnings (TTM) NZ$469.00m
Revenue (TTM) NZ$2.19b
NZ: New Zealand Dollar
🚘 Tech and Electric Vehicles Stocks
Tesla NASDAQ: TSLA
When it comes to tech, Tesla is hard to miss. Its origin started in electric vehicles with a determination to develop better and quicker cars that were more fun to drive than gasoline cars. By creating clean energy products for everyday consumers, Tesla’s vision of removing CO2 emissions from vehicles and significantly reducing reliance on fossil fuels could soon become a reality. The average vehicle running on fossil fuels releases 69 tonnes of CO2 throughout the use phase of its life cycle; comparatively, a Tesla Electric Vehicle (EV) being charged on the grid releases under 200g CO2/mi. The company’s expansion into clean energy and storage products has even reached Australian shores with the world’s largest lithium-ion battery in South Australia.
Tesla's performance
Market Cap US$615.32b
Earnings (TTM) US$11.19b
Revenue (TTM) US$74.86b
Nio NYSE: NIO
NIO designs, manufactures and sells smart, electric, and autonomous vehicles in China. NIO is also accelerating the adoption of electrification and clean energy at home and in the public space. The company offers power solutions, including Power Home, a home charging solution; Power Swap, a battery swapping service; Public Charger, a public fast-charging solution; Power Mobile, a mobile charging service through charging vans; Power Map, an application that provides access to a network of public chargers and their real-time information; and One Click for Power valet service, where it offers vehicle pick up, charging, and return services.
Nio's performance.
Market Cap US$21.15b
Earnings (TTM) -US$1.56b
Revenue (TTM) US$6.19b
BorgWarner NYSE: BWA
BorgWarner Inc is an American multinational automotive supplier, delivering innovative and sustainable mobility solutions for the vehicle market. In 2020, 85% of BorgWarner’s revenue came from sustainable mobility solutions vehicles, with 10% of revenue coming from electric and hybrid products and 75% from emissions-reducing combustion products, such as Exhaust Gas Recirculation (EGR) valves and coolers. BorgWarner aims to accelerate electric vehicle sales to 45% by 2030, contributing to their vision of a clean and energy-efficient world.
BorgWarner's performance.
Market Cap US$9.81b
Earnings (TTM) US$818.00m
Revenue (TTM) US$15.35b
Xpeng NYSE: XPEV
XPENG Motors, or XPENG for short, designs, develops, manufactures, and markets smart electric vehicles in China. While headquartered in Guangzhou, China, XPENG’s reach extends beyond China, with strong ties to the United States Market, a base in the illustrious Silicon Valley, and a public listing on the New York Stock Exchange. This commitment has been recognised by MSCI, who have awarded XPENG with an AA rating, which is reserved for leaders in driving ESG efforts, over the past 2 consecutive years (2021). Furthermore, XPENG’s AA rating places it at the forefront of sustainable behaviour within the automotive industry.
Xpeng's performance.
Market Cap US$9.77b
Earnings (TTM) -US$1.16b
Revenue (TTM) US$4.35b
How do they compare?
Each company listed above is driven to provide solutions to the carbon emission crisis, but choosing the right company to invest in comes down to you! Ask yourself:
Is investing in shares and stocks right for my personal situation? Talk to a professional advisor first! You can find a list of ethical advisors on the RIAA website here or learn about how to invest in shares on the Money Smart website.
Which company reflects my values and impact interests?
How much am I willing to invest?
How has the company previously performed?
How is the company performing from an Environmental, Social, and Governance (ESG) perspective?
Investing in shares can be risky and before making any investment decision you should consider whether the product is right for you and whether you should obtain advice from a professional financial adviser. Research is key, and through the links provided, you can investigate the companies further. You can also sign up for the Bloom Impact Investing app, where you’ll be able to invest in cleantech and clean energy shares, see how much impact you are making and hear stories from the companies you invest in.
Looking for an easy way to start investing in renewable energy?
Do you want your money to work for not against nature? Then download the bloom app and open your ethical investing account within 5 minutes. Start investing in over 50 climate solutions and 90 assets (including those listed in this blog).
Don't forget, you can also join the Bloom community if you want to learn more about sustainable investing We have an upcoming array of events where you can learn how to make a positive impact on your finances.
The information on this website is prepared by Bloom Impact Investment Services Pty Ltd (ACN 651 965 098 AR 001294778), who is an authorised representative of Cache Investment Management Pty Ltd (ACN 624 306 430 AFSL 514 360) (Cache). Bloom’s financial products are issued by Melbourne Securities Corporation Limited (ACN 160 326 545 AFSL 428 289), as disclosed in the relevant PDS. All information provided in this article is general information only and does not take into account your personal circumstances, financial situation or needs. Before making a financial decision, you should read the relevant product disclosure statement and target market determination consider whether the product is right for you and whether you should obtain advice from a professional financial adviser.