The need for the UK and other world powers to accelerate the shift towards green energy has never been greater. Last year the government committed to bringing net greenhouse gas emissions to zero by 2050.
That’s a tall order and will require many businesses to change their models to allow for more renewable energy alternatives to the likes of oil and gas.
It also presents an opportunity for investing in green energy stocks. These are companies that have built their business with an eco-friendly approach, and could be set for growth in the years ahead as the UK strives for net zero emissions.
Here are two green energy stocks I think could provide my portfolio with growth over the long term.
The Renewables Infrastructure Group (LSE:TRIG) is one example of the rise of ESG (environmental, social, and governance) investing. Many funds have been set up with the ultimate goal of supporting companies which generate electricity from renewable energy sources.
TRIG in particular focuses on energy produced by onshore wind farms and solar PV parks. The group’s portfolio includes assets across the UK and Europe.
The fund’s share price performance has been up and down recently. But if I had invested in the shares five years ago my investment would have grown 35%.
As an added bonus for TRIG investors, the company provides an attractive dividend yield of 5.27% at its current share price of 130p.
On the downside, shares in this fund could be viewed as expensive. Funds like this are often judged on their estimated NAV (net asset value). NAV is the net value of a fund, i.e., the total value of the assets it holds minus the total value of its liabilities, and is calculated on a per share basis.
The estimated NAV for TRIG is currently sitting at 107.93, very much on the premium end of things.
However, I only see demand for TRIG’s assets growing as the UK moves to hit its 2050 target.
Another green energy stock which I see as adding long-term value to my portfolio is Greencoat UK Wind (LSE:UKW).
The company is currently the largest listed company in the UK by market cap whose sole focus is renewable energy sources.
Greencoat’s main business is selling wind farms to larger utility providers. This is an area I think will come to increased prominence as the biggest energy suppliers will need to ultimately divest from oil and gas into renewable energy.
Competition is already on the increase, however, which could drive prices down in the long term as we head towards 2050. This could have a knock-on effect for Greencoat’s profits.
The estimated NAV for the company is even higher than TRIG as well at 117.
However, the company currently rewards investors with an attractive 5% dividend yield which gives me an extra reason to invest. I’d add this to my portfolio of green energy stocks today.
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conorcoyle has no position in any of the shares mentioned. The Motley Fool UK has recommended Greencoat UK Wind. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.