Sustainable Energy Stocks to Buy in 2024

The clean energy transition has never been so hot for sustainable energy stocks, driven by the rapid growth of the renewable energy industry. Governments and companies are going all in on solar, wind and green hydrogen. Investors have never had more opportunity to align their portfolios with the trend. Here’s the best renewable energy companies, stock picks and why the renewable energy space is set to boom in 2024.

Why Sustainable Energy Stocks?

The clean energy transition is driven by:

Government Policies: US Inflation Reduction Act and similar policies in other countries are driving investment in renewable energy.
Global Demand: Fossil fuels are under regulatory pressure, clean energy sources like solar and wind energy are in high demand.
Technology: Fuel cell, energy efficiency and solar panel innovations are making it more cost effective.
Sustainable Growth: Renewable energy projects have long term returns as adoption grows in residential, commercial and industrial sectors.

Definition and Benefits of Investing in Renewable Energy

Investing in renewable energy refers to allocating capital to companies, projects, or funds that focus on generating energy from renewable sources such as solar, wind, hydro, and geothermal power. This sector has gained significant traction in recent years due to increasing concerns about climate change, energy security, and sustainability.

The benefits of investing in renewable energy are manifold. Firstly, it allows investors to contribute to a cleaner and more sustainable future. Renewable energy sources, such as wind power and solar energy, produce little to no greenhouse gas emissions, which are major contributors to climate change. By investing in these technologies, individuals and institutions can help mitigate environmental impact.

Moreover, renewable energy investments can act as a hedge against the volatility of fossil fuel prices and reduce dependence on imported fuels. As the cost of renewable energy technologies continues to decline, these investments become increasingly attractive. For instance, the International Energy Agency (IEA) reports that the cost of solar energy has dropped by over 70% in the last decade, making it more competitive with traditional fossil fuels.

Governments worldwide are also implementing policies and regulations to support the growth of the renewable energy sector. The European Union, for example, aims to generate at least 32% of its energy from renewable sources by 2030. Such policies create a stable and supportive environment for renewable energy investments, further enhancing their appeal.

Renewable Energy Stocks to Buy

1. NextEra Energy (NEE)

NextEra is the leading renewable energy company with significant investment in solar and onshore wind.

Market Cap: $150 billion
Focus: Solar, wind and natural gas energy solutions.
Why It’s a Top Pick: NextEra has scale and diversification so it’s a safe bet for investors looking to get into clean energy.

NextEra Energy has also made substantial investments in wind turbines, further solidifying its position in the renewable energy sector.

2. First Solar (FSLR)

First Solar is the pioneer in solar modules.

Market Cap: $20 billion
Focus: Advanced solar projects and domestic solar panel manufacturing.
Why It’s a Top Pick: Growing demand for solar installs and government subsidies backing First Solar.

3. Clearway Energy (CWEN)

Clearway Energy operates utility scale solar and offshore wind in the US.

Market Cap: $4.5 billion
Focus: Power generation from renewables.
Why It’s a Top Pick: Consistent dividends and diversified renewable portfolio makes Clearway Energy a great choice for income investors. Clearway Energy’s involvement in offshore wind farms further underscores its commitment to generating sustainable energy and providing a reliable income stream for investors.

Renewable Energy Companies

Global Players

1. Vestas Wind Systems

Focus: Wind turbine manufacturing and servicing.
Key Markets: Onshore and offshore wind in Europe, Asia and Americas.

Vestas Wind Systems plays a crucial role in the wind energy sector, being a leading manufacturer of wind turbines and contributing significantly to the growth of renewable energy.

2. Siemens Gamesa

Focus: Offshore wind innovation.
Why It’s Special: Involved in some of the world’s largest wind farms.

UK Players

1. Greencoat UK Wind

Focus: Onshore and offshore wind in the UK.
Why It’s Attractive: Stable income from renewable projects.

2. ITM Power

Focus: Green hydrogen solutions for energy storage and transport.
Why It’s Important: Can change the energy storage landscape in the UK.

Renewable Energy ETFs for Diversified Exposure

For investors seeking diversified exposure to the renewable energy sector, renewable energy ETFs offer a convenient and effective solution. These ETFs typically track a basket of stocks or bonds related to renewable energy companies, allowing investors to spread their risk and potentially benefit from the sector’s growth.

Invesco Solar ETF [TAN]

The Invesco Solar ETF is a popular choice for those looking to invest in the solar energy sector. This fund tracks the MAC Global Solar Energy Index, which includes companies involved in the solar energy industry, such as manufacturers of solar panels and solar energy systems. By investing in this ETF, investors can gain exposure to a broad range of companies driving innovation and growth in solar power.

iShares MSCI ACWI Low Carbon Target ETF [CBRN]

The iShares MSCI ACWI Low Carbon Target ETF offers a more broadly diversified approach. This ETF tracks the MSCI ACWI Low Carbon Target Index, which comprises companies from around the world with lower carbon emissions than the broader market. The fund includes companies involved in renewable energy, energy efficiency, and other low-carbon sectors. This makes it an excellent option for investors looking to support sustainable practices while diversifying their portfolios.

By incorporating these ETFs into their investment strategies, investors can gain exposure to the renewable energy sector’s potential for growth and innovation, while also contributing to a more sustainable future.

Green Energy in 2024

Renewable Energy Adoption

International Energy Agency predicts 90% of global electricity growth in the next 10 years will come from renewables.
Wind and Solar: Together they will dominate the renewable power market as they are scalable and cost effective.

Supply Chain

Governments are investing in domestic solar panel and wind turbine manufacturing to reduce imports.
First Solar will benefit from local production incentives.

Emerging Tech

Fuel Cell Technology: Hydrogen powered vehicles and energy storage getting more viable.
Energy Efficiency: Smart grids and battery storage making renewable power more reliable.

Are Green Stocks a Buy?

Why Clean Energy Stocks

Long Term Growth: As the world moves away from fossil fuels, clean energy stocks will pay off big time.
Diverse Applications: Clean energy powers everything from electric cars to industrial processes, lots of investment opportunities.
Sustainability: Green stocks give you financial returns and align with your environmental goals.

Risks

Market Volatility: Renewable energy stocks are impacted by government policy and economic changes.
High Competition: The space is getting crowded with established and emerging players.

FAQs: Green Energy Stocks

What’s the best renewable energy stock?
NextEra Energy (NEE) is the best stock for renewables, hands down.

What are the 3 energy stocks to buy?
The 3 energy stocks for 2024 are:

NextEra Energy
First Solar
Clearway Energy

What’s the most sustainable energy company?
NextEra Energy globally and Greencoat UK Wind in the UK.

Does Warren Buffett invest in renewable energy?
Yes, Warren Buffett’s Berkshire Hathaway Energy division is investing heavily in wind and solar.

Are green stocks a buy?
Yes, green stocks are a great investment for long term growth and sustainability.

How to Invest in Green Energy Stocks

Research Individual Stocks: Look at leaders like NextEra Energy, First Solar and Vestas Wind Systems.
Consider ETFs: Funds like the iShares Global Clean Energy ETF (ICLN) give you broad exposure to the renewable energy sector.
Follow Market Trends: Watch government policy, technology and market demand.

Bottom Line

The renewable energy space is hot in 2024. NextEra Energy, First Solar and Greencoat UK Wind are leading the way to a cleaner future. Stay informed and invest in the best sustainable energy stocks and you’ll get long term growth and sustainability.

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