My top 3 renewable energy stocks for 2022
As more and more money flows into the renewable energy industry, I have been looking for green energy stocks to buy for my portfolio this year.
I think the industry has reached an inflection point. In many regions around the world, green energy is taking over. Costs have dropped, and consumers are becoming more aware of where their power comes from.
These changes, coupled with the flood of money heading into the sector, suggests to me that the outlook for renewable energy investments is brighter than ever.
As such, here are my top three renewable energy investments I would buy for my portfolio for the year ahead.
Renewable energy stocks
One central theme I want to build exposure to this year is energy storage. There are two companies in particular I believe present the best way to gain exposure to this theme.
Gore Street Energy Storage is a pureplay energy storage company. The group owns a portfolio of related assets across the UK, and its portfolio is continuing to expand. These assets are designed to help balance the electricity grid.
As renewable energy generation can be unpredictable and volatile, the demand for energy storage assets, such as those provided by Gore Street, is expanding. The facilities help providers balance out supply and demand during periods when renewable capacity is low.
Bluefield Solar Income is also trying to build its exposure to this market. Towards the end of last year, the company raised just over £100m to expand away from its traditional solar market into wind and battery storage investments.
This will help the company diversify away from solar energy, although this is a predictable and growing market. The additional funding will provide the corporation with headroom to expand into new markets, potentially providing a multi-year growth catalyst.
Hydrogen energy
As well as the companies outlined above, I would also buy AFC Energy. This group develops technology to produce green hydrogen, which could become a massive market over the next few years. It has just started to roll out its technology, and I am looking forward to further progress in the year ahead.
Of course, AFC is not the only organisation exploring hydrogen technology. This is good news for the world, but it challenges investors. Competition in the sector could rob the group of its first-mover advantage. This is probably the most considerable threat to its growth potential right now.
Competition is also the major challenge facing Bluefield and Gore Street. Investors are clamouring for exposure to renewable energy assets, pushing up prices. Ultimately, the fight for assets could depress potential returns on investment, which would be bad news for investors like myself.
Despite these risks, I would be happy to buy all three companies for my portfolio of renewable energy investments today.
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.