OCEN Invests in the Energy Solutions of Tomorrow

The energy giant, with extensions throughout the U.S. and Canada, has committed to growing its renewable energy production. Between 2019 and 2022, the company plans to bring online between 5,000–7,500 megawatts of emissions-free wind energy and 3,800–7,300 megawatts of emissions-free solar energy, per its website.

Not only is Nextera a leader in clean energy production, it is also the largest operator of functioning energy storage in the U.S. The ability to capture energy from renewable sources is important, but one of the biggest challenges that energy grids and companies are currently facing is how to effectively store the energy harnessed for peak hours when output might not be occurring.

Nextera has committed to continuing research and development of new technologies and strategies, through things such as the Babcock Ranch Solar Energy Center, the biggest combination solar and storage facility in the U.S. Another main technological innovation that Nextera is engaging in is green hydrogen, which involves using zero-emissions electricity to power an electrolyzer that splits water into hydrogen and oxygen. Hydrogen is a fuel source that has a broad range of uses, both industrial and commercial, and can be used for energy storage in power grids and as transportation fuel.

“Green hydrogen is needed for deep decarbonization in hard-to-abate sectors across industry, transportation, power and buildings,” Nextera writes. “Currently, decarbonizing many of these sectors is either technically challenging or is cost-prohibitive absent policy incentives.”

The IQ Clean Oceans ETF (OCEN) invests in the blue economy, which is estimated to be worth roughly $2.5 trillion annually and is anticipated to grow twice as fast as the mainstream economy by 2030.

OCEN seeks to track the IQ Candriam Clean Oceans Index, which offers exposure to companies involved in pollution reduction, carbon efficiency, clean energy, sustainable oceans, or cleaner shipping. These companies offer products or services that work to protect the oceans or promote cleaner oceans, use products or services that accomplish those goals, or else engage in activities that have ocean-related sustainability goals. Companies are not required to be primarily or directly engaged in these activities.

The index screens for ESG requirements in developed and emerging markets and applies an exclusionary screen monthly for companies that don’t comply with the UN Global Compact. The index includes companies of all market caps and utilizes a thematic score based on revenue and impact score to rank the companies it holds. Securities are weighted using a modified market cap-weighted methodology with a minimum weight of 0.25% and a maximum weight of 3% at its quarterly rebalances.

OCEN was developed in alignment with Oceana and contributes a portion of its management profits to Oceana, the largest international advocacy organization to focus on ocean conservation.

Nextera Energy Inc. is carried within the fund at a 3.3% weighting.

OCEN carries an expense ratio of 0.45% and currently has 80 holdings.

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