What Were the Green Technology Trends in 2021
Top of 4 green tech innovations you should’ve invest in 2021
Now that President Biden took his seat in the White House, the clean energy revolution will be back on track for the United States.
As the world’s most powerful country, the U.S. leads the campaign for a clean energy revolution. In a span of 10 years, Biden will be investing $400 billion in clean energy technologies. Rejoining the Paris Agreement signatories, President Biden aims to cut 50% of the carbon footprint by 2035.
Along with this milestone comes a significant shift in the stock market behavior around the world. Two of the most influential stock exchanges in the world are in the U.S. — NYSE and NASDAQ. How the market trends perform in both of these markets will very much affect the rest of the world’s stock exchanges. Like a domino effect.
Intelligent investors are sensible enough to know that future trends will follow green investments. But what green technologies should you invest in in 2021?
#1 Solar Technologies
Before, solar technology was only used in outer space to provide power to satellites using the Sun’s energy. Now, solar panels have become cheaper in the past decade that even residential homes have them up on their roofs, backyards, or front lawns. They save up on their electricity bills, they help the environment, and they patronize companies striving for sustainable solutions.
Image taken from Our World in Data
From $378/MWh in 2010, solar photovoltaic panels have become more affordable at $68/MWh 9 years after! It happens to every novel technology — it’s expensive at first because research on the technical and economic competitiveness of solar energy is costly. But once these solar technologies are improved, the more efficient they become. Eventually, they will find ways to bring this novel technology to the middle-income and eventually to the low-income earners.
NextEra Energy, Inc. is one of America’s leading renewable energy providers, particularly in solar and wind energy technologies. Its market capitalization increased by 28% in 2020, outperforming oil companies like Chevron Corporation. Other solar companies like First Solar, Inc. are also doing well with a 46% gain last year. Invesco’s Solar ETF — a market index comprised of solar energy companies traded in the NYSE — has been a trailblazer with a 143% hike in 2020.
#2 Offshore Wind Farms
Other than solar energy, wind energy technologies are also racing towards commercialization. Although, more challenges are present compared to onshore wind farms. The weather conditions in the sea can be extreme. The turbines should be larger and taller. Not to mention, the logistics of constructing and operating wind turbines offshore are tricky. However, much of the wind energy potential is found offshore with a technical resource potential of more than 2,000 GW of capacity, according to the National Renewable Energy Laboratory.
This pushes wind energy companies to take the challenge of utilizing more renewable energy resources. In the 2019 report by the Global Wind Energy Council (GWEC), China had the most number of new offshore wind installations (2.4 GW), followed by the UK (1.8 GW) and Germany (1.1 GW). According to Statista, some leading companies in the offshore wind energy industry in 2019 are Siemens AG (Germany), Vestas Wind Systems A/S (Denmark), Ming Yang Smart Energy Group Ltd. (China), Envision Energy Co Ltd. (Germany), and GE Wind Energy LLC (U.S.).
GWEC also projects that offshore wind farms will reach full commercialization in 2030. There’s a lot of market potential for investors to tap into! Specifically, Vestas’ stock performance has increased by 72% last year. This company is one of Europe’s top-performing green stocks in 2020.
#3 Electric Vehicles
You’ve probably heard that Elon Musk, Tesla’s CEO (among his many other companies), has surpassed Amazon’s Jeff Bezos as the richest man in the world. Aside from exploring outer space and Mars, Elon Musk has long studied making and continuously perfecting electric cars to reduce the carbon footprint globally through the Tesla brand. Tesla, Inc. increased by a whopping 700% in 2020 which landed the company into the S&P 500 Index — a list of large-cap U.S. companies that benchmark the overall stock market performance.
But aside from Tesla, there are also aspiring competitors such as NIO, Inc. (China) and Fisker Inc. (U.S.). NIO is a dark horse in the game — losing profit in its early years in 2018 but came back strong with a soaring 1,300% performance in 2020. They may also have an advantage since much of the world’s battery supply comes from China.
Fisker, on the other hand, is much like Tesla but with a twist. Aside from cutting GHG emissions, electric vehicle materials are made from recyclable materials (e.g. plastic bottles, fishnets, and clothing). That’s a promising technology combining sustainable energy and waste utilization. Investors may want to put their money on Fisker as early as now because they won’t release their Ocean SUV until 2023.
Aside from private electric vehicles, there are also companies like GreenPower Motor Company Inc. who produce electric vehicles for public transport such as buses and trucks.
#4 Lithium-Ion Batteries and EV Charging Equipment
Lithium-ion batteries are the tiny things that power our smartphones and laptops so we can do our work anywhere and anytime. But its most appealing use that calls for increasing demand is in electric vehicles whose 2020 sales were around $1.7M. By 2040, BloombergNEF’s 2020 EV Outlook projects the sales to jump up to $54M.
Although the 2020 EV battery demand had it slow compared to 2019, the demand can grow as much as 14 times to a capacity of 1,755 GWh in 2030! According to S&P Global’s 2021 forecast, Europe beat China as the dominant global contributor to EV sales growth. But with President Biden’s plans of investing in 500,000 EV charging stations and replacing government vehicles with EV’s, U.S. might also join the EV global top players.
Examples of leading EV battery manufacturers are LG Chem Ltd. (South Korea), Contemporary Amperex Technology Co. Ltd. or CATL (China), and Panasonic Corporation (Japan) — showing Asia as the hotspot for EV battery equipment.
LG Chem had its best quarterly performance with a 25% increase in quarterly sales during the 2nd quarter of 2020 despite the COVID-19 pandemic. They are also expanding their operations in Poland and Ohio, where they are already building an LLC battery plant with General Motors. CATL, China’s top producer of EV batteries, is expanding plant operations in Germany. Panasonic is Tesla’s exclusive provider of lithium-ion batteries, but they have also recently partnered with Toyota with the plans of producing 500,000 EVs in 2022.
Are Green Technologies Worth the Investment?
Only time will tell. The next best thing we can do is to be on the lookout.
So far, solar energy, wind energy, and electric vehicles with battery charging equipment are the top green investments in the stock market right now. But more than looking at the performance of companies related to these industries for the last few years, it’s also important to be forward-looking.
What are the government regulations and world movements around the globe that’s influencing these market trends? Right now, that is climate change policies.
Conventional fossil fuel energy technologies have reached the plateau of the learning curve. There is only so much we can do to reducing GHG emissions from carbon-rich fuels.
It’s time to take the other path — the sustainable path. Learning curves for green technologies are still steep. There are still a lot of innovations that we have yet to see, which makes it exciting for investors.
With increasing installed capacities using these green technologies, the price will have to go down. And when the price goes down, more people will buy, increasing the demand.
Investors not only give support to the improvement of these green technologies, but they can also reap their rewards from these companies’ profits. If you ask me, it’s a win-win situation.
I think the climate change revolution is not a fleeting trend. Retrofitting our ways that will lessen the environmental impact takes a slow effortful change. We all know it — changing our bad habits is a holy grail. But it is doable and achievable.
We can restore the balance.
