Chinese Firms Pour Billions Into Green-Energy Tsunami
Some analysts say outbound investment push is a win for decarbonization, others fear it is simply flooding the West
Chinese companies are pouring billions into clean-energy technology in an investment push some analysts say is a win for decarbonization. But the “green tsunami” also faces geopolitical barriers as China’s trade tensions with the West mount.
The political reality of having Chinese companies take the lead in the climate-change fight seems daunting, but the environmental benefits could outweigh political concerns, the analysts say.
“China’s growing domination of cleantech manufacturing and export supply chains is clearly a geopolitical issue the U.S. and the Western world can’t continue to ignore,” said Tim Buckley and Annemarie Jonson at Sydney-based think tank Climate Energy Finance.
“It is far from a secure, sustainable position for any country to dominate 80% to 90% of global market supply of anything,” they told The Wall Street Journal after CEF released a report on the surge in China’s outbound foreign direct investment into clean energy.
However the reality, according to Buckley, director and founder of CEF, is that China’s leadership in research and development, innovation, manufacturing and export in almost every sector of decarbonization technology means it is now in that dominant position in battery materials and solar manufacturing.
And it is quickly moving into pole position in other clean-technology spaces as well, including electric vehicles.
The report comes at a time of growing tensions between China and the West as the U.S. imposes sweeping trade tariffs on Beijing in a bid to protect its local industries from what it views as unfair competition.
CEF estimates that Chinese companies have committed more than $100 billion in outbound foreign direct investment since 2023, marking what it says is a pivot in how the country directs its green funds.
Chinese corporations are taking their traditionally domestically focused investment and deployment of energy-transition technologies global, the think tank said in the report published this week.
However, these cleantech initiatives face increasingly unfriendly reception abroad.
“Rising anti-China sentiment fanned by domestic political rivalries in the U.S. is undermining the willingness of Chinese firms to build new factories in the U.S., and their ability to deliver those investments they do propose,” Buckley and Jonson said.
They pointed as an example to battery maker Gotion High Tech, which has been trying to build a multibillion-dollar lithium battery-components manufacturing plant in Michigan. The effort has faced stiff resistance from locals and lawmakers.
China’s development model has tended to create overcapacity in fields policymakers deem to be strategically important, drawing criticism from those who say the practice has given it an unfair advantage in industries like electric vehicles. The clean-energy industry has been a top priority for Beijing, forming part of the economic growth drivers dubbed the “new productive forces” as it looks to pivot away from traditional engines of growth like the property sector to revitalize its economy.
Global clean-energy investments surged from $248 billion in 2014 to $745 billion in 2023, research firm and consultancy Rystad Energy calculates. During that time, China has deployed more clean-energy technologies than all other countries combined, it said in a recent analysis.
“In most fields of clean energy, China is now either at or near the technology frontier,” said Anders Hove, senior research fellow at the Oxford Institute for Energy Studies, an independent research institute based in the U.K.
The push has drawn criticism from the West. The U.S., Canada and the European Union have been raising tariffs on China-made goods like electric vehicles, in a bid to protect against what officials see as unfair competition. Beijing has defended its industrial policies, saying they are in line with the principles of a market economy.
Concerns about China’s dominance in renewables could have a silver lining, analysts say, and there are lessons to be learned for those who want to catch up.
While China’s success in clean energy is indeed due in part to state support, narratives fixated on an uneven playing field created by government subsidies are simplistic, Hove wrote in a research paper published in July. Such views overlook factors like the role of entrepreneurship and the importance of industrial clusters, he said. These Silicon Valley-like concentrations of businesses played a key role in scaling up China’s clean-energy manufacturing, spurring innovation and lower costs.
“While policy and subsidies encouraged entrepreneurs, risk-taking and business innovation fed back into the design of such policy, rather than just following the government’s lead,” Hove said. Talent, human capital and entrepreneurs were instrumental, he said.
China’s leadership in the renewable equipment manufacturing scene highlights more of an operational risk than a geopolitical risk, said David Thoo, a senior analyst at BMI, a unit of Fitch Solutions. Since the bulk of such equipment is made there—for example over 80% of all solar-manufacturing equipment—there is potential for delays in renewable power projects worldwide if supply chains are disrupted.
From what BMI has observed, the expansion plans of Chinese clean-energy firms, mainly solar equipment makers, in Western markets are limited. They are mostly setting up in Southeast Asia, Thoo said. However, if the main goal of such facilities is to manufacture equipment for export to the U.S. or markets with high tariffs, they will face challenges, he said.
“With the rise of protectionist policies and funding schemes to encourage domestic manufacturing of renewable equipment, we may see some sorts of ‘trade alliances’ that aim to reduce China’s dominance,” he said.
From a decarbonization point of view, China’s aggressiveness in clean energy seems to have a silver lining.
The scale of China’s investment has had a profound impact on the global energy transition, creating a ripple effect by pressuring other countries to develop their own cleantech manufacturing capacity, said Lars Nitter Havro, head of energy macro at Rystad Energy.
“The results are clear: As China ramped up its cleantech investments, the rest of the world followed in quick succession,” he wrote in a commentary.
As other regions catch up, China’s investment lead could narrow and may fade entirely by 2027, Havro said.
Until then, tackling the climate crisis may need to take precedence over trade concerns, some analysts say.
China’s progress in reducing the costs of producing batteries and solar panels supports more rapid decarbonization globally, and should also help competitors make faster progress as well, said Albert Park, chief economist at the Asian Development Bank.
“Supply chain diversification does not require tariffs,” he said.
While recognizing the need to maintain fair competition in trade, given the global urgency of meeting the climate challenge, ADB encourages all countries to reduce barriers to trade in environmental goods and services as much as possible.
China has delivered the goods, but trade barriers are making cost-competitive, cutting-edge clean technologies less accessible, said Buckley and Jonson at Climate Energy Finance, calling for a market-driven, pragmatic approach to the global energy transition that goes beyond geopolitical rivalries.
“In our view, China’s cleantech overcapacity—the ‘flooding’ of the market the U.S. has criticized—is more appropriately framed as under-deployment. It is the world’s great decarbonization opportunity,” they said.
Peloton: JMP Securities previews upcoming CEO announcement for Peloton, anticipates price hikes and cost cuts amid profitability push (4.62)
JMP's Anrew Boone noted, "With Peloton's new CEO expected to be announced at or before the next earnings call, which likely takes place in ~a month, we are previewing what we view as likely changes including a price increase for subscription, further cost cuts, and debt paydown. Interim management has tried to not make changes it views as permanent, giving the incoming CEO flexibility to make decisions based on his or her strategy. To that end, we believe there are obvious permanent moves like price increases, offshoring of talent, and capital allocation decisions coming as he or she settles into the seat. To that end, we are increasing our FY2026 EBITDA estimate by 15% as we identify multiple levers for Peloton to further drive profitability. We maintain our Market Perform rating. Despite the pull forward of demand continuing to be a headwind, Peloton has made significant progress increasing profitability and free cash flow as we continue to view its connected fitness experience as best in class. While we come away from our debt paydown work incrementally positive as there is a path to less than $100M of net debt in FY2027, we remain at Market Perform as we view valuation multiples as capped until subscriber growth returns as we project CF subscriber losses in FY25 and FY26."
Cipher Mining announces September 2024 operational update; BTC Mined: 155; BTC sold: 923 (3.85)
- During the month, the Company's operational and construction teams finalized preparations for the upgrade of the mining fleet at Odessa, expected in the coming weeks, and continued to build the new Black Pearl data center.
- "With the anticipated completion of the Odessa upgrade by year-end, we will have one of the most efficient fleets of mining rigs in the industry," said Tyler Page, CEO of Cipher. "At the same time, construction at Black Pearl is progressing well and is on track for energization by the end of Q2 2025," continued Mr. Page.
- "September was also a big month for corporate development as we successfully closed the acquisition of the 300 MW Barber Lake site, which is an ideal candidate for HPC hosting. This purchase was largely funded through the sale of bitcoin from our treasury. We manage our bitcoin holdings opportunistically, with the goal of maximizing shareholder returns. Large-scale, energized sites are in high demand and rarely available today. Therefore, we believe this was a perfect opportunity to exchange a portion of our bitcoin holdings for an asset that can produce extraordinary returns for shareholders over time. We look forward to updating the market in the coming months on our progress and discussions on potential tenants at Barber Lake," said Mr. Page.
Gapping down
In reaction to earnings/guidance:
In reaction to earnings/guidance:
- LEVI -11.2% (also announces strategic review of its Dockers brand), AIN -3.2% (guidance), NGG -1.5% (guidance), ANGO -0.5%
Other news:
- HIMS -8.7% (FDA says Lilly weight loss drug shortage is over)
- EQX -4.5% (announces convertible note conversion and bought deal secondary offering)
- ETON -2.9% (enters into an asset purchase agreement to acquire Increlex; acquisition is expected to close near year-end 2024)
- NVAX -2.6% (clarifies that it has neither updated nor reaffirmed its full year 2024 financial guidance issued on August 8)
- NGVT -2.6% (announces CEO transition as Fortson departs company; Fernandez-Moreno appointed as interim president and CEO)
- PAC -1.8% (September traffic)
- KTB -1.5% (in sympathy with weak LEVI earnings)
- RCUS -1.2% (announces collaboration with Volrustomig)
- TM -1.2% (pushes back production of EVs in North America to 1H26 amid slowing sales, according to Nikkei)
- JBL -1.2% (acquires Mikros Technologies)
- PNTG -1.1% (prices offering of 3.5 mln shares of common stock at $31.00 per share)
- ASTS -1.1% (completes redemption of public warrants)
- LASE -1% (to restate certain financials)
Gapping up
In reaction to earnings/guidance:
In reaction to earnings/guidance:
- NNDM +1.7% (guidance, also - DM stockholders approve merger), BIGC +1.4% (reaffirms guidance, also names new CEO and exec chair)
Other news:
- CLW +4.8% (temporarily suspends ops at 2 faciltites due to Hurricane Helene)
- CDXS +3.2% (increases cash reserves; appoints new execs, including a new CFO)
- HROW +2.4% (announces the relaunch of TRIESENCE 40 mg/mL)
- FPI +1.9% (to divest $289 million of farmland to Farmland Reserve)
- XPER +1.9% (Xperi and Perceive completed Asset Purchase Agreement with Amazon.com (AMZN) Services)
- RNA +1.9% (announces FDA removed partial clinical hold on Delpacibart Etedesiran)
- ALDX +1.9% (resubmits NDA for Reproxalap)
- ABVX +1.7% (Reports Interim Efficacy and Safety Analysis of Once-Daily 25mg Obefazimod in Moderate to Severe Ulcerative Colitis Patients After 2-Years of Open-Label Maintenance)
- LUV +1.5% (director acquires shares)
Research Calls I
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Upgrades:
- BMW Group (BMWYY) upgraded to Equal Weight from Underweight at Barclays
- EQT Corp. (EQT) upgraded to Buy from Neutral at Citigroup; tgt raised to $44
- EVgo Inc. (EVGO) upgraded to Overweight from Neutral at JP Morgan; tgt $7
- Imperial Brands (IMBBY) upgraded to Overweight from Equal-Weight at Morgan Stanley
- InvenTrust Properties (IVT) upgraded to Buy from Neutral at BofA Securities; tgt raised to $33
- RTX (RTX) upgraded to Hold from Sell at Deutsche Bank; tgt raised to $129
- Shoals Technologies (SHLS) upgraded to Neutral from Sell at Citigroup; tgt raised to $5.50
- Wolverine (WWW) upgraded to Outperform from Neutral at Exane BNP Paribas; tgt $22
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Downgrades:
- Academy Sports + Outdoors (ASO) downgraded to In-line from Outperform at Evercore ISI; tgt lowered to $60
- Blue Bird (BLBD) downgraded to Neutral from Buy at ROTH MKM; tgt $48
- British American Tobacco (BTI) downgraded to Underweight from Overweight at Morgan Stanley; tgt $33
- ChargePoint (CHPT) downgraded to Underweight from Overweight at JP Morgan
- CoreCard Corporation (CCRD) downgraded to Neutral from Buy at B. Riley Securities; tgt lowered to $15
- Infosys (INFY) downgraded to Sell from Hold at Investec
- National Grid (NGG) downgraded to Neutral from Buy at Citigroup
- Nestle (NSRGY) downgraded to Neutral from Buy at Citigroup
- New Fortress Energy (NFE) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $15
- Stellantis (STLA) downgraded to Equal Weight from Overweight at Barclays
- Tractor Supply (TSCO) downgraded to In-line from Outperform at Evercore ISI; tgt $300
- Voya Financial (VOYA) downgraded to Neutral from Overweight at JP Morgan; tgt $87
- Wipro (WIT) downgraded to Sell from Hold at Investec
- Wolfspeed (WOLF) downgraded to Underperform from Neutral at Mizuho; tgt lowered to $8
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Others:
- BridgeBio Pharma (BBIO) initiated with a Perform at Oppenheimer
- Cal-Maine Foods (CALM) resumed with an Equal-Weight at Stephens; tgt $82
- Casella Waste (CWST) initiated with an Outperform at William Blair
- Concentrix (CNXC) initiated with an Outperform at Robert W. Baird; tgt $70
- Devon Energy (DVN) resumed with a Hold at Jefferies; tgt $45
- Dianthus Therapeutics (DNTH) initiated with an Outperform at Oppenheimer; tgt $48
- Enovis Corporation (ENOV) initiated with a Mkt Outperform at JMP Securities; tgt $62
- Hormel Foods (HRL) resumed with an Equal-Weight at Stephens; tgt $31
- Larimar Therapeutics (LRMR) initiated with an Outperform at Wedbush; tgt $22
- Ligand Pharma (LGND) initiated with an Outperform at Oppenheimer; tgt $135
- Liquidia Technologies (LQDA) initiated with an Outperform at LifeSci Capital
- nLIGHT (LASR) initiated with an Overweight at Cantor Fitzgerald; tgt $15.50
- Pilgrim's Pride (PPC) resumed with an Equal-Weight at Stephens; tgt $43
- Republic Services (RSG) initiated with an Outperform at William Blair
- Sila Realty Trust (SILA) initiated with a Buy at Janney; tgt $28
- Two Harbors Investment (TWO) initiated with a Buy at Compass Point; tgt $15.75
- Tyson Foods (TSN) resumed with an Equal-Weight at Stephens; tgt $57
- Verona Pharma (VRNA) initiated with an Overweight at Wells Fargo; tgt $50
- Waste Mgmt (WM) initiated with an Outperform at William Blair
Nuclear / Uranium names higher on reports that Google (GOOG / GOOGL) may source power from nuclear plants
- Among names / ETFs trading higher: LEU 5.75%, SMR 4.60%, CCJ 2.93%, NNE 2.50%, UUUU 2.00%, LTBR 1.82%, URA 1.67%, URA 1.67%, URG 1.65%, DNN 1.55%, UEC 1.47%, BWXT 1.05%, NLR 0.77%
As data center usage heats up, Submer raises $55.5M to cool things down
The race is on for better chips and data center capacity to handle AI workloads, but all that activity comes with a catch. Heavy processing power means heat — a lot of it — and that has massive implications, both for how well servers operate and the environment.
With traditional cooling methods like air and water failing to keep up with demand, startups with new approaches are seeing their stars rise. Among them is Barcelona-based Submer, which just raised $55.5 million at a valuation of half a billion dollars to scale its business: a system where entire racks are submerged in, and operate out of, vessels filled with proprietary, biodegradable, non-conducting coolant that co-founder Pol Valls likened to an “amniotic fluid.” Some models also give users the option of capturing heat from their own cooling process to use for other purposes like heating buildings.
Submer’s business is already at a steady boil. Valls, who co-founded the company with CTO Daniel Pope, said that its customers include at least one of the world’s biggest and best-known “hyperscalers,” which operates a number of data centers; telecoms companies like Telefonica; corporates like ExxonMobil; government bodies like the European Commission; and major research centers. (Valls, who is the company’s CFO, declined to give several names on the record.)
Because of that list and the current pipeline in discussion, this round — an all-equity Series C led by M&G, with previous backers Planet First Partners and Norrsken VC also participating alongside new investor Mundi Ventures — is coming in at a valuation of about $500 million post-money. It’s also left the option open to raise more in the round.
The challenge that Submer is tackling is partly technological and partly one of cost and resource consumption.
Put simply, the data center industry is already a major energy hog, and AI is leading it to the trough.
Estimates from the International Energy Agency put data center consumption at 460TWh in 2022 (the latest figure available), which works out at between 1% and 2% of global energy consumption. The IEA predicts this could more than double to 1,000TWh by 2026, “roughly equivalent to the electricity consumption of Japan,” it writes.
Meanwhile, a research paper from Goldman Sachs from May noted that on average, a ChatGPT search “needs nearly 10 times as much electricity to process as a Google search.” The paper predicted that data center power demand will grow 160% by 2030. Other researchers have pointed to the “growing carbon footprint” of AI and the billions of cubic meters of water that are needed to cool these data centers.
That is where Submer’s technology comes to bear. As we have previously recounted, Valls and Pope arrived at the idea of building a better approach to data center cooling because of Pope’s previous experience in running data centers and Valls’ programming expertise. Valls could see that the pace of technology would demand more processing power over time, and Pope knew the limitations of data centers.
They turned to a network of retired industrial engineers and material scientists to help develop the product, which includes a coolant — a proprietary, non-flammable, biodegradable, synthetic mixture that has the viscosity of water, Valls said — and a smart container where server racks could be installed and operate.
These days, Submer offers a range of immersion fluids and containers, and in some models, the water cooling system that keeps the coolant cool can be run through a heat exchanger to in turn be re-used, for example, to heat a building.
The road hasn’t always been smooth for the startup. In 2016, feeling optimistic about what it had built, the duo applied but got rejected from Y Combinator.
At that time, Submer’s product might have indeed looked like an unglamorous solution for a very unglamorous business. It took the explosion of computing in recent years — first propelled by the rapid migration of applications to the cloud and now more recently the AI boom — to really focus industry minds and drive business ahead for the company.
Now the company is building an ecosystem, Valls said, where server component companies are interested enough in what Submer has that they are building parts that will be compatible with Submer’s solution.
“We have agreements with the major server OEMs,” Valls said. “It look a lot of time and effort but we are scaling these and it’s becoming easier and easier.” Its pitch is pretty simple, he said. “We show the data. It extends the lifespan of the servers and there are no particles, no dust, and no noise.” These partners include the likes of Dell, Supermicro, Intel, and more.
Per Pitchbook, the startup, which has now raised around $100 million (including this round we covered in 2020), is currently a standout among its peers in terms of money raised and valuation. Others taking the liquid-solution approach include Icetope in the U.K and two startups out of Texas. One, LiquidStack, announced funding from Tiger Global only a couple of weeks ago. The other, Green Revolution Cooling, is backed by the National Science Foundation and the U.S. Department of Defense.
The task ahead for Submer will be to get more partners and customers signed up. It’s notable that the company recently appointed a new CEO with considerable corporate experience. Patrick Smets, who initially joined Submer in August 2023 as the COO, came in as CEO in January 2024.