This report outlines the performance of the Deloitte Australia cleantech index (DACT) against the Australian Securities Exchange 200 (ASX200), and briefly touches upon the various sub-indices and leading companies in each category. The report highlights the constant growth being achieved in cleantech and compares this emerging industry and its constituents in the DACT with well-established Australian companies located in the ASX200.

DACT index comprises 93 companies listed on the Australian Securities Exchange (ASX) that are included in the cleantech sub-indexes. The index’s performance is compared with the ASX200, and throughout financial year 2019 (FY19) the DACT made an 18.8% gain, outperforming the market by 5.8% and making it the sixth consecutive year outperforming the market. This positive performance reflects significant growth by the industry and conveys how cleantech has matured as the world transitions into a sustainable future.

The cleantech sector is not to be confused with Socially Responsible Investments (SRI) or Environmental, Social and Governance (ESG). This is because SRI and ESG investments are focused on incremental increases in company performance. Cleantech, however, focuses on how the listed companies in the index positively enhance communities and ecologies they operate in through their output.

It is important that companies involved with the energy sector welcome constantly adapting and evolving clean technology as it is creating new investment opportunities and could be a cause of value loss for companies who do not abide. Infigen Energy (IFN) has embraced change to strategically evolve its company to maintain positive performance annually. As Australia’s largest listed wind power generator, the company has implemented 4 strategies to adapt to market conditions:

1. Organisation Restructuring – Infigen decreased its international exposure to focus on domestic operations. This came through selling its US solar development business for US$29.5 million, followed shortly by its US wind portfolio for US$274.4 million.
2. BESS – In 2018, Infigen invested in the Battery Energy Storage System (BESS), the same battery storage powered by Tesla Powerpack technology. It included a strategic partnership with the South Australian government and the Australian Renewable Energy Agency to co-fund the $38 million project.
3. Favourable Conditions – Nature’s volatility can affect multiple businesses, however wind conditions in Q4 of FY16 increased production thus improving revenue by 47%.
4. Firming up Capacity – The $74 million acquisition of the Smithfield Open Cycle Gas Turbine further increased Infigen’s value and growth strategy in its renewables portfolio. Infigen also announced a one cent per share distribution to shareholders and continue half-year dividends into the future. The last prior distribution was in 2010.

Within cleantech there are a number of niche sub-indices contributing to the DACT. In order of performance these include renewable energy, water, waste, sustainable minerals and efficiency & energy storage. These sub-indices have reported extremely positive performance in the last 5 years, with renewables leading the charge at 117% while the lowest being waste at 34%, still an encouraging indication of performance.

1. DACT involves 93 cleantech companies listed on the ASX, involving sub-indices like renewable energy, water, waste, sustainable minerals and efficiency & energy storage.
2. FY19 reflected the DACT outperforming the ASX200 by 5.8%, being the sixth consecutive year of outperforming the market. This reflects increased investment in the sector, ultimately resulting in increased overall returns in order to beat the market.
3. DACT has gained more than 100% over the last five years, 72.9% ahead of the ASX200's five year performance. High growth figures like this solidify a serious industry reaching maturity.
4. At the end of FY19, the DACT achieved a market capitalisation of $50.9 billion, the first time it has broken the $50 billion benchmark.
5. The leading sub-index over the last five years was renewable energy at 117%, followed closely by efficiency and energy storage at 116%. This sits well with Australia's position in the renewable energy space and its further growth potential.
6. The best performing stock on the index was Meridian Energy (MEZ), a New Zealand based electricity generator and retailer operating in Australia and New Zealand. Meridian reported a 6% contribution to the DACT index through FY19, attributed to new investment, particularly hydro storage and increased electricity demand.
7. Contact Energy Limited (CEN) was second in performance, with a 2.4% increase in FY19. Contact is another New Zealand renewables generator and retailer of electricity and natural gas. Contact focuses primarily on hydro, geothermal and thermal energy generation.