10th May 2022
- Governments are investing heavily in green energy production
- Popular opinion is pushing green energy
- While it’s hard to identify the best green energy stocks, this sector could be a wise investment in 2022
Green energy is something of a buzzword at the moment, but does that mean it’s a good time to find the best green energy stocks to buy? According to many analysts, the answer is yes. If you’re considering hunting down the best renewable energy stocks of 2022, make sure you’re informed before you jump on the green stocks bandwagon.
What is green energy?
Green energy comes from natural resources, like water, solar power, wind, biomass, geothermal energy, and green hydrogen. It’s often used interchangeably with clean energy and renewable energy, but “clean” energy doesn’t cause any pollution, and “renewable” energy comes from renewable sources.1
Why does green energy matter?
Sustainability is top of the agenda in 2022. Public opinion has largely accepted that climate change is a reality, and people are clamoring for governments and businesses to do more to correct it. The Global Sustainability Study 2021 reports that 74% of consumers say sustainability in energy affects their purchase choices, and close to one-third would even be willing to pay more for renewable energy.2
In response, more countries, municipalities, and corporations have committed to emissions targets. Over 130 countries have either set or are contemplating setting a goal of net zero emissions by 20503; EU member states promised to slash greenhouse gas (GHG) emissions by 55% by 20304; more than 70 state policies relating to renewable energy and the climate were enacted in the US in 20215; and 87% of America’s investor-owned utilities have publicized their own targets6.
Why invest in green energy stocks in 2022?
Governments are pouring resources into green and renewable energy production, through policies like the Bipartisan Infrastructure Framework (BIF) in the US7 and the Green New Deal in the EU8. ResearchAndMarkets forecasts that the renewable energy market will grow by 98.40 gigawatts (GW), or 8.46% CAGR, between 2022 and 20269.
According to the International Energy Agency (IEA), solar photovoltaic systems will reach 162GW this year, almost 50% higher than in 2019; global wind capacity will jump to over 50% above 2019 levels; and transport biofuel production will expand 7% in 202210. Green hydrogen production could increase by over 200GW, or more than a thousandfold, by 204011
Analysts with S&P Global Market Intelligence report that in 2022, up to 44 GW of solar energy, 27 GW of wind energy, and over 8 GW of battery storage may be installed in the US alone, and spending on utility renewables could surpass $14 billion. ““It’s going to be a record year for renewable energy development in the U.S.,” said Richard Sansom, Head of Commodities Research at S&P Global Market Intelligence.12
2022 is a good year for green energy stocks
All of this spells opportunity for an emerging sector and makes this an excellent time to consider what might be the best green stocks to invest in in 2022. With so many different types of clean, green, and renewable energy companies out there, it can be hard to forecast, let alone pinpoint what may or may not be the best green stocks for 2022, but we’ve gathered some interesting suggestions for investors eager to take part in the green energy revolution.
1. Defiance Hydrogen ETF (HDRO)
Green hydrogen, as opposed to higher-polluting gray or blue hydrogen, is a favorite green energy source for the long term. It’s more constant than solar or wind power, results in close to zero pollution, is easily transportable, and draws on a resource that’s highly abundant across the planet.
While it’s not a stock and does not give you direct ownership in the companies it invests in, Defiance’s ETF, HDRO allows you to spread investment across a number of green hydrogen companies, providing sector and sub-sector diversification and helping mitigate your exposure to the risk that comes with investing in just one or two stocks. HDRO has holdings in companies that derive 50% or more of their revenue from hydrogen-based energy sources, fuel cell technologies, and industrial gases, spanning the gamut of green hydrogen production.
HDRO tracks the rules-based BlueStar Global Hydrogen & Next Gen Fuel Cell Index, has an expense ratio of 0.30%, and share price is currently $14.1413.
2. Enphase Energy (ENPH)
Enphase sells solar cells, battery storage, controls, and monitoring services, so consumers can take advantage of solar power independently. The solar energy market is predicted to grow at a CAGR of 6.9% by 2027, and Enphase’s own revenue is forecast to jump by over $5 billion by 202414.
Enphase has a market capitalization in excess of $30 billion; sold almost 2.6 million of its micro-inverters in Q3 2021; and reported record revenues over $351.5 million in the same period, and anticipates that income will continue to grow. It’s currently trading at $137.4615.
3. Stem (STEM)
STEM is a new and relatively small green energy stock, having only gone public in 2021, but 37 different ETFs carry its stock and its Q3 revenues of $39.8 million represent a rise of 334% year-over-year16. It uses AI to run smart batteries that support a more resilient and cleaner energy grid, with over 950 deployments so far and bookings above $100 million a quarter17.
Stem is currently trading at $10.4218, and many analysts rate it among the best green energy stocks of 2022. Todd Shaver of the Bull Market Report says “this company has massive secular tailwinds behind it. If you’re looking for a green opportunity, STEM has the potential to become something truly special.19“
4. NextEra Energy (NEE)
NextEra energy is something of a hybrid where green energy is concerned. Granted, it’s an electricity company that uses fossil fuels, but it’s also heavily pushing solar, nuclear, and wind-produced electricity, with plans to expand offshore wind energy production to New Jersey.
NextEra has a market cap of $147.6 billion market cap, reported earnings growth of close to 12% YOY in Q3 2021, and is considered by many to be a strong renewable energy stock for 202220. It’s currently trading at $73.8521.
5. Clearway Energy (CWEN)
Clearway is one of America’s largest renewable energy stocks, with wind and solar projects across 25 states producing 4,700MW of energy22. It’s delivered annual total returns of close to 10% since its inception, and aims to achieve 5-8% annual dividend growth over the next few years, which is probably why you’ll find its stocks in over 70 different ETFs23.
Clearway is seen as a fairly reliable investment24, and its share price is currently $30.2625.
For current performance and holdings, please visit defianceetfs.com/HDRO
1 “Renewable energy explained” https://www.eia.gov/energyexplained/renewable-sources/
2 “Recent Study Reveals More Than a Third of Global Consumers Are Willing to Pay More for Sustainability as Demand Grows for Environmentally-Friendly Alternatives” October 14, 2021 https://www.businesswire.com/news/home/20211014005090/en/Recent-Study-Reveals-More-Than-a-Third-of-Global-Consumers-Are-Willing-to-Pay-More-for-Sustainability-as-Demand-Grows-for-Environmentally-Friendly-Alternatives
3 “United Nations Climate Action”, accessed January 31, 2022 https://www.un.org/en/climatechange/net-zero-coalition
4 “Climate change: EU leaders set 55% target for CO2 emissions cut” December 11, 2020 https://www.bbc.co.uk/news/world-europe-55273004
5 National Council of State Legislatures, “Energy State Bill Tracking Database,” September 17, 2021. Taken from “2022 renewable energy industry outlook” December 2021 https://www2.deloitte.com/content/dam/Deloitte/us/Documents/energy-resources/us-eri-renewable-energy-outlook-2022.pdf
6 “2022 renewable energy industry outlook” December 2021 https://www2.deloitte.com/content/dam/Deloitte/us/Documents/energy-resources/us-eri-renewable-energy-outlook-2022.pdf
7 “From Electric Vehicles to Resilience: Climate Action in the Bipartisan Infrastructure Deal” August 3, 2021 https://www.eesi.org/articles/view/from-electric-vehicles-to-resilience-climate-action-in-the-bipartisan-infrastructure-deal
8 “What you need to know about the European Green Deal – and what comes next” July 13, 2021 https://www.weforum.org/agenda/2021/07/what-you-need-to-know-about-the-european-green-deal-and-what-comes-next/
9 “Global Renewable Energy Market 2022-2026” October 2021 https://www.researchandmarkets.com/reports/5504957/global-renewable-energy-market-2022-2026
10 “Renewable Energy Market Update Outlook for 2021 and 2022” May 2021 https://iea.blob.core.windows.net/assets/18a6041d-bf13-4667-a4c2-8fc008974008/RenewableEnergyMarketUpdate-Outlookfor2021and2022.pdf
11 “Hydrogen electrolyser market booms with ‘1,000-fold’ growth in frame by 2040: Aurora” May 11, 2021 https://www.rechargenews.com/energy-transition/hydrogen-electrolyser-market-booms-with-1-000-fold-growth-in-frame-by-2040-aurora/2-1-1009199
12 “S&P Global Market Intelligence energy outlook says record wind and solar generation additions set to make 2022 a big year as the energy transition continues to gain pace” November 10, 2021 https://www.spglobal.com/marketintelligence/en/media-center/press-release/sp-global-market-intelligence-energy-outlook-says-record-wind-and-solar-generation-additions-set-to-make-2022-a-big-year-as-the
13 Accessed February 22, 2022 https://www.google.com/search?q=hdro+share+price&ei=QfMUYqgDvICL6A-S87OgCg&ved=0ahUKEwjop4rmwpP2AhU8wAIHHZL5DKQQ4dUDCA4&uact=5&oq=hdro+share+price&gs_lcp=Cgdnd3Mtd2l6EAMyBggAEAcQHjIFCAAQgAQ6BwgAEEcQsANKBAhBGABKBAhGGABQywNYywNg0QVoAnABeACAAXyIAXySAQMwLjGYAQCgAQHIAQjAAQE&sclient=gws-wiz
14 https://www.kiplinger.com/investing/stocks/604230/best-green-energy-stocks-for-2022
15 Accessed February 22, 2022 https://www.google.com/search?q=enphase+energy+share+price&ei=R_MUYq6IGc7WkgXwsYrYCA&ved=0ahUKEwjux5HpwpP2AhVOq6QKHfCYAosQ4dUDCA4&uact=5&oq=enphase+energy+share+price&gs_lcp=Cgdnd3Mtd2l6EAMyBggAEAcQHjIGCAAQBxAeMgYIABAHEB4yBQgAEIAEMgUIABCABDIFCAAQgAQyBAgAEB4yBggAEAgQHjIGCAAQCBAeOgcIABBHELADOgUIABDEAjoECAAQDToICAAQCBAHEB5KBAhBGABKBAhGGABQgQZYyxRgxh5oAnABeAKAAZQDiAHJFJIBCjAuMTIuMi4wLjGYAQCgAQHIAQjAAQE&sclient=gws-wiz
16 “10 Best Green Energy Stocks for 2022” February 17, 2022 https://www.kiplinger.com/investing/stocks/604230/best-green-energy-stocks-for-2022
17 “Under-The-Radar Energy Stocks For 2022” January 19, 2022 https://www.forbes.com/sites/moneyshow/2022/01/19/under-the-radar-energy-stocks-for-2022/?sh=36f045a64591
18 Accessed February 22, 2022 https://www.google.com/search?q=stem+inc+share+price&ei=mvMUYuzCHJL-sAeKoZmQCA&ved=0ahUKEwjs996Qw5P2AhUSP-wKHYpQBoIQ4dUDCA4&uact=5&oq=stem+inc+share+price&gs_lcp=Cgdnd3Mtd2l6EAMyBQgAEIAEMgQIABAeOgcIABBHELADOgcIABCwAxBDOgoIABDkAhCwAxgAOhIILhDHARDRAxDIAxCwAxBDGAE6EgguEMcBEKMCEMgDELADEEMYAToGCAAQBxAeOggIABAHEAoQHkoECEEYAEoECEYYAVDFCFiNEGCSFGgCcAF4AIABrgGIAZ8JkgEDMC44mAEAoAEByAETwAEB2gEGCAAQARgJ2gEGCAEQARgI&sclient=gws-wiz
19 “Under-The-Radar Energy Stocks For 2022” January 19, 2022 https://www.forbes.com/sites/moneyshow/2022/01/19/under-the-radar-energy-stocks-for-2022/?sh=36f045a64591
20 “10 Best Green Energy Stocks for 2022” February 17, 2022 https://www.kiplinger.com/investing/stocks/604230/best-green-energy-stocks-for-2022
21 Accessed on February 22, 2022 https://www.google.com/search?q=nextera+energy+share+price&ei=CfQUYtLvGuWT9u8PlaWNwAw&oq=nextera++share+price&gs_lcp=Cgdnd3Mtd2l6EAMYADIGCAAQBxAeMgYIABAHEB4yBggAEAcQHjIGCAAQBxAeMgYIABAHEB4yBggAEAcQHjIGCAAQBxAeMgYIABAHEB4yBggAEAcQHjIFCAAQgAQ6BQgAEMQCSgQIQRgASgQIRhgAUABYiglgwhFoAHABeACAAb0BiAHJCZIBAzAuOJgBAKABAcABAQ&sclient=gws-wiz
22 “The 7 Best Green Energy Stocks to Grow Your Portfolio in 2022” December 20, 2021 https://finance.yahoo.com/news/7-best-green-energy-stocks-110016814.html
23 “10 Best Green Energy Stocks for 2022” February 17, 2022 https://www.kiplinger.com/investing/stocks/604230/best-green-energy-stocks-for-2022
“Investing in Renewable Energy Stocks” February 2, 2022 https://www.fool.com/investing/stock-market/market-sectors/energy/renewable-energy-stocks/
24“The 7 Best Green Energy Stocks to Grow Your Portfolio in 2022” December 20, 2021 https://finance.yahoo.com/news/7-best-green-energy-stocks-110016814.html
“10 Best Green Energy Stocks for 2022” February 17, 2022 https://www.kiplinger.com/investing/stocks/604230/best-green-energy-stocks-for-2022
“Investing in Renewable Energy Stocks” February 2, 2022 https://www.fool.com/investing/stock-market/market-sectors/energy/renewable-energy-stocks/
25 Accessed February 22, 2022 https://www.google.com/search?q=clearway+energy+share+price&ei=PPQUYs2fHpSp9u8P746umAM&ved=0ahUKEwjNrYDew5P2AhWUlP0HHW-HCzMQ4dUDCA4&uact=5&oq=clearway+energy+share+price&gs_lcp=Cgdnd3Mtd2l6EAMyBQgAEIAEMgUIABCABDoHCAAQRxCwAzoHCAAQsAMQQzoKCAAQ5AIQsAMYADoSCC4QxwEQ0QMQyAMQsAMQQxgBOgYIABAHEB5KBAhBGABKBAhGGAFQhwZYqg1gzhFoAnABeACAAacBiAHaCpIBAzAuOZgBAKABAcgBEsABAdoBBggAEAEYCdoBBggBEAEYCA&sclient=gws-wiz