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Renewable Energy Growth Is Practically Guaranteed

Renewable Energy Growth Is Practically Guaranteed

 In July, the European Union (EU) agreed to carve out $900 billion for renewable energy development in its “Next Generation EU” recovery plan.

President Joe Biden’s infrastructure plan would allocate $400 billion to $500 billion toward upgrading the power grid and calls for a network of 500,000 electric vehicle chargers.

And with governments around the world implementing zero-carbon initiatives, renewable energy growth is practically guaranteed.

But despite positive developments, stocks in the renewable energy industry have had a rough year as money has shifted from growth to value stocks.

For long-term investors, the recent weakness presents a huge buying opportunity.

Now Is an Ideal Time to Buy Renewable Energy Stocks

At current valuations, the market is severely underestimating the magnitude of the renewable energy takeover.

Investing in renewable energy stocks now will be like investing in the oil and gas industry in the 1980s, a move that handed investors nearly 10,000% returns.

Leading the takeover will be wind and solar energy. Bloomberg forecasts these sources to generate 33% and 23% of the world’s power by 2050, respectively.

Considering wind and solar accounted for only 7% and 4% of the power generation last year, it’s safe to say huge growth is on the way.

global power generation chart

(Source: Bloomberg.)

Critics of wind and solar energy often cite high costs as an obstacle to their adoption. In the past that may have been a reasonable concern, but times have changed.

The underlying technology has gotten dramatically cheaper in recent years. The cost of solar and wind has dropped 70% and 41% over the past five years, respectively.

And growth in battery storage will continue to make solar and wind even cheaper. Over the next 30 years, installed battery capacity is expected to climb by over 18,000%.

global installed battery capacity chart

(Source: Bloomberg.)

The data suggests that renewable energy will dominate the market in the coming years. But with renewable energy stocks down 13% since February, investors seem to be ignoring the data.

TSX renewable energy clean tech index

(Source: Bloomberg.)

This chart suggests the bottom may be in for renewable energy stocks, making now an ideal time to buy.

Investors that want to gain exposure to a collection of renewable energy stocks can buy the Global X Renewable Energy Producers ETF (Nasdaq: RNRG).

Renewable energy companies will dominate in the New American Economy, and investors can’t afford to miss out on the opportunity.


Steve Fernandez

Research Analyst, Automatic Fortunes

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