Chinese companies leave world behind in race for renewables income, earning twice as much from clean energy as US peers

beijingwalker · Sep 4, 2023

Chinese companies leave world behind in race for renewables income, earning twice as much from clean energy as US peers

Companies on the S&P 500 produce just 3.4 per cent of their revenue from clean-energy sources, roughly half as much as Shanghai index-listed firms
Asia-Pacific has more than 680 companies that draw more than half their revenue from clean energy, compared with 410 in the US

Bloomberg

Published: 10:40am, 4 Sep, 2023

Wind turbines operate in Hezhang County, in southwest China’s Guizhou Province on August 19, 2020. Photo: Xinhua
Business Banking & Finance

The biggest Chinese companies are far out in front of their US and European peers when it comes to generating income from solar, wind, nuclear and other types of renewable energy.

Companies that make up the S&P 500 produce just 3.4 per cent of their revenue from clean-energy sources, which is roughly half of what companies on the Shanghai Composite Index earn, according to BloombergNEF (BNEF).

Chinese companies such as solar leaders Longi Green Energy Technology and Tongwei are benefiting from the nation’s dominant position in the clean energy supply chain. In fact, the largest number of clean energy equity investment opportunities are in the Asia-Pacific region, according to BNEF.

The region has more than 680 companies that draw more than half their revenue from clean energy, which includes renewable and nuclear power, electrified transport, biofuels, hydrogen and carbon capture, BNEF estimates. That compares with closer to 410 companies in the US and roughly 430 in Europe, the Middle East and Africa combined.

Workers produce photovoltaic modules at the workshop of a new energy company in Yi-Hui-Miao Autonomous County of Weining, in southwest China’s Guizhou Province, on July 19, 2023. Photo: Xinhua

With corporations struggling to make the transition to net-zero emissions, analysts at BNEF examined more than 8,000 companies to determine how much of their revenue is attributable to clean energy.

“Shifting business models toward greener activities is about more than being virtuous for the sake of the planet,” says BNEF’s Michael Daly. “There’s a huge financial opportunity for companies that help drive the energy transition.”

The opacity of company reports makes uncovering clean energy exposures a major challenge, Daly says. For instance, most large oil and gas companies do not break out clean-energy revenue as a stand-alone category. And some, such as fossil fuel giants ExxonMobil and Marathon Petroleum, provide no information whatsoever about any proceeds from clean energy activities.

Unsurprisingly, almost all renewable energy manufacturers and developers derive most of their revenue from clean energy, which earns them an A1 rating from BNEF, led by companies including China’s Contemporary Amperex Technology and Denmark’s Vestas Wind Systems. By comparison, 45 per cent of electric utilities tracked by the research firm are rated A1.

Electricitie de France SA generated almost 70 per cent of its revenue last year from nuclear power, with additional income from hydro, wind and solar sources, according to BNEF. Italy’s Enel has a more balanced set of clean power generation revenue and ranks just behind EDF and Sweden’s Vattenfall among the world’s largest utilities with the highest clean-energy exposure.

In the automotive sector, Tesla and BYD are the clear leaders, far ahead of traditional carmakers such as BMW and Ford, according to BNEF.

Looking forward, Daly says “we expect the latter group – traditional carmakers – to raise its electric-vehicle exposure, as more models are released and new policies supporting the EV roll-out are introduced.”