3 green energy shares I’d buy with £1k

This Fool takes a look at three green energy shares he’d buy as global spending on renewables heats up over the next few years.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Windmills for electric power production.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The world spent a total of $500bn on green energy initiatives last year. Moreover, this spending is only expected to accelerate in the years ahead. Indeed, BP alone is planning $60bn of spending on renewable energy generation projects over the next nine years.

And with that in mind, I’ve been looking for green energy shares to add to my portfolio as a way to ride the renewable energy boom. 

Green energy shares to buy

The number of companies on the market with exposure to renewable energy has increased dramatically in recent years. Amid all the new businesses sits old hand Drax (LSE: DRX).

This company owns and operates the UK’s largest power station. In recent years it’s been positioning itself as a green energy company by converting its power stations to burn biomass and installing carbon capture technology. 

It recently became the world’s leading sustainable biomass generation and supply business after acquiring Pinnacle Renewable Energy, a major producer and supplier of good-quality, compressed bioenergy pellets.

This is all part of the company’s ambition to become a carbon negative by 2030. It looks as if it’s on track to hit this target.

The company’s principal risks and challenges are regulation and costs, both of which could hold back its transition to becoming a carbon negative business. Still, despite these risks, I’d buy the stock for my portfolio of green energy shares. 

Fuel cells 

Another company I’d consider buying is Ceres Power (LSE: CWR), a world-leading developer of low-cost, next-generation fuel cell technology

Unlike Drax, which is already a well-established business, Ceres is still in its development stages. As such, the company may not be suitable for all investors. Moreover, as long as it remains unprofitable, there’s always going to be a risk the company could run out of money. 

Nevertheless, the group is moving forward with its green energy ambitions. Turnover for the 12 months ended 31 December 2020 increased 15% to £21.9m. At the beginning of March, the company also completed a £181m fundraising to invest in developing its fuel cell technology and manufacturing capabilities. 

I’m encouraged by Ceres Power’s recent progress. So, despite the company’s speculative nature, I’d buy the stock for my portfolio as a way to invest in a niche but growing sector of the green energy revolution. 

Solar energy

The final company I’d buy for my portfolio of green energy stocks is Bluefield Solar Income (LSE: BSIF). This enterprise does what it says on the (recyclable) tin. It is seeking to produce income for investors by investing in solar assets.

So far, management has achieved this aim. It’s targeting an 8p per share dividend for the year, which could provide a dividend yield of 6.5% on the current share price. 

The company is also looking to expand its universe of investable assets. Management is expanding beyond its core market into unsubsidised solar, onshore wind and battery storage assets. If it’s successful, this could help it become a green energy champion. 

That said, at present most of the company’s income streams are attached to government subsidies. So its dividend could be at risk if those subsidies are cut. This is the main risk the green energy group faces right now.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

More on Investing Articles

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

The market is wrong about this FTSE 250 stock. I’m buying it in April

Stephen Wright thinks investors should look past a 49% decline in earnings per share and consider investing in a FTSE…

Read more »

Black father and two young daughters dancing at home
Investing Articles

1 FTSE 250 stock I own, and 1 I’d love to buy

Our writer explains why she’s eyeing up this FTSE 250 growth phenomenon, and may buy more shares in this property…

Read more »

View of Tower Bridge in Autumn
Investing Articles

The FTSE 100 is closing in on 8,000 points! Here’s what I’m buying before it’s too late!

As the FTSE 100 keeps gaining momentum, this Fool is on the lookout for bargains. Here's one stock he'd willingly…

Read more »