Renewable energy stocks have been gaining attention in recent years as the demand for clean energy sources continues to rise. Investing in clean energy stocks not only supports the transition towards a sustainable future but can also provide significant returns for investors. In this piece, we’ll explore the current state of renewable energy stocks and the potential opportunities they offer for those looking to invest in the growing clean energy sector.
In November 2022, the world’s population reached a new high of 8 billion from a humble 2.5 billion in 1950. The United Nations said that while it took 12 years for the figure to go from 7 billion to 8 billion, it is expected to increase by nearly 2 billion people in the next 30 years – 9.7 billion in 2050.
As the world’s population grows, the concerns for climate change caused by traditional sources of fuel such as coal, oil and natural gas, are rising. Coastal areas are flooding, wildfires are raging and there is only limited time to combat global warming before the ramifications become permanent.
The scarcity of such resources is prompting people to invest in alternative sources of energy for the future – Renewable Energy.
Environmental solicitude in terms of fossil fuels, economic growth in developing regions and swift urbanization, is paving the way for green energy to become one of the fastest-growing economic sectors in the last decade.
According to a report by Statista, the global renewable energy market is expected to continue its upward trajectory in the coming years.
Why Is Renewable Energy A Good Investment?
Renewable energy is considered to be the way of the future. It is a way for people to change the consequences of climate change and not wait for others to fix the problem for us. The chance to aid the planet is a huge benefit but including renewable energy in your portfolio has more potential to offer.
While traditional energy sources are experiencing volatility, investing in renewable energy is a force of stability.
Sustainable clean energy is also enticing investors by becoming affordable. Solar energy and Wind energy are two of the fastest-growing energy sources in the world, and also the cheapest.
Previously, financial institutions had exploited loopholes to fund green energy ventures according to Guardian, by considering only green energy as money.
The IEA’s Renewables 2022 report predicts a major shift at a time of significant volatility and geopolitical tension – renewables are proceeding to become the planet’s largest source of electricity generation by 2025, surpassing coal.
“The first truly global energy crisis, triggered by the Russia-Ukraine conflict, has sparked unprecedented momentum for renewables.”
Amongst the green energy sector, IEA expects wind and solar photovoltaic energy to supply nearly 20 percent of the world’s power generation in 2027 whereas the growth in geothermal, hydropower and bioenergy is expected to stay limited despite their critical role in integrating wind and solar PV systems.
The amount of Greenhouse Gas (GHG) Emissions in the full life cycle of green energy projects is close to nil while the EPA recently concluded that 75 percent of the United States CO2 emissions emerge from traditional fuel combustion.
5 Best Renewable Energy Stocks To Invest In:
Biomass, Wind, Hydroelectric, Geothermal and Solar – the high potential renewable energy sources account for only 11 percent of consumption. It has become critical to diversify our supply chain and start making more investments in clean energy for a sustainable future.
Many companies are experiencing an investment megatrend due to the favorable outlook of renewables. Global leaders have colluded to speed up the adoption of the technology and aid in the energy transition.
In the last decade, by generating returns of 192 percent, renewable energy outperformed fossil fuel and continues to yield higher returns, corresponding to being less volatile as well. The market for renewable energy stocks looks promising and here are our recommendations for the best green energy investments one can make. These energy companies stand out from their competitors as the best stocks to buy in 2023.
Vestas Wind Systems:
Market Cap: $31.88 billion
Sector: Wind Energy
Founded in 1945, Vestas Wind Systems [CPH: VWS] is a Danish manufacturer and with 16 percent of its market, Vestas is the world’s largest wind turbine maker, present in 87 countries. Launched on the Copenhagen Stock Exchange in 1998, Vestas stock has grown 605 percent even after dropping 45 percent since January 2021 due to the Russia-Ukraine conflict.
Divided into two businesses, namely turbine manufacturing and wind farms, Vestas has showcased its grit by delivering the best solutions for wind power than any other company. As the most in-demand clean energy solution, the company has also partnered with governments that are hoping to hasten the transition to renewables.
With the unparalleled wind capacity of 154GW and incredible investments fueling the expansion of projects, Vestas stock downtrend appears to be short-term only.
NextEra Energy:
Market Cap: $151.08 billion
Sector: Wind and Solar Energy
NextEra Energy [NYSE: NEE] is a diverse electric utility company founded in 1925. As one of the largest producers of solar and wind energy, NextEra generates power at its Florida utilities and sells power under PPAs to other utilities and users.
In 2022, the company unveiled its Real Zero Plan which aims to eliminate carbon emissions from its operations by 2045. With an objective to supersede natural gas in NextEra’s power plants with renewable natural gas and green hydrogen, the company has managed its financial flexibility by maintaining one of the best balance sheets in the utility sector.
With an excellent track record of producing total returns of 1000 percent over the past 15 years, NextEra has powered its earnings per share at an 8.4 percent compound annual rate since 2005. The company anticipates delivering at least 10 percent annual dividend growth through 2024, already having earned its Dividend Aristocrat distinction for increasing its annual dividend for over 25 years, consecutively.
Earnings are predicted to increase by nearly 6-8 percent of the annual target range by 2025, fuelled by continued investments.
Clearway Energy:
Market Cap: $6.56 billion
Sector: Wind and Solar Energy
Deemed one of the leading owners of renewable energy facilities in the U.S, Clearway Energy is headquartered in San Francisco. Generating a steady cash flow through power-selling through PPAs, Clearway sold its thermal business in 2022 and gained $1.35 billion from cash proceeds to expand its renewable energy operations.
Complementing its clean energy assets, the company has started to become more visible in its capability to increase its dividend. Clearway Energy continues to capitalize on newer renewable energy opportunities, expecting to hike its dividend towards an 8 percent annual target through 2026.
Brookfield Renewable Partners:
Market Cap: $17.39 billion
Sector: Hydroelectric Power
As the global leader of hydroelectric power, Brookfield Renewable [TSE: BEP.UN; NYSE: BEP] has also been steadily soaring in its solar (utility and rooftop solar), wind (offshore and onshore) and energy storage operations. Utilizing long-term PPAs, the company has expansion to thank for its skyrocketing growth.
Since its inception in 2011, Brookfield Renewable has generated total annual returns of 18 percent. The company’s assets include over 200 hydroelectric plants, wind farms, storage facilities and solar facilities with over 21GW power. With its headquarters in Toronto, Canada and extensive acquisitions in its pipeline, Brookfield Renewable sees immense growth ahead, estimated to be 20 percent through 2026.
These projects will help hike the dividend between 5-9 percent annually. With fundamentals such as top-notch potential, strong management and attractive dividend yield, Brookfield sets the class apart from other green energy companies.
SolarEdge Technologies:
Market Cap: $17.63 billion
Sector: Solar Energy
An Israeli company established in 2006 in Delaware, SolarEdge Technologies [NASDAQ: SEDG] develops and sells battery energy storage products, solar inverters for photovoltaic arrays and other energy-related products to residential, industrial and commercial customers.
The company has ventured into smart energy solutions with its core inverter business generating strong financials. The component of developing and manufacturing an optimized inverter system that maximizes power through solar panels. has helped SolarEdge Technologies to capitalize on the decarbonizing trend.
Expanding into low-cost solutions, the company held nearly $1 billion in net cash in 2022. The stock achieved phenomenal success growth of 277.7 percent since 2015 making it the second-largest company in the solar sector. With a rich revenue percentage increase in the last 8 years, SolarEdge has leveraged its inverter expertise to strengthen rising sales, making it a good pick for a profit-driven investor.
SolarEdge aims to address other market segments such as solar, uninterruptible power supplies (UPS), electric powertrains, grid service solutions, storage and electric vehicle charging through its acquisitions.
