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Trading in financial markets involves significant risk of loss which can exceed deposits and may not be suitable for all investors.
Before trading, please ensure that you fully understand the risks involved
Trading in financial markets involves significant risk of loss which can exceed deposits and may not be suitable for all investors. Before trading, please ensure that you fully understand the risks involved

Thursday, August 06, 2020

Renewable Energy Stocks Investment Guide

By Century Financial in Brainy Bull

Renewable Energy Stocks Investment Guide

Clean and green energy is expected to be the future of energy investment. Producing energy from fossil fuels is outdated and many nations plan to migrate from fossil fuels to methods that are better for the environment, such as wind, water and solar energy.

Find out how this rapidly advancing industry can benefit your investment portfolio as we look at wind, water and solar energy investments. We cover the newest and also the largest renewable energy companies, to provide a holistic picture of the renewable energy investment marketplace. We then look at how you can invest in renewable energy stocks and provide an efficient method to do so.

The rise of renewable energy investment

Being environmentally aware has become mainstream, particularly following the Extinction Rebellion protests and Greta Thunberg's activism. This has led to the environment and climate change movement gaining worldwide traction. Events such as these have been the catalyst for transformation in the way the world stores, distributes and generates power.

By 2050, around 50% of global energy production is expected to come from wind and solar energy. As the public adopt new attitudes and behaviours for a more eco-friendly life, major energy and utility companies are investing heavily in new green initiatives. For example, Shell has spent around $2bn on investment in renewable energy since 2016.

With large companies investing in green initiatives and smaller companies developing new and innovative technologies to drive the industry forward, it's estimated that around $11.5tn will be invested into the renewable energy sector by 2050.

The UK generates around a third of its electricity with renewables, predominantly split between water energy, wind energy and solar energy.

Water energy

Water energy is a means of producing energy from falling or streaming water. Also known as hydroelectric energy, it can be generated in the form of dams, or by ocean currents. As of 2018, around 2.9% of the UK’s renewable energy was produced by hydroelectric means.

Wind energy

Wind energy involves the use of turbines to provide the mechanical power to run electricity generators. Wind power currently generates half of the UK’s renewable power and this is expected to increase as the UK aims to be carbon neutral by 2050.

Solar energy

Solar energy harnesses the light and heat from the sun. A number of complex technologies can produce solar energy, such as artificial photosynthesis and molten salt power plants, but perhaps the most recognisable is the solar panel. The UK generates around a third of its electricity from solar energy.

The largest renewable energy companies

As the renewable energy stock sector continues to climb in worth, many mainstream energy providers are starting to invest in the sector. However, there are also several pure plays in the renewable energy sector that could evolve into market leaders. Given these companies’ size and reputations, it's projected they will be large players in the renewable energy sector for years to come. Some of the largest renewable energy stocks are shown below, in no particular order. Financial details are correct as at 18 June 2020.

1. NextEra Energy

NextEra Energy (NYSE: NEE) focuses on wind and solar energy. As of June 2020, NextEra is the world’s largest producer of wind and solar energy. NEE operates in the United States and Canada and is headquartered in Juno Beach, Florida. The company has around 14,000 employees.

Founded 1984
Share price $249.00
Market capital $121.87bn
P/E ratio 34.56
Revenue $19.2bn (2019)
Net income $5.78bn (2019)

2. Tesla

Tesla (NASDAQ: TSLA) is an American electric car manufacturer and renewable energy company. Headquartered in Palo Alto, California, it has around 48,016 (2019) employees and specialises in electric vehicle, batteries and solar panels. In terms of renewable energy, Tesla has a subsidiary known as Solar City.

Founded 2003
Share price $1,011.00
Market capital $187.47bn
P/E ratio 240.51
Revenue $24.578bn (2019)
Net income $-862m (2019)

3. First Solar

First Solar (NASDAQ: FSLR) is an American manufacturer of solar panels. In 2009, First Solar became the first solar panel manufacturer to reduce the costs associated with producing a solar panel down to $1 per watt of energy production.

Founded 1999
Share price $51.13
Market capital $5.4bn
P/E ratio 127.23
Revenue $3.06bn (2019)
Net income $-114.93m (2019)

How to invest in renewable energy stocks

There are several ways to gain exposure to renewable stocks. These include investing in individual stocks, ETFs that track the performance of several renewable energy stocks, and renewable energy share baskets. Please note that when trading stocks, ETFs or share baskets with us, you will be trading using leverage*. Leveraged trading allows you to put up an initial margin or deposit, but it's important to remember that your profits and losses are magnified based on the trade's full value, which results in a greater risk compared with unleveraged trading.

Renewable energy stocks

You can access renewable energy stocks such as Next Era, Tesla and First Solar via our trading platform. Here, you can choose to either go long and ‘buy’ or go short and ‘sell’. By playing both sides on the market, you increase the number of potential trading opportunities as you can trade on markets in both directions.

Renewable energy ETFs

Renewable energy ETFs such as Invesco Solar ETF help to provide exposure to several assets, thus, increasing the diversity of your investment in comparison to trading a single share. Besides increasing asset diversity and helping to contribute to a balanced portfolio, ETFs can also bear lower costs when compared to investing in each asset individually.

Renewable Energy share basket

Share baskets are mini portfolios of stocks built around a specific theme. We offer, for example, a Renewable Energy share basket. Our traders and market analysts sift through data on popular themes and growing trends in the markets and handpick stocks to give you maximum exposure to those themes with a single position.

Our share baskets are designed by our in-house trading team who have selected shares based on their level of exposure to a particular theme, and their ability to capitalise on the growth projections of that trend. Please see below for the breakdown of our Renewable Energy share basket. This table can help give you an idea of who the big players are in the renewable energy sector, and our share baskets help provide exposure to all of the below companies under a single instrument.

Enphase Energy 21.58%
TerraForm Power 12.86%
First Solar 9.67%
Plug Power 6.11%
Sunrun 5.00%
Vivint Solar 4.81%
TPI Composites 4.29%
Renewable Energy Group 3.77%
NextEra Energy Partners 3.55%
MKS Instruments 3.45%
BWX Technologies 3.43%
SunPower 3.38%
Ormat Technologies 3.33%
Hannon Armstrong Sustainable Infrastructure Capital 3.28%
Hawaiian Electric Industries 2.86%
NorthWestern 2.85%
Avista 2.83%


When trading on, or investing in renewable energy stocks, you're exposing yourself to risk. Most data points towards growth in the renewable energy market sector, but it's never known who the market leaders will be when the industry reaches the point of maturity. When investing into renewable energy stocks, it can be best to consider diversified products such as share baskets or ETFs.

*Leveraged trading products are complex financial instruments that carry significant risks. Certain leveraged trading products are only considered appropriate for experienced traders.

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