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​​Renewable energy stocks: The companies tackling climate change

By  Yoke Wong

Edited by Vanessa Kintu

16:38, 28 February 2022

​​Renewable energy
​​Renewable energy stocks: The companies tackling climate change – Photo: Shutterstock

With more countries across the world passing legislation to accelerate decarbonisation to combat global warming, interest in investing in green energy stocks is growing.

In early November 2021, the US Congress passed the Bipartisan Infrastructure Deal (Infrastructure Investment and Jobs Act), which is part of US President Joe Biden’s Build Back Better plan. The act has been billed as a once-in-a-generation investment in the country’s infrastructure.

Under the act, $7.5bn (£5.59bn, €6.69bn) will be invested to build a national network of 500,000 electric-vehicle (EV) chargers in the country and to support the president’s desire “to accelerate the adoption of EVs, reduce emissions, improve air quality, and create good-paying jobs across the country”.

Government policy, coupled with extreme weather caused by climate change, has expedited the development of renewable energy globally. The International Energy Agency (IEA) said in its World Energy Outlook 2021 report:

“A new energy economy is coming into view, ushered forward by policy action, technology innovation and the increasing urgency of the need to tackle climate change.”

According to the IEA, clean energy will become a major new area for investment and international competition. It said:

“If the world gets on track for net zero emissions by 2050, then the annual market opportunity for manufacturers of wind turbines, solar panels, lithium-ion batteries, electrolysers and fuel cells grows tenfold to $1.2trn by 2050.”

The IEA believes the five elements above could generate more revenue than today’s oil sector and its downstream industry.

Are you interested in investing in renewable energy? Read on to learn more about the clean energy companies to invest in and the outlook of analysts on renewable energy sector stocks.

Types of renewable energy

Much of the world’s renewable energy is for electricity generation. Unlike burning fossil fuels for power generation, renewable energy has a low carbon footprint, which is why it is referred to as green energy.

Solar, wind and hydroelectric power generation are some of the more well-known and mainstream types of renewable energy.

Type of renewable energy

How it works

Hydropower

Flowing water is used to drive turbines to generate electricity. Hydropower plants consist of dams and reservoirs. Hydropower dams with a large reservoir can store water over short or long periods to meet peak demand.

Wind

Wind energy is used to drive wind turbines connected to generators, thereby producing electrical energy through electromagnetism.

Solar photovoltaic

Photovoltaics (PV), also called solar cells, are electronic devices that convert sunlight directly into electricity.

Solar thermal

Concentrated solar power (CSP) uses mirrors to focus solar rays that heat fluid to create steam for driving turbines and generate electricity. CSP is used to generate electricity in large-scale power plants.

Top renewable energy stocks to watch

Some of the best clean energy stocks could be of those companies that focus on renewable energy, as the carbon footprint of those operations would be lower.

Before you decide what green energy stocks to buy, let’s look at some of the top alternative energy companies’ stock by market capitalisation. According to CompaniesMarketCap, the top five companies by market cap are LONGi Green Energy Technology, Adani Green Energy, Vestas Wind Systems, Brookfield Renewable Partners.

This article does not constitute financial or investment advice. When considering whether to invest in a renewable energy company’s stock, you should always do your own research, considering the outlook and relevant market conditions. A number of factors dictate whether stock prices rise or fall, including the company’s fundamentals and broader macroeconomic factors.

For more information on these five renewable energy companies’ stock, read on.

LONGi Green Energy Technology (601012)

601012 stock price chart

LONGi is an integrated Chinese solar panels manufacturer and solar PV solutions provider founded in 2000. The group operates seven manufacturing plants in China, and one in Malaysia and Vietnam respectively. According to LONGi, it is also planning to open a manufacturing facility in India.

The company, which is listed on the Shanghai Stock Exchange (SSE), was ranked number 42 in Fortune’s Future 50 index. LONGi asserts that it is a world-leading solar technology organisation and has the highest number of shipments in the industry. At the time of writing on 28 February according to CompaniesMarketCap, LONGi had a market cap of $66.57bn.

LONGi’s third quarter revenue in 2021 jumped to CNY21.1bn ($3.3bn), up 54% compared with Q3 2020. The company’s revenue in the first nine months of 2021 also surged to CNY56.2bn, up 66% year on year (YoY). 

Adani Green Energy (ADANIGREEN)

ADANIGREEN stock price chart

Adani Green Energy is an Indian renewable energy company headquartered in Ahmedabad, Gujarat. According to the company, it “develops, builds, owns, operates and maintains utility-scale grid-connected solar and wind farm projects”, with the existing project portfolio capacity at 13,990 MegaWatt. 

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Adani has concluded 25-year power purchase agreements with the Indian central and state government entities, which enabled it to expand its operation across 11 Indian states. The company is listed on the National Stock Exchange of India (NSE) and, according to CompaniesMarketCap, has a market cap of $38.05bn.

Adani’s earnings before interest, tax, depreciation and amortisation (EBITDA) in the nine months ended 31 December 2021 increased to INR24.74bn ($329.5m), up 56% compared with the same period in 2020. The company said of the results:

“Robust growth in revenue from power supply is backed by strong growth in capacities and improved solar and wind capacity utilisation factor (CUF).”

Adani has increased additional capacity of 2,460 megawatts (MW) and improved solar and wind CUF in the nine months to the end of 31 December 2021.

Vestas Wind Systems (VWS)

VWS stock price chart

Vestas Wind Systems is a Danish manufacturer of wind turbines, and provides the installation, service and maintenance of its products globally. The company is listed on Nasdaq Copenhagen exchange and has a market cap, according to CompaniesMarketCap, of $29.79bn.

According to Vestas, it is “the world’s leading fleetwide service provider” and services more than 52,000 wind turbines across 73 countries with total capacity above 129 GigaWatt.

The company’s revenue in 2021 increased to €15.6bn ($17.4bn), up 5.4% from €14.8bn in 2020. As a result of higher raw material and operating costs, Vesta’s EBIT margin fell by 2.1% YoY to 3% in 2021. CEO Henrik Andersen commented on the financial result on 10 February 2022:

“Together with rising energy prices, the supply chain disruptions and accelerated cost inflation from raw materials, transport, and turbine components, continued to amplify costs throughout the year, which severely impacted profitability.”

Vestas expects the supply chain disruption to continue in 2022 and its revenue for the year is forecast in a range of €15bn to €16.5bn in 2022 and the EBIT margin at 0% to 4%.

Brookfield Renewable (BEP)

BEP stock price chart

Brookfield is one of the largest producers of hydroelectric power, making it one of the top green power stocks for investors. Brookfield is a publicly-traded limited partnership with a portfolio consisting of renewable assets, such as hydroelectric, wind, solar and storage facilities, in North America, South America, Europe and Asia. As of December 2021, Brookfield’s combined renewable installed capacity is over 21,000 MW and approximately 62,000 MW are in development. The company has a market cap of $22bn, according to CompaniesMarketCap.

The company “believes hydropower is the premier renewable technology due to its perpetual nature and dispatchability. And while the asset classes of wind and solar are certainly growing faster, the benefits of hydro are rapidly increasing in today’s market environment.”

However, the company's finances remained in the red in the fourth quarter of 2021, recording a $57m net loss and $368m loss for 2021. Connor Teskey, CEO of Brookfield Renewable has said:

“Looking ahead, decarbonisation is now firmly established as an objective of the global economy and as one of the pre-eminent global clean energy companies with deep operating capabilities and scale, we are uniquely positioned to execute on the most attractive decarbonisation investment opportunities around the world.”  

SolarEdge Technologies (SEDG)

SEDG stock price chart

Established in 2006, SolarEdge (SEDG) is an Israel-headquartered manufacturer of PV systems. It provides a wide range of services including grid services, energy storage, home-energy management and electric-vehicle charging etc.

According to the company, Its systems have been installed in more than 133 countries, with the company present in 31 countries. 

SolarEdge’s fourth quarter net income more than doubled YoY to $41m, while the 2021 full-year net income increased to $169.2m, up 21% from 2020. Zvi Lando, CEO of SolarEdge said on 15 February 2022:

“The global demand for solar energy across all segments and geographies is extremely strong and generating unprecedented demand for our products. In particular, we are excited about the strong momentum of the commercial market and the increasing rate of adoption of our innovative technology within this segment.”

It is important to note that this article does not constitute financial or investment advice. Before you choose to invest in alternative energy companies stock, always do your own research and remember that your decision should be based on your attitude to risk, your expertise in this market, the spread of your portfolio and how comfortable you feel about losing money. There are no guarantees. Markets are volatile. You should conduct your own analysis, taking in such things as the environment in which it trades and your risk tolerance. And never invest money that you cannot afford to lose.

FAQs

Are renewable energy stocks a good buy?

Due to the growing investment in the renewable sector, many analysts believe renewable energy stocks are a good buy. However, analysts’ trend forecasts can be wrong and have been wrong in the past. You should do your own research and never invest what you cannot afford to lose.

Why have the green energy stocks been going down?

As returns in oil and gas are higher because of the recent price spike, many investments have been diverted away from green energy stocks, leading to the lower share prices.

What are the best green energy stocks to buy?

The Motley Fool investment platform listed Brookfield Renewable, Clearway Energy, First Solar, NextEra Energy and SolarEdge Technologies as its top five green energy stocks to buy. While Investopedia listed the best value green energy stocks as Daqo New Energy Corp, Renewable Energy Group Inc, and SunPower Corp.

Please remember that the  above information is an indication. Only you can decide which, if any, green energy stock is suitable for you to buy. You should do your own research and never invest more money than you can afford to lose.

Markets in this article

SEDG
SolarEdge Technologies
31.66 USD
1.68 +5.630%

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