Top renewable energy stocks
Renewable energy – whether harnessed from the sun, wind or water – is becoming the power of choice as the world strives to tackle climate change. Discover which renewable energy stocks are on investors’ radars.
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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
- Invest in renewable energy stocks by opening a share dealing account
- Trade renewable energy stocks – without taking ownership of the underlying asset – by opening a spread betting or CFD account
- Practise spread betting and CFD trading in a risk-free environment with a demo account
Alternatively, if you don’t feel ready to start trading at all, you can continue to learn more with IG Academy’s range of online courses.
Top 3 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 3 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 30 July 2022.
Sources to use for top stocks:
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.
Tesla ($861 billion)
US-based electric vehicle (EV) and clean energy company Tesla's shares have had a great run in 2022, up 27% this year so far. The company helmed by Elon Musk makes world class electric vehicles and associated software, including the software for fully autonomous cars. And, with fossil-fuelled vehicles set to be phased out by governments around the world over the coming years, EVs are the future.
In its second-quarter figures posted in July 2022, the company quoted on Nasdaq marked its record month of production, making 258,000 cars. This was despite dealing with supply chain issues, labour shortages and factory shutdowns in Shanghai due to Covid lockdowns there.
Its new ‘gigafactory’ in Berlin is now producing 1,000 cars a week, and the company says the second half of 2022 will be a “record” one. It eventually expects to ramp up vehicle deliveries by 50% each year and is well funded, with $18 billion in the bank.
Musk’s recent abandoned attempt to buy social media company Twitter has weighed on Tesla shares. Investors voiced concerns that the controversial entrepreneur has been distracted from focusing on Tesla as a business, in addition to planning to use Tesla shares as collateral.
However, while expensive - trading on a price earnings ratio of upwards of 50 - the shares are off their year highs of $1,243 seen in November 2021. The recent dip offers a decent entry point for investors.
Verbund ($18 billion)
Verbund, Austra’s biggest electricity producer may be worth a fraction of Tesla but packs a punch. Shares in the clean energy company have been on a seemingly unstoppable trajectory since January 2020, and have been boosted by the Europe-wide hike in wholesale electricity prices.
The company produces 33 billion kilowatts of electricity each year from hydropower in Austria and Germany. Around two-thirds of Austria’s electricity now comes from harnessing energy from water, and Verbund supplies the majority of this in the country and Bavaria.
In its first-half results in 2022, the company enjoyed a spike in EBITDA (earnings before interest, tax, depreciation and amortisation) due to the strong increase in sale prices for hydropower, up €65.9 MWh to €112.5 MWh. Revenues rose 174% to €4.7 billion, while EBITDA rose 110% to €1.4 billion.
Verbund expects full-year ‘group result’ earnings of €1.7 billion and €2 billion (EBITDA of €3 billion to €3.5 billion). It plans to deliver 45% to 55% of this to shareholders in dividends – assuming it will not be subject to government energy company clawbacks.
Meanwhile, the company is investing heavily in clean energy infrastructure across the Continent - including the hydrogen economy - and looks set to play a key part in the move towards renewable energy across Europe.
Ørsted A/S ($48.8 billion)
Over 10 years the Danish company Ørsted A/S has reinvented itself from being a fossil fuel-focused energy business to a renewable energy provider. What’s more, for the past four years it has been rated the most sustainable energy company in the world by the Corporate Knights Global 100 index. Ørsted was previously heavily coal-intensive, but is now one of the world’s leading offshore wind energy providers and one of the biggest renewable energy firms by capacity across the globe.
This summer the company won a contract from the UK government for the world’s biggest offshore wind farm – the Hornsea 3 off the coast of Yorkshire. The project will have a capacity of 2,852 MW – enough to power 3.2 million homes in the UK. Ørsted has also acquired French and German offshore wind platform Ostwind.
Half-year revenues rose 50% to DKK 19.8 billion ($2.7 billion), while EBITDA increased by 50% to DKK 5.9 billion ($800 million). Management expects full-year earnings of DKK 18 billion to 21 billion ($2.5 billion to $2.9 billion). This excludes any impact from new partnerships, such as Hornsea 2 and the 50% farm-down of Borkum Riffgrund 3. The Greater Changhua project in Taiwan – another of the world’s biggest offshore wind farm projects - has been hit by delays from Covid lockdowns, however.
Meanwhile, commissioning of the wind turbines for the Hornsea 2 project has also progressed slower than expected. The shares have lost 10% of their value in the past year, which could offer an entry point for investors.
RENIXX-World stocks constituents
Here’s a list of all of the constituents of the RENIXX-World index:
|Ballard Power Systems||Canada|
|Brookfield Renewable Energy Partners||Bermuda|
|China Longyuan Power Group||China|
|China High-Speed DL||Cayman Islands|
|GCL-Poly Energy Holdings||Cayman Islands|
|Huaneng Power International||China|
|Innergex Renewable Energy||Canada|
|SMA Solar Technology||Germany|
|Sunnova Energy International Inc||US|
|Vestas Wind Systems||Denmark|
|Xinjiang Goldwind Science & Technology||China|
|Xinyi Solar Holdings||Cayman Islands|
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