One challenge is that we don’t know which technologies will be long-term winners. Wind and solar seem pretty certain, but what about hydrogen and nuclear? I’d also want exposure to energy efficiency and recycling. Reducing resource usage is always going to be a win-win for the environment.

Given this uncertainty, the investment strategy I’d use today would be to build a mini portfolio of three renewable energy stocks. That way, I’d have a horse in the race, however the renewable energy market develops. Here’s what I’d buy.

Wind + more

My first stock would be FTSE 250-listed firm The Renewables Infrastructure Group (LSE: TRIG). This business has its roots investing in UK wind farms, but is gradually expanding into other types of energy and into Europe.

I’ve been following TRIG for several years and have been impressed by the management of the group. Each year’s results have generally been as expected. The dividend has grown steadily and currently offers a tasty 5% yield.

The main risk I can see here is that a lot of TRIG’s income still comes from subsidised wind farms with fixed energy prices. In the future, more of TRIG’s income will come from energy sold at market prices, so profits could be more volatile.

Even so, I think TRIG’s experienced management are handling the transition well. I’d be happy to buy TRIG today.

Nuclear stockpile

Some environmentalists are strongly opposed to nuclear power. I think it can be part of the solution to our energy needs, providing reliable low-carbon energy regardless of weather conditions.

One way I’d invest in nuclear energy is through Yellow Cake (LSE: YCA). This company buys and sells uranium, which is used to fuel nuclear power stations. The company held 15.8m lb of uranium at the end of 2021, highlighting its long-term strategy.

There’s plenty that could go wrong here. Yellow Cake buys most of its uranium from Kazakhstan producer Kazatomprom, so there are political risks. The value of the group’s assets is also dependent on the price of uranium, which is hard to forecast.

I don’t know how these risks will pan out. But I believe Yellow Cake’s assets are likely to remain valuable in the future. I’d be happy to tuck some of these away as a play on nuclear power.

An alternative renewable energy stock

My final choice is focused on energy efficiency. Impax Environmental Markets (LSE: IEM) is an investment trust that buys shares in companies involved in cleaner or more efficient delivery of energy, water, and waste disposal services.

Around half IEM’s assets are in North America, with one third in Europe, and the remainder in the Asia-Pacific region. I believe the technologies and businesses backed by IEM will be crucial to our future, regardless of where we’re getting our energy from.

Buying this stock would give me exposure to companies and markets that I wouldn’t invest in directly. Although some of the shares in the portfolio look expensive to me at the moment, I think many of them offer great long-term growth potential. IEM is a stock I’d tuck away for the next decade.

The post My 3 best renewable energy stocks to buy with £1k today appeared first on The Motley Fool UK.

Jupiter Green Investment Trust (LSE: JGC) is small, with a market-cap approaching just £57m. But since launch in 2006, the share price has climbed approximately 165%. It’s up 24.5% in the past 12 months.

The trust says it “invests globally in companies which have a significant focus on environmental solutions.” So it’s global, with under 6% of its funds invested in UK equities. I see almost nothing in the top 10 holdings that I recognise. Danish wind turbine manufacturer Vestas Wind Systems is there, as is Evoqua Water Technologies of the USA. Japan’s Azbil is in the mix too.

Not knowing these companies is unfortunate. But they appear to be profitable today rather than ‘jam tomorrow’ hopefuls. I’ll dig deeper to properly understand the inevitable risks, but I think this looks promising. At 265p, the shares are on a discount to net asset value (NAV) of around 6.5%, which adds to the attraction for me.

Waste services investment trust

The Impax Environmental Markets Trust (LSE: IEM) share price is up 42% over the past 12 months, and has gained 161% over five years. This investment trust is a bigger one, with a market-cap of a nearly £1.6bn. The trust targets companies providing cleaner energy, water and waste services.

With the shares at around the 540p level, it’s on a 6.8% premium to NAV. That, coupled with its more established market-cap, suggests investors see Impax as less risky than Jupiter Green. I see less personal risk because I am actually familiar with some of its investments.

Clean Harbors, a provider of environmental services, including hazardous waste disposal, which has been around for 40 years, is its top holding. Most of the holdings are American, with Pentair, another water treatment company, also in the top 10. Software firm PTC is there too, though I have yet to investigate its environmental angle.

UK wind

Greencoat UK Wind (LSE: UKW) owns and operates wind farms across the UK. And we have plenty of the key asset here. It already supplies the likes of SSE and Centrica with power.

That strategy generates solid dividends, and yields over the past five years have been around the 4.5% to 5.5% range. Earnings have been a bit up and down, but the dividend has been nicely progressive. With big dividends, the shares haven’t gained as much as investment trusts seeking growth. But 17% over five years isn’t too shabby as a bonus on top of the income. It hasn’t really moved over the past 12 months though.

The share price of 135p represents a premium to NAV of around 4%. That sounds attractive to me. But there’s a specific risk here as the trust is invested in one specific business. More conventional investment trusts offer wider diversification, and that helps spread the investment risk.

There’s a speculative aspect to investment trusts like these, and with that comes risk. But pooled investments help to offset this. These are all ISA candidates for me.

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