Europe similarly plans to more than triple its wind and solar capacity by 2030. had about 1.2 terawatts (a terawatt is 1,000 gigawatts) of electricity-generating capacity as of the end of last year. and Europe will be adding 80 gigawatts of solar and wind per year, according to Wood Mackenzie, meaning they’ll be displacing older forms of energy. added 30 gigawatts of total new electricity generation last year, meaning that renewables accounted for nearly all of the increase but didn’t really challenge existing sources. In the U.S., solar and wind have helped meet rising demand for electricity over the past decade, but they haven’t cut much into the shares of other power sources. and Europe are each adding about 30 gigawatts a year of new solar and wind capacity, enough to power about 10 million homes. To understand the opportunities in renewable energy, it helps to look at the math. All the same, Barron’s has identified six promesing stocks in the field: a developer of solar roof projects, two innovators in hydrogen technology, a battery maker, a supplier of green power to utility companies, and a miner of a mineral key to renewables. “Because some of these technologies are nascent, you just don’t have an abundance of publicly traded companies with long-term track records,” says Ben Cook, portfolio manager of the Hennessy Energy Transition fund. And some of the companies involved haven’t shown they can persevere through good times and bad. Green-energy indexes and funds like the Invesco Solar exchange-traded fund (ticker: TAN) have historically traded based on short-term expectations for government policy or raw materials costs, instead of the longer-term opportunity. Big, obvious winners are few and far between. Despite the enormity of the transition, investors will need to be picky.
Annual clean-energy investment worldwide will need to hit $4 trillion by 2030 to meet the widely held commitment of net-zero carbon emissions by 2050, according to the International Energy Agency. From there, investments should ramp up even more. and China, up from 23% and 30%, respectively, according to S&P Global Commodity Insights. “Now we have visibility for a decade, which is going to be amazing.” By 2030, renewables could account for 60% of power generation in Western Europe, up from 35% today, and 38% in the U.S. He thinks those short-term gyrations are a thing of the past. “By far, this is the most significant piece of legislation we’ve ever seen globally,” says Jos Shaver, chief investment officer of Electron Capital Partners, which has been investing in renewables through multiple boom/bust cycles over the past 17 years. Research firm Wood Mackenzie projects that the incentives will trigger some $1.2 trillion in private investments by 2035. The climate bill in the U.S., expected to clear the House on Friday, unlocks $370 billion for clean-energy incentives and consumer benefits. Wind and clean hydrogen will get enormous subsidies, too. Using grants and other incentives worth over $200 billion, the REPowerEU plan aims to double the region’s solar capacity in just the next three years, with capacity to power more than 100 million homes. Russia’s invasion of Ukraine gave new urgency to Europe’s already-ambitious clean-energy goals.
A patchwork system of tax credits and environmental rules is now giving way to much more robust governmental support, not just in the U.S. The next stage should be even more impressive. Renewables are now the largest source of power generation in Europe, and they expanded their share of global power generation to 29% in 2020 from 20% in 2010. Electric vehicles account for 5% of new-car sales, a tipping point that in other countries has led to 25% adoption within four years. Wind turbines now produce more power in the U.S. Sources of energy like solar panels that seemed like anachronistic tree-hugger technology less than a decade ago have become key parts of baseload electricity generation. The age of renewable energy, by comparison, is coming on with lightning speed. After the first oil rush in Pennsylvania in 1859, more than a century passed before crude topped coal. It took some 200 years for coal to supplant wood as the world’s leading source of energy. As a rule, energy transitions don’t happen quickly.
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