Clean energy industries are likely to grow at generationally significant rates for an extended period of time

Our research and supply chain due diligence indicates that while the headwinds of 2021 were material, they are most definitely temporary and, in many cases, already showing signs of easing. Further, our view is that tightening monetary policy (particularly in the United States) is unlikely to cause an economic recession.

Looking longer-term, the world’s ambitions of shifting its energy sources away from emissions-intensive traditional forms isn’t showing any signs of slowing. We are proud to be investing in the solutions to these considerable challenges.

Our research indicates that the key clean energy sub-industries are likely to grow at generationally significant rates for an extended period of time. In particular, our bottom-up research indicates that installed renewable energy generation capacity (excluding hydroelectric) will increase by >5x between 2020 and 2030; annual production of electric vehicles grow by >20x; and energy storage capacity (excluding pumped hydro) by >100x. These critical industries require tremendous supply chains spanning many other ‘enabling’ industries such as microchips and communications technology, and not to mention basic metals.

We strongly believe that a powerful long-term thematic with broad-based government support globally (as evidenced by many of the outcomes from the United Nations Climate Change Conference held in Glasgow during November which we wrote about in our last letter) experiencing short-term fundamental headwinds and battered company valuations, represents an incredible investment opportunity.

The path ahead will not be without volatility (especially at this relatively early stage in its evolution – a characteristic we expect to gradually normalise over time) which necessitates an active long-term approach levering contemporary investment techniques such as quant but also traditional fundamental research and analysis of industries and companies, a genuine prioritisation of ESG factors, and oversight and deep insights from industry experts.