Decarbonisation and Smart Energy Monthly Report | August

08 August 2022


Economists and analysts are not calling the end of the market correction, but global markets breathed with relief in some of the trading sessions in the month. What for some was a bit of a “midsummer night’s dream”, on Tuesday July 19th 98% of the S&P500 constituents closed up, the highest percentage of companies advancing since December 26th, 2018.[1] Ark Innovation (ARKK), Cathie Wood’s ETF famously representing technology and innovation closed the month up 13.16% (although it is still down -52.29% in the year. Equity FED officials have raised interest rates by 75 bps at the July 26&27 policy-setting meeting, in line with expectations. Inflation remains the top priority of central banks, and signs of economic deceleration are not diverting attention from persistent increases in CPI rates. On July 22nd, Russia and Ukraine signed a deal that will allow Ukraine to resume exports of grains through the Black Sea, the agreement will give respite to global food supply (Ukraine is the 7th largest producer of wheat) and could alleviate inflation pressure.[2] The reporting of 2Q22 earnings (more on that below) is an important indicator of whether the US is already in a recession. A slowdown in corporate purchases, layoffs, and decrease in consumer spending may help to curb inflation, push yields lower, and prompt the Fed to pivot towards a more dovish approach.

The iClima Decarbonisation Enablers Index was up 12.05% in the month while down -16.55% YTD, as the iClima Distributed Renewable Index was up 20.80% in July and closed the 7th month period down -16.83%, while the S&P500 was up 9.11% and Nasdaq up 12.35% in the month. [3]

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.

Tesla reported 2Q22 results on July 20th, on what was considered a solid quarter despite the challenges with Covid lockdown in Shanghai.June was Tesla’s highest ever monthly vehicle production, with the recently inaugurated Berlin factory reaching 1,000 units/week throughput.[4] EV sales in 2Q22 reached $14.6 billion, a 43% YoY growth, with operating margins at 14.6% contracting from 19.2% in 1Q22. Total EV units sold in 2Q22 added to 258,580 cars and company reiterates a broad 50% long term sales growth. Tesla’s energy business had a solid quarter with solar deployed reaching 106 MW and storage deployed at 1,133 MWh. Tesla is however an outlier in terms of results, as only oil & gas companies, health care and consumer staples expected to beat earnings forecast.[5] Example of companies reporting bad results abounded, like Snapchat that missed on Q2 revenue, shares dropping 23% after the announcement on July 21st that sales per user were down -4.5% YoY.[6] Additionally, Blackrock reported a $1 trillion drop in AUM in 2Q22 versus the year before, and a 21% decrease in EPS.[7] Large US retailer Walmart reduced its earnings forecast citing inflation as a trigger for consumers reducing discretionary purchases.[8] However, the environment seems to be a “bad news is good news” one – reflecting the view that if corporates are facing a slowdown in earnings, hiring, and growth there would be no room for central banks to insist on hawkish measures.

US Senator Manchin derails President Biden’s Climate Bill, weeks after the Supreme Court of the US delivered its ruling limiting the Environmental Protection Agency (EPA) authority to regulate GHG emissions of power plants under the US Clean Air Act. The Lower House had passed the Build Back Better Act that had a $555 billion funding towards climate change mitigation, but Senator Manchin would not agree to more than $300 billion of climate funding.[9] It is unlikely that Biden will be able to pass his Climate Bill prior to midterm elections on November 8th. A concern with the SCOTUS stance on the EPA ruling is that it indicates that it would rule for Congress to explicitly give instructions to agencies, like the Securities and Exchange Commission (the SEC) to regulate on climate matters. While Congress and Supreme Court disappointed, it is important to make a distinction between “less harm”, reducing emissions from fossil fuel energy sources, and the acceleration of adoption of low emission alternatives. The EPA now have to get clear authorization from Congress to establish a cap-and-trade program or to demand generation changing from high emission sources towards renewables, but the current commodity price levels of coal and natural gas make the traditional power plants even less competitive and harder for companies to justify new developments of CCGTs. Certainly, it would be beneficial to have fiscal stimulus supporting buyers of EVs and solar panels with investment tax credits, but the acceleration of adoption of is also being prompted by the demand destruction that fossil fuel high prices is causing. US Climate Envoy, John Kerry, said on July 24th that President Biden is still considering enacting a climate emergency, which would allow the executive branch to leverage other funding sources to support his climate goals. [10]

Numbers are out for offshore wind additions in 2021, and the International Energy Agency (IEA) releases a new report on solar supply chain, both cases pointing out to the role of China in the energy transition. The Global Wind Energy Council (GWEC) announced the best year ever for offshore wind, as in 2021 ca. 21 GW on new offshore wind being added to global capacity, which brought the total global offshore wind capacity to 56 GW.[11] BloombergNEF analysis shows offshore wind as on track to reach 504 GW by 2035, a near 10x increase.[12] Of the new additions last year, 17 GW (so 80%) were developed in China, while the previous largest developer the UK added 2.3 GW of new offshore wind capacity. The US has not yet added any material capacity to the grid, but eleven states have over 35 GW of offshore wind under development, with two projects currently under construction in Long Island and New York. The Biden administration aim to support the installation of 30 GW of offshore wind by 2030 and as the federal government leases seabed it is a development that the President has room to support.[13] On the solar side, the IEA[14] published in July a detailed special report on the state of the solar PV supply chain.[15] While acknowledging that China had an instrumental role in bringing down the supply curve, with material increases in production capacity, the report calls for the need of diversification of the supply sources citing China’s current market share of solar manufacturing at 80%, from polysilicon, to ingots, wafers, cells and the full solar panels. However, half of that supply is met by demand from China itself. China is decarbonising Asia and the planet, and it would be detrimental to Net Zero targets if China were to slow down its investments in the green technologies and solutions.



The two iClima indices rebalanced on the first Wednesday in August. A total of 14 new names were added to the decarbonisation index, bringing the number of constituents to 174 while the distributed renewable energy index is now with 55 companies after three new additions. A few names were removed, companies that were not pure players in the space and where the data compiled by iClima does not indicate that their revenue growth in the decarbonising or distributed energy solutions were in the double-digit rates, a rule set out in our methodology. The new additions to both indices is summarized below.

AppHarvest Inc. (APPH, UP 10.03% IN JULY, DOWN -1.29% YTD) Jonathan Webb founded the AgTech B Corp certified company, which went public in February 2021, when $475 million of capital was raised in a PIPE.[16] The company epitomizes Controlled Environment Agriculture, as it develops and operates indoor farms to grow non-GMO produce free of chemical pesticide residues. Its products include tomatoes, other fruits and vegetables, such as berries, peppers, cucumbers, and salad greens. The company was incorporated in 2018 and is based in Morehead, Kentucky where Webb is originally from. Their flagship indoor farm uses 90% less water than the open field equivalent (water that is reused in a closed loop system), is strategically located less than 1 day drive to 70% of the US population, and can yield 30x more produce than traditional agriculture (a 60 acre high tech farm yields what would require 1,800 acres of open field production). [17]

Array Technologies Inc. (ARRY, UP 53.04% IN JULY, UP 7.39% YTD) was founded in 1989 and is headquartered in Albuquerque, New Mexico. It is a renewable equipment manufacturer, supplying solar tracking systems and related products in the US and globally. Its products include a single-axis solar tracking system and SmarTrack, a machine learning software that is used to identify the optimal position for a solar array in real time to increase energy production. In July JPMorgan increased its price target for Array to $28. [18]

Corporación Acciona Energías Renovables S.A. (ANE, UP 16.20% IN JULY, UP 31.18% YTD) Spanish construction Acciona announced in June 2021 its intention to float is subsidiary Acciona Energia that develops, owns, and operates renewable energy projects in Spain and other 15 countries. Assets include onshore wind, solar photovoltaic, hydraulic, biomass, and solar thermal projects with a total installed capacity of 11 GW and plans to grow to 20 GW by 2025. [19]

Ecopro BM Co Ltd (247540.KS, UP 5.20% IN JULY, DOWN -3.49% YTD) The South Korean parent company Ecopro Co Ltd went through a corporate restructuring and listed its subsidiary Ecopro BM, that develops and sells cathode materials used in batteries. Its products are used in EVs, electric energy storage systems, and in smart grids. The company was incorporated in 2016 and is based in Cheongju.

Gogoro Inc (GGR, DOWN -21.70% IN JULY, DOWN -39.37% YTD) The Taiwanese electric scooter and developer of the battery swapping system went public last April, when it raised $335 million.[20] Its two-wheeled electric vehicle are sold in China, India and Indonesia, where the scooters provides cloud connectivity and electric powertrain that utilizes swappable battery infrastructure allowing gathering, analysing, and sharing riding data through a mobile application on the rider’s smartphone. Gogoro has a strategic partnership with Foxconn Electronics Inc. The company was founded in 2011 and is based in Taoyuan City.

LG Energy Solution, Ltd (373220.KS, UP 13.75% IN JULY, DOWN -16.44% YTD) After spinning off from parent petrochemical company LG Chem, LG Energy went public in January this year. It develops and manufactures automotive batteries, which include pouch-type battery cells, modules/packs, and battery management system products for use in energy and power solutions, as well as light electric vehicles and energy storage systems that are used in power grids.[21] IT batteries for various applications in IT devices, such as smartphones and laptops are not considered by iClima as green revenue. It operates in South Korea, China, and the United States.

Local Bounti Corporation (LOCL, UP 21.70% IN JULY, DOWN -40.00% YTD) It is another CEA addition to the index, an AgTech that grows fresh greens and herbs in the US. It produces lettuce, herbs, and loose-leaf lettuce. The company sells its products to food retailers and food service distributors. It completed the acquisition of Pete's, a CA based lettuce producer for $122.5 million last April.[22] Local Bounti Corporation was founded in 2018 and is headquartered in Hamilton, Montana.

Lucid Group Inc (LCID, UP 6.35% IN JULY, DOWN -52.04% YTD) The high-end EV developer and manufacturer is now in commercialization mode, which is a requirement to be eligible for the iClima universe. The company has reiterated guidance of 12,000 to 14,000 cars being delivered by 2022 year end.[23] Lucid was founded in 2007 and is headquartered in Newark, California.

ReNew Energy Global PLC (RNW, UP 4.95% IN JULY, DOWN -12.72% YTD) The India based renewable energy developer went public at Nasdaq via a SPAC deal completed in August 2021.[24] The company operates through Wind Power and Solar Power segments. It also provides energy management services for public utilities, commercial, and industrial customers. In January ReNew announced a JV with Fluence (also in iClima’s index) to focus on energy storage investment opportunities in India.[25] As of March 31, 2021, its portfolio consisted of 9.86 GW of wind and solar energy projects, firm power projects, and distributed solar energy projects, of which 5.60 GW projects were commissioned and 4.26 GW were committed. ReNew Energy Global plc was founded in 2011 and is based in Gurugram, India.








&However, the mid to longer term growth prospects of green solutions – from EV adoption to long duration energy storage (LDES) – are extremely strong, led by German and EU efforts to replace Russian fossil fuels. That means that longer term investors have a unique opportunity to invest in the companies leading the energy transition at a steep discount. How fast that strategy will yield solid returns will depend on the fate of fossil fuel prices. Below we summarize the four possible scenarios that we expect markets to price in over the course of the next 24 months: A “green swan” case where fossil fuel investments increase and expected production goes up but the energy transition accelerates and prices from crude to gas collapse (as they did in the first lockdown, when 20% of global demand evaporated and crude for the first time ever traded at negative prices), to an “Orderly” case, where a fast transition somewhat balances a lower demand for FF with a lower supply, to a lower transition case where both green and brown stocks “Coexist”, to the extreme case of the “Revenge” of the old business-as-usual (BAU) economy. This last case seems to be what markets are pricing right now, not considering that the historically high fossil fuel prices could promote a demand destruction that only further prompts the substitution of hydrocarbon commodities.;



EV Segment

In 2Q22, Tesla (TSLA, down -11.2% in June, down -36.3% YTD) delivered 254,695 BEVs, compared to 201,250 BEVs in 2Q21 and 310,048 in 1Q22.[9] This 26.5% YoY growth fell short of expectations, but supply chain challenges, semiconductor chip shortages and a recent lockdown in Shanghai posed challenges to Tesla’s output levels. Tesla’s soft guidance for long term top line growth is 50%. Sales for the US market for the first semester are not out yet, but in Europe the most recent figures, released at the end of May, indicated BEV sales were up 20% YoY, representing 11% of all new units sold in May (PHEVs represented 8% of all units.[10] Nio (NIO, up 24.9% in June, down -31.4% YTD) had a positive month, benefiting from a change in sentiment regarding Chinese stocks, from a benevolent report by Morgan Stanley upgrading the company to Outperform, and positive sales figures for June.[11] Nio reported 12,961 units delivered, a 60.3% YoY growth, bringing sales in 2Q22 to 25,059 BEVs, a 14.4% YoY growth.[12] The battery swapping BEV maker in May listed its share in a third exchange, being the first auto company to be listed in HK, NYSE and now in Singapore. [13]

China based BYD, Xpeng and Li Auto reported even better sales figures.[14] Xpeng (XPEV, up 35.06% in June, down -36.9% YTD) sold 34,422 BEVs in 2Q22 including 15,295 in June alone, more than doubling the figure sold in June 2021. Meanwhile, BYD (BYDDF, up 12.14% in the month, up 17.78% YTD) sold 355,021 units of BEVs and PHEVs in 2Q22 - up 256% over 2Q21 - while Li Auto (LI, up 52.81% in June, up 19.35% YTD) sold 28,687 units of BEVs and PHEVs in 2Q22 - up 63% YoY. The graph below shows BYD and Li Auto as the pure players in the electric automaker space with the lowest drawdown levels in this very negative year for share performance, with BYD trading at 4 P/S (TTM sales).





Note: BYD and Li Auto are up YTD, negative drawdown refers to drop from highest share price within the last six months.


Fuel Cells

Green hydrogen has been likened to a Swiss army knife, for its potential use for a variety of decarbonizing solutions, from long duration energy storage, to blending with natural gas to a fuel for hard to abate heavy transportation segments.[15] A strategy to invest towards a (green) hydrogen economy is through shares of companies in the fuel cell and electrolyser segments. Plug Power (PLUG, down -10.34% in June, down -41.30% YTD) is the largest market cap name (ca. $10 Billion), with Bloom Energy (BE, down -5.82% in June, down -24.76% YTD) the company with the largest revenue in the universe of 10 names in the iClima Decarbonisation Index. Bloom makes solid oxide fuel cells (SOFC), which are at present predominantly fuelled by natural gas, while PlugPower makes proton exchange membrane (PEM) cells that run fully on hydrogen, operate in lower temperatures and can start and stop fast, making them suitable for transportation applications. IRENA last month released a Global Hydrogen trade cost, projecting that at sub $2/Kg “total demand for hydrogen in 2050 represents 12% of the total final energy demand”.[16] Of that global future need, ca 32% would be used by the power sector, with the remainder in ammonia and transportation. The future addressable market will clearly be material, but companies need to showcase the path to near term profitability, Bloom seems to be the closest company to reaching this positive margin.




Companies in the renewable energy segment are keen to enter into lucrative and fast-growing segments. For example, Iberdrola (IBE.MI, down -10.32% in June, down -4.94 % YTD) just announced its first utility scale clean energy storage project in Ireland.[17] However, despite the robust growth forecasts, certain equipment manufacturers are struggling to translate the long-term prospects into short term profitability.

That is the case for Nordex (NDX.F, -down 26% in June, down =41.51% YTD) and Vestas Wind Systems (VWS.CO, down -15.34% in June, down -25.05% YTD). Germany is going to be a key market for wind projects, as the country plans to double its onshore wind capacity by 2030, reaching 115 GW, a figure required to get their grid to 80% renewables by the end of the decade. That will require ca. 10 GW of annual onshore wind additions, 5-fold the ca 2 GW added in 2021. To do so the country will give renewable energy “overriding public interest” status. Last week in June, Nordex announced it is closing down a wind turbine blade manufacturing facility in Northern Germany.[18] Of the top 10 wind turbine manufacturers, six are Chinese, three are European (Vestas the largest player supplying ca. 10 GW, followed by Siemens Gamesa supplying ca. 9 GW and Nordex the smallest at ca. 2 GW, all in the index) and one is American (GE, not in the index).[19] In their efforts to accelerate the energy transition, European governments are also facing the question of how to support key local equipment manufacturers in the process, with a fresh history of how local solar panel manufacturers were not able to compete with price pressures from Chinese players.




Short term solutions to the energy crisis are energy efficiency and producing electricity (and storing it) at the point of consumption, i.e., in buildings. Insulation solutions, smart meters, smart thermostats, heat pumps, solar rooftops are key technologies represented in the graph below. Sunrun (RUN, down -10.57% in June, down -31.9% YTD), SunPower (SPWR, down -10.53% in June, down -24.25% YTD) and Sunnova Energy (NOVA, down -7.85% in June, down -33.99% YTD) had a good beginning of the month, when President Biden waved tariffs on solar products coming from Southeast Asia.[20] Heat pump makers Nibe (NIBE.ST, down -9.75% in June, down -43.84% YTD) and Trane Technologies (TT, down -5.93% in June, down -35.72% YTD) are poised to benefit from the RePower EU clear goal of 2 million heat pumps per year to be added to buildings in the region in the next 5 years (according to Ember almost 2 million heat pumps were installed in Europe in 2021), reaching a total of 30 million installations by 2030.[21]  The graph below indicates that current markets are discounting future growth despite the robust prospects of the many solutions.




Fluence, the JV between AES and Siemens focused on developing long duration energy storage (LDES) solutions, is doing a deep dive on the challenges that transmission system operators face in 2022. Solving intermittency is a key priority for the countries and regions committed to a 100% green grid; Germany and California in particular. Here are the first three articles not to be missed:

Intermittency & Congestion      Weakening Grid Stability        Reduced Visibility of Grid Assets

      Challenge 1                                 Challenge 2                                Challenge 3



Proactive New York spoke to Gaby about ESG 3.0, the challenging market and what is ahead for green growth. You can see the video here: 

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.



Climate Change ETF Performance (As of 31.07.22)








CLMA iClima Global Decarbonisation Enablers UCITS ETF (Acc)







CLMA iClima Global Decarbonisation Enablers Index








Smart Energy ETF Performance (As of 31.07.22)








iClima Distributed Renewable Energy UCITS ETF (Acc)







iClima Distributed Renewable Energy Index







Performance before inception is based on back tested data. 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. Source: Bloomberg / HANetf. Data as of 31.07.2022 Please note that all performance figures are showing net data.



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