Smart Energy Monthly Report | January

21 January 2022


2021 As the Revenge of the Old (High Emission) Economy

In 2021 the stocks in our universe traded mixed in what was undoubtedly the year of S&P 500. [1] Besides the strong performance of the FAANG group (FB up 26.07%, AAPL up 34.2%, NFLX up 13.2%, GOOG up 66.68%, and also MSFT up52.56%) that are top constituents of the S&P500 by market cap, it is also striking that 7 of the top 20 highest returns of their broad index were legacy high CO2e emission names, namely Devon Energy, Marathon Oil, Ford, Diamondback Energy, Apache, Conoco Phillips and EOG Resources (DVN up 176.22% was the highest performance in the whole S&P, followed by MRO up 145.13%, F was the 5th highest performance up 132.88%). As expected, the energy transition is being characterised by supply reduction of fossil fuel commodities faster than demand decline, and capital chasing value opportunities poured into oil & gas names. Systematic risk abounded and explained, as we will see, part of the negative monthly performances. Idiosyncratic risks for certain decarbonization solutions and inflation fears combined with tapering and 2022 interest rate increases have hurt growth names in our universe. In policy terms, expectations on Biden’s Infrastructure Bill and COP26outcomes boosted climate change solutions – lifting both Indices from first week of October to mid-November. The Bill was signed on November 15th and events in Glasgow ended on Nov 12th, which coincided with the beginning of a sell off for many companies in our universe. [2] The struggles of the accompanying Build Back Better Act were additional reason for the negative sentiment towards many names in our universe at year end. [3] 


Green Growth & Brown Value Coexistence

In the table below, we see that systemic risks related to inflation, tapering and future interest rates hikes affected both growth and value in some months, but the year was marked by a persistent rotation towards value. The iClima Distributed Renewable Energy Index TR closed the year up 18.35%, after peaking on November 12th at a YTD return of 41.22%. The broader iClima Decarbonization Enablers Index TR closed 2021 up 7.6%, after peaking on November 8th at YTD of 17.3%. The most extreme month was October, when the index for CLMA was up 9.14% and DGEN up 15.88%. We expect the green/brown coexistence to persist in 2022.

Please note that all performance figures are showing net data. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product.

Looking back, we can identify some clear trends. An overwhelming conclusion is that many of the companies in our universe benefited from an incredible rally in 2020 and suffered a correction in 2021. The market reaction in 2021 started with a rotation to value as early as February, as growth names naturally are affected by interest rate increase expectations. As we will see, profit taking was not due to lack of revenue growth reporting, lack of supportive climate change policies or slowdown in adoption of key decarbonisation solutions.


End of the Beginning – Entering into Higher Adoption Phase

Traditional Portfolio Managers are predicting that 2022 will not be the year of “story stocks”, therefore prescribing the conventional idea of playing defence with banks and utilities, and finding value in companies like Ford or GM. Such strategy is also predicated on a “story” - that Ford will successfully migrate into EVs, that energy names do not face incredible risks with the energy transition and that cash flow generated by incumbent players are stable and certain. Some of the main trends we observed in 2021 indicate that 2022 could mark the “end of the beginning” of key solutions, as the distributed renewable technologies in the iClima Smart Energy ETF prove to move beyond concepts and into wider acceptance, revenue level and positive operating cash flow. A beginning of the year resolution on the on-again/off-again Build Back Better plan could trigger a rotation back towards many constituents in DGEN. Senator Manchin has just indicated that “the climate thing is one we probably can come to an agreement on much easier than anything else”. [4] Here are some of the 2021 trends, some segments faced material stock price correction while announcing solid product growth and further revenue prospects while some segments benefited from another year of sound share performance:

1. Microgrid and Smart Grid companies benefit from multiyear ongoing development of decentralized renewable energy integration, clean energy storage and electric vehicles converging into a grid that is managed and monitored more intelligently and is therefore more energy efficient. With increasing demand for the above reasons, the global market for microgrids, estimated at $24.6 billion in 2021, is projected to grow to $42.3 billion by 2026 by Business Wire, representing a CAGR of 11.4%. [5] Smart Grids are expected to sustain higher growth, from a $43.1 billion market size in 2021 to $103.4 billion in 2026, a 19.1% CAGR. The Smart Grid can be defined as digital technology that allows for two-way communication between a utility and its customers, allowing for better alignment of electricity supply to demand. [6] A Microgrid is a local energy grid that can disconnect from the traditional grid and operate autonomously. [7] With increasing demands for electricity, driven by wider adoption of EVs and home heating, coupled with the importance of reliability after periods of blackouts in extreme weather conditions, the demand for both these solutions is set to grow, and the companies in this segment largely benefited from share increase throughout both 2020 and 2021 as shown in the tables below. MYR Group (MYRG, up 84.41% in 2020 and up 83.94% in 2021), the Colorado based electrical infrastructure builder of both transmission, substations and distribution construction is an example, reaching almost $2 billion market cap at year end.

2. The companies the epitomise the idea of “local solar” did poorly in 2021, after extremely strong share price performance in 2020. Sunrun (RUN, down 50.56%) saw its revenue grow ca. 31% from 1Q21 to 3Q21, reaching ca. $439 million. That represented a 109% increase over 3Q20. Homeowners interested in security of supply and cash savings from day one continued to turn to the CA based company for their solutions. [8] However, according to Sunrun only 3.5% of US homes have residential solar installations on their rooftops. [9] In contrast, in Australia one in five homes has a solar system, obtained at $1.2 per watt, in contrast to the US’s $4 in the US, with installation times up to twelve times shorter than the US. Sunrun’s calculations show that there are a further 77 million potential beneficiaries of distributed generation across the US if this issue can be addressed. Bill Nussey argues that the discrepancy is primarily due to Australia’s single national regulation versus the US’s ‘patchwork’ landscape. [10] With the correction, Sunrun now trades at a Price/Sales ratio below 5x, as we can see in the table below.

3. Some of our most exciting constituents are ClimateTech names that were listed via SPACS during a favourable growth market period. Many of the names suffered a correction in 2021 despite being multiyear stories with so much going for them, as the solutions benefit from the convergence of EVs, clean energy storage and the digitalization of energy. V2G is a technology that allows pushing energy from the battery of an electric vehicle (EV) to a power grid. An EV car is plugged in at a home, but instead of charging, the energy in the battery can go either back to a home (V2H) or the grid (V2G). V2G is one of the most critical technologies for the future of the energy transition as EVs undeniable fast adoption will provide almost all the short-term storage a country needs. A 2021 EV has at least 50 kWh of storage and the home it is attached to might typically use less than 10 kWh a day. Nuvve (NVEE, down 22.65%) is the only listed pure V2G company, with hardware + software solution transforming EVs into power plants. The company reached many milestones in 2021 including 5th year anniversary of operating project in Denmark and closed the year announcing a partnership with BYD (BYD, up 21.2%), for the integration of Nuvve’s V2G into 5,000 BYD BEVs. [11] Charging network is a key infrastructure of the 21st century, not only because it is mitigating EV range anxiety, but because of their demand side energy management increasing capabilities. Nonetheless, Blink (BLNK, down 37.99%), ChargePoint Holdings (CHPT, down 52.47%) and EVGo (EVGO, down 7.19%) after rallying in anticipation of President Biden’s $1 trillion Infrastructure Package bill, closed the year in negative territory. However, the fundamental case for the need for a charging network is very strong because public charging is a pre-requisite for EV adoption, which is a key element of all net zero plans.

If we take some key figures for EVGo we make the point of the sizeable growth already observed. EVGo owns the largest public fast charging direct current network in the USA. In March 2021, it had over 220k active customers. At the end of 3Q21 it had 310k active customers. [12] Stem (STEM, down 7.28%) is a player in both the Behind the Meter (“BTM”) and Front of the Meter (“FTM”) AI powered clean energy storage. Stem sees the storage market as a $1.2 trillion opportunity to 2050, growing 25x until 2030. Increasing cost reduction in solar and wind installations, combined with further cost reductions in battery hardware, will enable such growth. Stem expects its revenue to grow at 50% CAGR to 2026. Blink Charging Co (BLINK, down 37.99%) is a similar case, a company that more than 10x in 2020 but suffered a correction in 2021. Back to a market cap around $1 billion, the company has increased revenue materially over the year, with 3Q21 at $6.4 million being ca. 3 times the 1Q21 reported revenue.


Smart Energy ETF Performance (as of 31.12.21)








iClima Smart Energy UCITS ETF (Acc)







iClima Distributed Renewable Energy Index







Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 31/12/2021

Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such a strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. Please note that all performance figures are showing net data.


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