Renewable energy stocks have had a thrilling ride so far this century, with the industry seeing several boom-and-bust cycles. Stocks have soared, solar panel manufacturers have gone out of business, and even banking businesses have gone bankrupt.
Here’s why many people have been highly bullish on renewable energy companies right now, based on what investors have seen happen in the business over the last twenty years and where the sector is present.
The story of development.
Renewable energy is on the rise all across the world. There has been a rise in solar and wind energy output in the United States over the last century. However, wind and solar power account for just around 12% of total electricity generated in the United States.
Based on power cost alone, wind and solar are currently winning against natural gas, coal, and nuclear energy, so there’s no doubt they’ll continue to develop. As wind and solar power grow more affordable, additional energy storage and technological advances like hydrogen will likely develop. Renewable energy has a bright future, as long as the firms you invest in can profit from what they create.
The financial picture is beginning to take shape.
There are several methods to invest in renewable energy. Still, we will use solar as an example as it has more public firms than wind and a longer track record in public markets than hydrogen or energy storage.
In the recent decade, the solar sector has seen a lot of changes as costs have dropped dramatically, some companies have gone bankrupt, and fresh business models have developed. Today, the market is entering a more mature stage, with players acquiring technological advantages and scale that enable them to construct a competitive moat. As a result, companies like First Solar (NASDAQ: FSLR), Enphase Energy (NASDAQ: ENPH), SolarEdge Technologies (NASDAQ: SEDG), and SunPower (NASDAQ: SPWR) are seeing consistent expanding profitability.
What are the best ways to invest in the renewable energy today?
Solar stocks, financiers, and speculative investments are the three types of renewable investments that we classify. And all three provide promising prospects.
Companies that create or purchase renewable energy facilities, usually with long-term contracts to sell electricity to a utility, are known as financiers. They have relatively consistent cash flows and frequently pay a dividend. The leaders in this market, NextEra Energy Partners (NYSE: NEP) and Brookfield Renewable Partners (NYSE: BEP), both have exposure to wind and solar energy projects. They’re also beginning to invest in new technology projects such as energy storage, which can supply grid services. The truth of the energy sector is that it takes a lot of money to build projects and create renewable electricity. Nextera Energy Partners, as well as Brookfield Renewable Partners, are essential players in making clean energy a reality.
We concentrate on the solar market because there are few publicly traded wind companies in the United States. However, several companies stand out in solar energy, such as First Solar in solar panel production, SunPower in residential and commercial solar deployment, and Enphase Energy in module-level power electronics. As competitors decline, all three firms are riding the tide of solar energy expansion and have emerged as market leaders.
On the speculative end, we see hydrogen as a major opportunity. Bloom Energy (NYSE: BE) is a solid-oxide fuel cell industry leader that has also created a roughly $1 billion backup power company, with new markets including electrolysis and marine energy on the horizon. Bloom Energy might be a significant winner in the hydrogen market if costs continue to fall.B