Renewable energy is a hot topic right now. Sustainability continues to grow in importance,
and combined with an oil and gas crisis, there are a lot of companies and individuals turning to renewables instead.
The world is continuing to move away from carbon-based fossil fuels in favour of cleaner alternative energy sources. Decarbonising the global economy will take an investment of over $100trn over the next three decades, experts have estimated.
So with the rise of popularity in the renewable energy sector, is investing in renewable energy stocks a good idea? Let’s break it down.
What are renewable energy stocks?
Renewable energy stocks allow you to invest in companies at the centre of the green energy transition and will allow you to share in any successes these companies have along the way.
Renewable energy sources include solar power, wind, biofuels and even nuclear. These all aim to produce the energy we all require without emitting any (or much) carbon.
You may have seen examples of renewable energy in the form of wind turbines or perhaps solar panels on houses. These are becoming more and more common, demonstrating the rise in renewable energy, a largely emerging market.
Top renewable energy stocks in the UK
|Company name||Market Cap.||Description|
|SSE||£19.31bn||Multinational energy company focused on renewable energy sources.|
|Greencoat UK Wind||£3.58bn||Investor in and operator of onshore and offshore UK wind farms.|
|ITM Power||£2.12bn||Energy storage and clean fuel company focused on green hydrogen.|
|Ceres Power Holdings||£1.38bn||Fuel cell technology and engineering company focused on clean energy.|
|AFC Energy||£239.46 mn||Developer of alkaline fuel cells which use hydrogen for electricity production.|
- Market Cap: £19.31 billion
- Average Daily Volume: 3,682,683
- HQ: Perth, Scotland
Part of the FTSE 100, SSE was previously known as Scottish and Southern Energy. It is a multinational energy company headquartered in Perth, Scotland and operates across the United Kingdom and Ireland.
SSE says it is driven by its purpose – to provide energy needed today while building a better world of energy for tomorrow.
The company is a large generator of renewable electricity and one of the largest electricity network companies in the UK.
SSE develops, owns and operates low carbon infrastructure, designed to support the zero-carbon transition. This includes onshore and offshore wind, hydro power, electricity transmission and distribution grids, and efficient gas-fired generation.
A renewable energy company of significant size, SSE employs around 10,000 individuals.
Greencoat UK Wind (LSE:UKW)
Greencoat UK Wind is a listed renewable infrastructure fund, invested in operating UK wind farms, which are generating income. The fund is a constituent of the FTSE 250.
It claims to offer an attractive, sustainable dividend, which increases in line with RPI, while preserving capital in real terms.
Greencoat UK Wind is currently invested in 43 wind farms, both onshore and offshore. Its net generating capacity is 1,442MW and its assets have produced over 14.4TWh of power since the firm had its IPO in March 2013.
ITM Power (LSE:ITM)
- Market Cap: £2.12 billion
- Average Daily Volume: 2,132,985
- HQ: Sheffield, England
For over 20 years, ITM Power has designed and manufactured electrolyser systems that generate green hydrogen based on proton exchange membrane (PEM) technology. Its systems use just renewable energy and water, with oxygen and water vapour the only by-products.
The company has developed a lot in recent years. In 2021, it opened a new Gigafactory in Bessemer Park, Sheffield, which is now the world’s largest electrolyser production factory.
This should help ITM Power cut the cost of electrolysers by almost 40% in the next three years, from increased automation and economics of scale.
It also works with partners – including Linde, Shell, Snam, Hyundai, and Honda – to scale its impact, industrial reach, and market penetration.
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Ceres Power Holdings (LSE:CWR)
- Market Cap: £1.38 billion
- Average Daily Volume: 320,670
- HQ: Horsham, England
Ceres Power Holdings’ main purpose is to help sustain a clean, green planet by ensuring there is clean energy everywhere in the world.
The company came out of Imperial College in London, where Professor Brian Steele invented the SteelCell. Since then, Ceres has been working to perfect this technology for almost 20 years, positioning itself as a global leader in fuel cells and electrochemistry expertise.
A fuel cell is a power generation unit that produces, without any burning, an electric current from a chemical reaction. Fuel cell generation results in energy with low or zero CO2 produced, as well as clean air with no particulates, SOx or NOx emissions.
Ceres wants to bring cleaner and cheaper energy to businesses, homes and vehicles. To do this, the company works with global partners to embed its technology in mass-market energy products.
AFC Energy Plc (AFC)
- Market Cap: £239.46 million
- Average Daily Volume: 4,101,870
- HQ: Cranleigh, Surrey
Surrey-based AFC Energy is a developer of alkaline fuel cells which use hydrogen for electricity production. It does this to generate clean energy, offering strong performance and low operating cost as part of global efforts to decarbonise industry.
Its Hydrogen Power (H-Power) systems use a patented design aimed at ensuring efficiency, robust quality and economic operation. It is also free of pollutants and greenhouse gases.
The company aims to help all customers achieve a net zero carbon future through continuous development and improvement of its product base.
It has undergone a transformation in the past two years, which includes the launch of a strategic partnership with ABB in December 2020. This was designed to create the next generation of high power electric vehicle (EV) charging solutions for grid constrained locations across the globe.
This was further extended in April 2021 when ABB made a strategic investment in AFC Energy and entered into a new development agreement.
Investing in US renewable energy stocks
You may also want to consider investing in US renewable energy stocks. A lot of platforms in the United Kindgom allow you to invest in US companies.
Here are some US renewable energy stocks to consider:
- Tesla (TSLA)
- Enphase (ENPH)
- NextEra Energy (NEE)
- Clearway Energy (CWEN)
- Brookfield Renewable (BEP)
- First Solar (FSLR)
Are renewable energy stocks right for you?
Clean energy stocks will not be right for everyone. Whether they are right for you will depend on the make up of your portfolio, your risk appetite, and your financial goals.
If you care about sustainability, climate change, and want to have a positive impact on the planet while hopefully making money too, then investing in renewable energy stocks may be right for you.
These are large companies with growth potential. But, the value of any company can go down as well as up. Make sure you do your own independent research before making any investment, including renewable energy stocks.