Key industries and companies within clean energy are still small and are likely to grow significantly

Despite renewables being considered the ‘next big thing’ for the last few decades, their penetration remains small and therefore the growth potential is large. Despite considerable capital flows into clean energy in 2020, the leading companies remain relatively small, for example:

• Solar and wind remain undersized versus conventional markets at c.2% and c.6% of global electricity production, respectively.
• The world’s leading manufacturer of wind turbines, Vestas Wind Systems (VWS DC), and the world’s largest manufacturer of solar panels, Jinko Solar (JKS US), make similar margins and each have similar market share to the world’s largest automotive manufacturer, Volkswagen (VOW GY). Notwithstanding the challenges facing conventional automotive, VOW’s enterprise value is 50% greater than that of VWS and nearly 4x that of JKS.

We strongly believe this is the most compelling thematic investment backdrop for decades – even more compelling than technology companies in the mid-1990s.