Renewable Energy stocks to watch in 2021
Everywhere around the world, governments are going green. Clean energy and lower emissions are on the agenda. Lofty sustainable power goals established in the likes the EU, the US, and the UK, are ensuring renewable energy stocks gain traction in investment portfolios. But which stocks should you potentially be watching?
Renewable energy stocks in 2021
The case for green energy investment
With Joe Biden’s election, the US is very much back in the renewables picture. President-Elect Biden wants his country to become a beacon of clean power generation and is likely to re-commit the US to protocols outlined in the historic 2016 Paris Climate Agreement during his administration. Biden would like to achieve 100% clean generation for utilities by 2050.
The EU has allocated significant spending, totalling in the billions, towards green infrastructure. It achieved 18% power generation from alternate means in January 2020 – although, in future, its levels may fall if you subtract UK clean output post-Brexit. The bloc has its eye on 32% of its energy needs coming from clean sources by 2032.
In the UK, offshore wind power is helping achieve the government’s clean energy objectives. Some of the world’s largest floating wind farm projects are taking shape along the British coastline. It’s hoped these, which should add over 1 GW of renewable electricity to the national grid by 2030, will put the UK on the right path so it reaches net-zero emissions by 2050.
Then there’s falling demand for oil. Despite a price rally toward the end of the year, and herculean efforts from OPEC and allies to keep prices steady, 2020 was bad news for the hydrocarbons industry. Demand has slumped as lockdown bites. Post-pandemic, lithium-powered vehicles could potentially sweep over their internal combustion powered predecessors altogether, further dropping the need to pump oil out of the ground.
Essentially, the world is turning towards greener ideas and cleaner power and energy to stave off the effects of man-made global warming. And this is where renewables stocks come into play. 2021 is fertile ground to lay some green energy seeds into your portfolio with a number of alternative energy companies as potential investment opportunities.
Renewable energy companies to invest in
Below are profiles of five alternative energy stocks that are either market leaders or companies whose stocks have enjoyed significant growth across the past year and could continue that into 2021.
- Vestas – With its market cap of $230.16bn, Vestas is the world-leader when it comes to wind turbine manufacturing. The Danish firm boasts an impressive 100 GW of installed capacity around the globe. And, despite orders dropping 14.9% due to the effects of Covid-19, Vestas posted a $241m profit between Jan-Sep 2020. Investors would have seen a 208% return on Vestas stock between 2015 and 2020. The future is looking good for the Danes too, with Indian and Vietnamese contracts announced in October 2020 to keep turbine orders coming.
- Ørsted – Ørsted covers 29% of the offshore wind power segment, making it the world’s largest player in this sector. Its Q3 results were certainly stable, with earnings generated from on and offshore activities growing 13% to reach £547m. Its project portfolio is set to expand too after inking deals with BP to integrate wind into BP’s green hydrogen projects. BP stocks rose 15% at the signing of the deal in November 2020. One attractive aspect of Ørsted is that most of its current investors are institutions. As these groups are usually on the ball when it comes to investing, Ørsted is subsequently one of the alternative energy stocks to watch in 2021.
- Enphase Energy – Enphase has been dubbed one of the brightest renewables stocks on the market. Its prime technology, solar panel microinverters compatible with nearly all contemporary designs, has seen major uptake with two million units shipping in the first three months of 2020 alone. Between July 2019-2020, Enphase’s revenue doubled to hit $205.5m. It’s Q3 financial report, released in October 2020, was above market expectation, which caused Enphase stock to rise 18%, which means it may be taking a larger chunk of the market, showing strong promise as the new year dawns.
- First Solar – Linked to Joe Biden and Kamala Harris’ eco-friendly plans, First Solar stocks jumped up slightly on Biden’s election win. The US solar panel maker has $17bn worth of project financing at its disposal and so far, has 20 GW of installed capacity to its name. Could it raise its game in 2021? First Solar enjoyed a $1.4bn cash injection in its 2020 Q3 which is expected to be pumped into efforts to improve its panels efficiency. A potential new green deal from Biden may play into First Solar’s hands.
- ReneSola – ReneSola stocks closed at an all-time high on December 28th 2020, rising 680% year-to-date, which has put the global solar project developer firmly on the renewables radar. As a Chinese business, ReneSola has global expansion in sight. December 2020 saw the business add 38 Polish contracts to its future project portfolio, alongside two ground-level installation developments in Romania, suggesting it will have a busy 2021. ReneSola’s cash in hand levels rose 66% according to latest quarterly fiscal reporting, however total revenues only amounted to $9.7m. A very small acorn compared with the mighty oaks of Vestas and Ørsted – but from small things, great things can grow. ReneSola has solid potential for future expansion.
The above renewable stocks are only a small handful of the alternative energy stocks on the market, but they demonstrate the massive sums being thrown into creating a greener, cleaner energy future. If market conditions hold, and particularly if Joe Biden actually gets his proposed green deal into law, then the clean skies are the limit.
But remember to exercise caution. The ongoing pandemic has slowed installation of key projects in Europe, the UK, and the US, so like many investment opportunities in recent times, it all depends on how quickly normalcy can be reached. The next twelve months will potentially be very interesting for renewables stocks.