Top renewable energy stocks

Renewable energy still has plenty of growth opportunity

Despite the global lockdowns that came with the emergence of the Covid-19 pandemic, it’s evident that there’s been rapid growth in wind and solarphotovoltaic (PV) as renewable energy sources.¹

According to the International Energy Agency (IEA), the United Nations Change Conference (COP26) held in November 2021 shone the spotlight on the reduction of carbon emissions and the use of clean energy. COP26 goals for 2030 include accelerating the phasing out of coal as an energy source, preventing deforestation, speeding up the switch to the use of electric vehicles and encouraging investment in renewables.²

In 2021, China was the global leader in renewable energy installations, and according to IEA predictions this’ll continue for the foreseeable future.¹ However, an increasing number of emerging markets are following suit.

Mobilising the world to be on track with COP26’s target of net zero emissions by 2050 will need an investment of $4 trillion a year by 2030. This’ll allow for the accelerated transition into clean energy.

There’s huge growth expected in clean energy technologies over the next decade in IEA’s Net Zero Emissions by 2050 Scenario (NZE), which is likely to lead to this renewables market being worth a cumulative $27 trillion by 2050.¹ The combined renewable energy market includes wind turbines, solar panels, lithium-ion batteries, electrolysers and fuel cells.

It’s predicted that by 2050, there’ll be about three billion electric vehicles (EVs) globally, which‘ll require three terawatt-hours (TWh) of battery storage. This’ll see batteries grab 60% market share in the clean energy technology equipment sector.¹

^{Source: International Energy Agency, 2018}

Generating electricity will remain the main use case for renewables, which is expected to account for almost 30% of global electricity demand by 2023. Hydropower is expected to be the biggest contributor, accounting for 16% of global electricity demand, followed by wind at 6%, solar at 4% and bioenergy at 3%.

The IEA says around 70% of the new power generation capacity to come online in the period up to 2023 will be powered by renewables, led by solar and followed by wind, hydropower and bioenergy.

How to take a position on renewable energy stocks

1. Invest in renewable energy stocks by opening a share dealing account
2. Trade renewable energy stocks – without taking ownership of the underlying asset – by opening a spread betting or CFD account
3. Practise spread betting and CFD trading in a risk-free environment with a demo account

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Top 10 renewable energy stocks: RENIXX-World stocks

The Renewable Energy Industrial Index (RENIXX) is a global index that tracks the 30 largest renewable energy companies by market cap, worldwide.

Some of these companies have diverse portfolios like wind energy, solar energy, hydropower, geothermal energy, bioenergy or fuel cell technology, while others concentrate solely on one power source, such as solar.

Many of the largest players are highly cash-generative, profitable and dividend-paying, and offer relatively stable business models that benefit from reliable revenues sourced from regulated markets.

We share the top 10 renewable energy stocks in more detail below. Note that these stocks have not been chosen as the largest renewable energy shares in the world alone, but rather based on various factors including market cap, future growth prospects, dividends and latest results. This list was last updated on 4 January 2022.

Sources to use for top stocks:

1. Tesla ($1.15 trillion)
2. Verbund ($58.36 billion)
3. Ørsted A/S ($52.59 billion)
4. Enphase Energy ($24.05 billion)
5. SolarEdge Technology ($14.34 billion)
6. First Solar ($9.28 billion)
7. Sunrun ($7.15 billion)
8. Neoen SA ($4.42 billion)
9. Ormat Technologies ($4.41 billion)
10. Jinko Solar ($2.20 billion)

Keep in mind that despite the global positive shift towards clean energy, this high growth and highly competitive industry can be volatile – resulting in drastic price swings. Keep abreast of news coverage around the sector and these companies when you’re looking to take a position, or are already holding a position on a stock.

You can take a position with us, whether the share price is rising or falling.

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Tesla ($1.15 trillion)

US-based electric vehicle (EV) and clean energy company Tesla is the leader among the pack in the renewable industry worldwide. Tesla’s currently in production with its in-house cell project and the Powertrain.

In its Q3 2021 financial update, the group reported their best-ever financial performance, $2 billion operating income, $1.6 billion net income and 30.5% automotive gross margin.3 Tesla’s strong financial performance can be attributed to delivering 73% (241,391) more vehicles YoY compared in the quarter, compared to 139,593 units in Q3 2020.

Tesla is also involved in energy storage, which saw a 71% year-on-year (YoY) increase in Q3 2021 that was driven by a strong Megapack deployment. In their solar retrofit and solar roof division, Tesla had 83MW of solar deployments in the same quarter, raising its YoY performance by 46%.

In Q4 2021, Tesla delivered 308,600 vehicles globally. And as the demand for electric vehicles increases and more players enter the market, the company believes more Tesla owners will spread the gospel about the benefits of electricity-powered cars.

The year 2021 also saw the launch of Tesla Vision, which was aimed at solving the problem of full autonomy through the collection of large datasets from Tesla vehicles and the implementation of advanced artificial intelligence (AI). The vehicles boast zero emissions, which has earned Tesla a significant amount of praise from the markets and the public alike.

Some of Tesla’s competition in the EV space include General Motors and semiconductor giant Nvidia.

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Verbund ($58.36 billion)

Verbund, Austria’s largest electricity provider, generates 90% of its energy from renewable sources – primarily hydropower plants, photovoltaic and carbon dioxide-free hydrogen. The company is involved in testing technology on an industrial scale to ensure replacing fossil fuels is an increasingly viable option.

The company has the following plants that generate electricity: 129 hydropower plants (31,525 GWh), 153 wind power plants (924 GWh), four photovoltaic parks (1 million kWh) and one thermal power plant (1.033 GWh).4

In their interim results for Q1 to Q3 2021, the company reported positive results, mainly driven by below average gas storage inventories, unfavourable weather conditions and low energy supply due to Covid-19 related interruptions, which hiked the prices of natural gas and coal prices worldwide.

As a result, the Austrian company’s share price also increased to an all-time high of €95.55 on 14 September 2021, while its market cap rose to €33.2 billion in Q3 2021, up from €27 billion in the previous quarter.

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Ørsted A/S ($52.59 billion)

Ørsted A/S is a renewable energy company based in Denmark that’s a global leader in offshore wind power. It also supplies onshore wind energy and solar energy solutions. The Danish company operates sustainable bioenergy plants.

In the Q3 2021 interim report, the multinational said its earnings from operational wind and solar assets amounted to kr10.3 billion for the first nine months of that year. This was a kr1.3 billion decrease compared to the first nine months of 2020, which was caused by wind speeds that continued to be significantly lower.⁵

Its operating profit (also known as EBITDA) totaled kr16 billion. EBITDA excluding new partnerships totaled kr10.7 billion, which was a decrease of kr2.4 billion compared to the same period in 2020. The company attributed this decrease to lower wind speeds than normal that resulted in an adverse impact on the company’s operational earnings.⁵

In December 2021, it (alongside other partner companies) commissioned the world’s biggest offshore wind farm Hornsea 2, located 89 km off the UK's east coast, to generate its first power.⁶ When fully operational, Hornsea 2’s 165 8MW Siemens Gamesa wind turbines will be capable of generating 1.32 GW of clean electricity. When combined with its predecessor Hornsea 1, they’re capable of generating enough energy to power more than 2.3 million homes. ⁶

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Enphase Energy ($24.05 billion)

Enphase Energy is a global energy management technology company that supplies microinverter-based solar-plus-storage systems. It delivers smart tech solutions that connects solar generation, storage and energy management on one platform.

The company has a semiconductor-based microinverter system that converts energy at the individual solar module level, transforming traditional solar energy systems into high tech ones. Inverters convert direct current (DC) power – obtained from solar generated photovoltaic (PV) cells from the sunlight – into alternating current (AC) which is used to electrify residential and commercial spaces.⁷

Enphase has been so successful because its microinverters are compatible with virtually any solar panel, which means the company can create a huge number of partnerships with other firms.

As at the of September 2021, the company had in excess of 39 million microinverters shipped and over 1.7 million residential and commercial managed systems were in more than 130 countries.⁷

In its Q3 2021 financial results, the company said it shipped just under 2.6 million microinverters, generating revenue of $351.5 million – an increase of 11% compared to the previous quarter.

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SolarEdge Technology ($14.34 billion)

SolarEdge Technologies is a global leader in smart energy technology and has developed the optimised inverter that changed the way solar power is harvested and turned into electricity.

For instance, the company’s DC optimised inverter increases power generation while reducing the cost of energy produced by the PV system. SolarEdge also has a number of products that range from PV, storage, EV charging, batteries, uninterrupted power supply (UPS), EV powertrains, and grid services solutions.

In its Q3 2021 financial results, the company announced record revenues of $526.4 million – a10% increase from the $480.1 million earned in Q2 2021 and a 56% hike from the $338.1 million generated in Q3 2020.⁸

The company’s record revenues were achieved despite the unprecedented global logistics and supply chain challenges, said the company CEO Zvi Lando. He continued that despite a 12-week Covid-19 related shutdown at its Vietnam manufacturing facility during Q3 2021, they were still able to supply products to meet the growing demand of their customers.⁸

The company remains optimistic that it would clear the backlog that resulted from the shutdown by Q1 2022 as it continues to support its customers’ businesses.

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First Solar ($9.28 billion)

First Solar is a US-based global provider of eco-efficiently produced advanced thin film PV modules aimed at providing a competitive, high-performance, lower-carbon alternative to conventional crystalline silicon PV panels.

In its Q3 2021 financial results, the company said that despite the challenges that came with the Covid-19 pandemic and the extended transit times for ocean freight impacting quarterly results, it still produced 2.0 GW DC of modules in the quarter – meeting its delivery commitments.

Q3 2021 net sales were $584 million, a $46 million decrease from the previous quarter, with the company attributing the decrease to lower systems segment revenue. The quarter’s operating income was $51 million.⁹

The cash, cash equivalents, restricted cash, and marketable securities at the end of Q3 2021 totaled $1.9 billion, which was a $111 million decrease from Q2 2021. The company said the decrease was due to capital expenditures and reinvestment of restricted cash.

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Sunrun ($7.15 billion)

Sunrun is the leading home solar, battery storage and energy services company in the US. This pioneer of home solar services was founded in 2007 and has plans to increase the accessibility of clean energy to American at affordable rates.

In its Q3 2021 financial results, the group’s management said they expected a 30% growth in installed solar energy capacity for the full-year 2021. This was pro-forma for Vivint Solar, a company Sunrun acquired as part of its strategic move to accelerate its adoption of clean energy. The Vivint Solar acquisition was finalised in October 2021.10

The Vivint Solar addition to the business increased the Sunrun customer base by 30,698 in Q3 2021 to a total of 630,441 – a 20% year-on-year jump.

The company generates $787 million annual recurring revenue with an average contract life remaining of 17.3 years. The group’s net earning assets were $4.5 billion, which included $941 million in total cash networked solar energy capacity of 4.5 Gigawatts.

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Neoen SA ($4.42 billion)

Neoen is one of the world’s leading and fastest growing independent renewable energy producers. Neoen currently has over 4.8 GW of solar, wind and storage capacity in operation or under construction in 11 countries, namely Australia, France, Finland, Mexico, El Salvador, Argentina, Ireland, Jamaica, Mozambique, Portugal, and Zambia. It also has a presence in Croatia, Ecuador, Sweden, and the US.

Some of the French company’s flagship assets include France’s most powerful solar farm in Cestas (300 MWp), and the world’s largest lithium-ion power reserve in Hornsdale, Australia (150 MW / 193.5 MWh storage capacity).11

In its financial results for Q3 2021, the company announced a consolidated revenue of €77.7 million, which was a 16% increase compared to the same period in 2020.¹¹

It also reported a solar revenue that was 3% lower than in Q3 2020 due to unfavorable irradiation conditions in Europe and in Australia. However, despite reduced wind conditions in Europe, the company reported that wind revenue increased by 13% compared to Q3 2020 due to the contribution from new projects in France and the Bulgana facility in Australia that were commissioned in Q4 2020.

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Ormat Technologies ($4.41 billion)

Ormat Technologies operates geothermal plants and energy recovery plants that turn excess heat into power. The company runs its own plants in the US, Guatemala, Guadeloupe, Honduras, Indonesia and Kenya, and it also builds and designs plants for others.

The company saw a 13.8% increase in electricity generation within its portfolio, with steady revenues of $93.6 per MWh in Q3 2021 compared to $92.3/MWh in the same period in 2020.¹²

In its Q3 2021 financial results, the company reported a 10.2% revenue increase to $472.1 million for the first nine months of that year and a 0.1% increase to $158.8 million in the quarter. The adjusted EBITDA for the nine months showed an 8.2% growth to $285.4 million, while that for the Q3 2021 had a 5.1% increase to $101.6 million.¹²

The company’s growth plans include significantly increasing its solar and geothermal capacity, accelerating its storage capacity to be in the leading position in this segment in the US.

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JinkoSolar ($2.20 billion)

JinkoSolar is one of the world’s largest solar module manufacturers that sells and distributes its products to a diversified international utility, commercial and residential customer base in various countries and regions. Some of these include China, the United States, Japan, Germany, the United Kingdom, Chile, South Africa, India, Mexico, Brazil, the United Arab Emirates, Italy, Spain, France, Belgium.

Additionally, the Chinese company has nine production facilities and 22 subsidiaries worldwide. As of September 2021, JinkoSolar had built a vertically integrated solar product value chain with an integrated annual capacity of 31 GW for mono wafers, 19 GW for solar cells and 36 GW for solar modules.¹³

In its unaudited financial results for Q3 2021, the company reported that its total revenues for the quarter were RMB8.57 billion (US$1.33 billion) – an 8.1% increase from the RMB7.93 billion in Q2 of the same year. JinkoSolar attributed the revenue hike to a rise in solar module shipment.¹³

The company also observed a 2.3% year-on-year decrease in total revenue from RMB8.77 billion in Q3 2020 due to an annual decline in solar module shipment.

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RENIXX-World stocks constituents

Here’s a list of all of the constituents of the RENIXX-World index:

Sources:

¹ The International Energy Agency, 2021
² COP26, 2021
³ Tesla, 2021
⁴ Verbund, 2021
⁵ Østed interim financial report, 2021
⁶ Østed, 2021
⁷ Enphase, 2021
⁸ SolarEdge Technologies, 2021
⁹ First Solar, 2021
¹⁰ Sunrun, 2021
¹¹ Neoen, 2021
¹² Ormat Technologies, 2021
¹³ JinkoSolar, 2021