Energy Security Goes Mainstream, Prioritize Focus on Green Power

Currently, the global geopolitical conflicts remain uncertain, and the energy supply landscape is accelerating its restructuring. Energy security has become a key concern for countries and the central investment theme across markets.

Why focus on the electricity energy theme now? It may be one of the few options with growth potential that is less affected by the course of wars.

1. If the conflict further escalates, global oil and gas prices will likely rise further, increasing the urgency for alternative energy development.

2. If the conflict de-escalates and peace talks proceed smoothly, global risk assets could rebound. Green energy has two core logic drivers: “power generation going overseas with computing power” and “increasing the proportion of green energy,” both of which offer valuation expansion opportunities.

Overall, in the current uncertain war environment, green energy is one of the few sectors with strong intrinsic industry logic and less impact from geopolitical conflicts.

The recent rise of the energy security concept is not a short-term hype but a long-term trend driven by geopolitical conflicts and the global restructuring of energy systems. The ongoing tensions between the US and Iran have significantly decreased the stability of international oil and gas supplies. The risks associated with energy supply concentration have been greatly amplified, elevating energy security from an industry issue to a national strategic priority.

Why prioritize green power generation?

1. Green energy is the core beneficiary of energy security

As energy security issues become more prominent, electricity—being the central carrier of energy—stands out due to its distributed deployment, limited resource constraints, and high controllability. It has become an important alternative to traditional fossil fuels. Capital inflows into “electricity-related” assets reflect recognition of the long-term demand for energy security. As a directly benefiting “power generation” asset, green energy benefits directly from this industry trend and capital alignment.

2. Three core logic drivers support green energy value

3. Valuations are at reasonable lows, making green energy among the most undervalued assets in the energy security chain

From a valuation perspective, the green power sector has notable allocation advantages. Currently, the CSI Green Power Index’s rolling P/E ratio is only around the 50th percentile over the past five years. Among energy-related assets, it has significantly lower valuations, offering a better valuation advantage.

2. The expansion of computing power overseas opens new space, enabling cross-border monetization of power value

China has the world’s largest, most cost-effective, and most stable power supply system, generating over one-third of global electricity and with installed capacity exceeding the combined total of G7 countries. Its power advantage is clear.

However, for a long time, electricity could not be transported across borders, limiting its external value realization. The rise of AI computing power and token export models has broken this limitation. Domestic green power can directly supply AI data centers, converting clean electricity into computing services and exporting via tokens globally. When overseas users access API services, the electricity consumption occurs domestically, but the value is realized through digital cross-border transfer. This “electricity stays in China, but the value goes global” model opens long-term growth space for green energy in the global computing market, significantly enhancing profitability and long-term value.

3. Policy mandates will accelerate green energy share

Strict policy constraints provide definite support for green energy demand. With the explosive growth of AI industries, AI data centers (AIDC) have become major electricity consumers. The national government explicitly requires that new AIDC projects at key nodes must have at least 80% green electricity consumption, with plans to further raise this standard. Under these policy mandates, the rapid growth of AI computing power will create rigid demand for green energy, quickly increasing its share in the energy consumption structure. Green energy is shifting from an “optional energy” to a “necessity,” with industry growth driven from policy guidance to demand-driven, unlocking long-term growth potential.

How to allocate green energy?

Currently, there are two green energy-related indices tracked by the market: the CSI Green Power Index and the Guozhen Green Power Index. The main difference is that the CSI Green Power Index emphasizes companies involved in wind, solar, hydro, and other green power sectors, as well as thermal and nuclear power companies transitioning into green energy. It does not limit itself to standard industry classifications but considers actual business operations, including a broader coverage of relevant companies. Since March, this index has also shown better performance during the rally.

Green Power ETF: E Fund Green Power (562960, Connect A/C: 019058/019059) tracks the CSI Green Power Theme Index and is a high-quality product for capturing green energy investment opportunities. Since March 19, it has seen five consecutive days of net capital inflows.

Table: Comparison of Green Power Indices

Source: Wind, data as of 2026/2/27