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3 Alternative Energy Stocks to Watch Amid Impacts of Policy Shift
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An impressive outlook for wind energy installation should bode well for alternative energy stocks. However, rising wind turbine costs and the impact of U.S. tariffs and policy changes could slow their growth. In particular, the passage of the One Big Beautiful Act continues to be a major headwind. Despite these challenges, the rapid electrification of transportation is set to drive strong growth in the U.S. electric vehicle market in the near term, benefiting clean energy stocks. The forerunners in the U.S. alternative energy industry are Talen Energy Corp. ((TLN - Free Report) ), Bloom Energy ((BE - Free Report) ) and Brookfield Renewable ((BEPC - Free Report) ).
About the Industry
The Zacks Alternative Energy industry can be fundamentally segregated into two sets of companies. While one group is involved in the generation and distribution of alternative energy and electricity from sources like wind, natural gas, biofuel, hydro and geothermal, the other is engaged in the development, design and installation of renewable projects involving these alternative energy sources. The industry also includes a handful of stocks that offer fuel cell energy solutions, which have gained popularity as an affordable clean energy lately. Per the BloombergNEF’s report published in January 2025, global spending on clean energy reached record levels of $2.08 trillion in 2024. With similar or more investments expected in clean energy in the coming years, the industry boasts solid growth opportunities for its participants.
3 Trends Shaping the Future of the Alternative Energy Industry
Wind Energy – A Key Growth Catalyst: Among alternative energy sources, wind energy has been making noticeable progress in the United States. Per a report by the American Clean Power Association (“ACP”), wind installations in the first quarter of 2025 increased 91% year over year, with all activity from new onshore projects. Looking ahead, 8.1 gigawatts (GW) of wind installations are projected in the United States this year, spanning onshore, offshore, and repowers, according to Wood Mackenzie. Average annual installations are projected to be nearly 9 GW over the next five years, totaling 44 GW of new capacity. This reflects a solid growth opportunity for the U.S. wind market at present, which, in turn, should boost the overall expansion of the alternative energy industry.
EV Market Boom to Boost Clean Energy: Electric vehicles (EVs) are playing a pivotal role in decarbonizing the transportation sector. Rising electrification, supported by government subsidies, tax rebates, grants, and incentives like carpool lane access, is encouraging more people to switch from gasoline-powered vehicles to EVs in the United States. Additionally, declining battery costs are further driving growth in the U.S. EV market. Consequently, 408,688 EVs were registered in the United States during the third quarter of 2024, marking an 8% increase year over year (according to data from the Alliance for Automotive Innovation. Looking ahead, the U.S. EV market size is expected to register a CAGR of 10.5% between 2025 and 2029, as estimated by a report from Statista. Such an impressive outlook bolsters the prospects of clean energy stocks, which offer the largest electric vehicle charging network in the United States.
Rising Costs & Impact of Tariffs and OBBA: The steadily rising cost of renewable installations in recent times has been posing a significant challenge for clean energy installers. In particular, the rising price of steel, which is used to make giant wind turbine blades, has been pushing up the cost of wind installation lately.
The heightened import tariff recently implemented by the U.S. government in early 2025 has put increased cost pressure on the wind industry. Notably, America’s wind turbine orders declined 50% in the first half of 2025 compared to last year, reaching their lowest level since 2020, caused primarily by tariffs and policy uncertainty. In addition to this, the passage of the One Big Beautiful Act (“OBBBA”) in July 2025 struck another big blow to the clean energy industry’s growth trajectory. The OBBBA brought significant changes to the tax credits available for eligible clean energy components and facilities, including terminating the advanced manufacturing production tax credit for wind components sold after Dec. 31, 2027. To this end, Wood Mackenzie’s modeling shows that the expiration of tax credits will increase unsubsidized Levelized Cost of Energy (“LCOE”) by an average of 25%, a more substantial impact than tariff scenarios, which can add up to 10%. Undoubtedly, the near-term growth of alternative energy stocks will be affected by the implementation of OBBBA, leading to delays in project completion and subsequent revenue generation.
Zacks Industry Rank Reflects Grim Outlook
The Zacks Alternative Energy industry is housed within the broader Zacks Oils-Energy sector. It carries a Zacks Industry Rank #179, which places it in the bottom 27% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates gloomy near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the bottom 50% of the Zacks-ranked industries is due to a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts have lost confidence in this group’s earnings growth potential over the past few months. The industry’s bottom-line estimate for the current fiscal year has moved down 1.7% to $2.38 since June 30.
Before we present a few alternative energy stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Beats Sector and S&P 500
The Alternative Energy Industry has outperformed its sector as well as the Zacks S&P 500 composite over the past year. The stocks in this industry have collectively surged 55.7% in the past year against the Oil-Energy sector’s 1.3% decline. The Zacks S&P 500 composite has gained 14.3% in the same time frame.
One-Year Price Performance
Industry's Current Valuation
On the basis of the trailing 12-month EV/EBITDA ratio, which is commonly used for valuing alternative energy stocks, the industry is currently trading at 21.24 compared with the S&P 500’s 17.55 and the sector’s 27.99.
Over the past five years, the industry has traded as high as 22.33X, as low as 8.82X and at the median of 10.56X, as the charts show below.
EV-EBITDA Ratio (TTM)
3 Alternative Energy Stocks to Watch
Talen Energy: Based in Houston, TX, the company owns and operates power infrastructure principally in the United States. On Aug. 7, 2025, Talen Energy announced its second-quarter 2025 results. Its operating revenues improved a solid 28.8% year over year, while operating income surged 144.4%.
The Zacks Consensus Estimate for the company’s 2025 sales implies an improvement of 14.8% from the previous year’s estimated figure. The stock boasts a long-term (three-to-five years) earnings growth rate of 15.5%. The company currently sports a Zacks Rank #1 (Strong Buy).
Price & Consensus: TLN
Brookfield Renewable: Based in New York, the company operates hydroelectric, wind and solar plants. In July 2025, the company announced that it would invest up to $1 billion to increase its equity interest to approximately 38% in Isagen S.A., which generates stable and contracted cash flows from its large fleet of hydro assets.
The Zacks Consensus Estimate for BEPC’s 2025 earnings per share is pegged at a loss of 30 cents, which implies a solid improvement from the prior-year quarter’s loss of 89 cents. The stock boasts a four-quarter average earnings surprise of 21.09%. BEPC currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price & Consensus: BEPC
Bloom Energy: Based in San Jose, CA, the company generates and distributes renewable energy. On July 31, 2025, Bloom Energy announced its second-quarter 2025 results. Its revenues improved a solid 19.5%, while its adjusted gross margin expanded 650 basis points to 28.2%.
The stock holds a long-term earnings growth rate of 28%. The Zacks Consensus Estimate for 2025 sales implies an improvement of 20.3% from the previous year’s reported figure. The company currently carries a Zacks Rank #2.
Price & Consensus: BE
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3 Alternative Energy Stocks to Watch Amid Impacts of Policy Shift
About the Industry
The Zacks Alternative Energy industry can be fundamentally segregated into two sets of companies. While one group is involved in the generation and distribution of alternative energy and electricity from sources like wind, natural gas, biofuel, hydro and geothermal, the other is engaged in the development, design and installation of renewable projects involving these alternative energy sources. The industry also includes a handful of stocks that offer fuel cell energy solutions, which have gained popularity as an affordable clean energy lately. Per the BloombergNEF’s report published in January 2025, global spending on clean energy reached record levels of $2.08 trillion in 2024. With similar or more investments expected in clean energy in the coming years, the industry boasts solid growth opportunities for its participants.
3 Trends Shaping the Future of the Alternative Energy Industry
Wind Energy – A Key Growth Catalyst: Among alternative energy sources, wind energy has been making noticeable progress in the United States. Per a report by the American Clean Power Association (“ACP”), wind installations in the first quarter of 2025 increased 91% year over year, with all activity from new onshore projects. Looking ahead, 8.1 gigawatts (GW) of wind installations are projected in the United States this year, spanning onshore, offshore, and repowers, according to Wood Mackenzie. Average annual installations are projected to be nearly 9 GW over the next five years, totaling 44 GW of new capacity. This reflects a solid growth opportunity for the U.S. wind market at present, which, in turn, should boost the overall expansion of the alternative energy industry.
EV Market Boom to Boost Clean Energy: Electric vehicles (EVs) are playing a pivotal role in decarbonizing the transportation sector. Rising electrification, supported by government subsidies, tax rebates, grants, and incentives like carpool lane access, is encouraging more people to switch from gasoline-powered vehicles to EVs in the United States. Additionally, declining battery costs are further driving growth in the U.S. EV market. Consequently, 408,688 EVs were registered in the United States during the third quarter of 2024, marking an 8% increase year over year (according to data from the Alliance for Automotive Innovation. Looking ahead, the U.S. EV market size is expected to register a CAGR of 10.5% between 2025 and 2029, as estimated by a report from Statista. Such an impressive outlook bolsters the prospects of clean energy stocks, which offer the largest electric vehicle charging network in the United States.
Rising Costs & Impact of Tariffs and OBBA: The steadily rising cost of renewable installations in recent times has been posing a significant challenge for clean energy installers. In particular, the rising price of steel, which is used to make giant wind turbine blades, has been pushing up the cost of wind installation lately.
The heightened import tariff recently implemented by the U.S. government in early 2025 has put increased cost pressure on the wind industry. Notably, America’s wind turbine orders declined 50% in the first half of 2025 compared to last year, reaching their lowest level since 2020, caused primarily by tariffs and policy uncertainty. In addition to this, the passage of the One Big Beautiful Act (“OBBBA”) in July 2025 struck another big blow to the clean energy industry’s growth trajectory. The OBBBA brought significant changes to the tax credits available for eligible clean energy components and facilities, including terminating the advanced manufacturing production tax credit for wind components sold after Dec. 31, 2027. To this end, Wood Mackenzie’s modeling shows that the expiration of tax credits will increase unsubsidized Levelized Cost of Energy (“LCOE”) by an average of 25%, a more substantial impact than tariff scenarios, which can add up to 10%. Undoubtedly, the near-term growth of alternative energy stocks will be affected by the implementation of OBBBA, leading to delays in project completion and subsequent revenue generation.
Zacks Industry Rank Reflects Grim Outlook
The Zacks Alternative Energy industry is housed within the broader Zacks Oils-Energy sector. It carries a Zacks Industry Rank #179, which places it in the bottom 27% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates gloomy near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the bottom 50% of the Zacks-ranked industries is due to a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts have lost confidence in this group’s earnings growth potential over the past few months. The industry’s bottom-line estimate for the current fiscal year has moved down 1.7% to $2.38 since June 30.
Before we present a few alternative energy stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Beats Sector and S&P 500
The Alternative Energy Industry has outperformed its sector as well as the Zacks S&P 500 composite over the past year. The stocks in this industry have collectively surged 55.7% in the past year against the Oil-Energy sector’s 1.3% decline. The Zacks S&P 500 composite has gained 14.3% in the same time frame.
One-Year Price Performance
Industry's Current Valuation
On the basis of the trailing 12-month EV/EBITDA ratio, which is commonly used for valuing alternative energy stocks, the industry is currently trading at 21.24 compared with the S&P 500’s 17.55 and the sector’s 27.99.
Over the past five years, the industry has traded as high as 22.33X, as low as 8.82X and at the median of 10.56X, as the charts show below.
EV-EBITDA Ratio (TTM)
3 Alternative Energy Stocks to Watch
Talen Energy: Based in Houston, TX, the company owns and operates power infrastructure principally in the United States. On Aug. 7, 2025, Talen Energy announced its second-quarter 2025 results. Its operating revenues improved a solid 28.8% year over year, while operating income surged 144.4%.
The Zacks Consensus Estimate for the company’s 2025 sales implies an improvement of 14.8% from the previous year’s estimated figure. The stock boasts a long-term (three-to-five years) earnings growth rate of 15.5%. The company currently sports a Zacks Rank #1 (Strong Buy).
Price & Consensus: TLN
Brookfield Renewable: Based in New York, the company operates hydroelectric, wind and solar plants. In July 2025, the company announced that it would invest up to $1 billion to increase its equity interest to approximately 38% in Isagen S.A., which generates stable and contracted cash flows from its large fleet of hydro assets.
The Zacks Consensus Estimate for BEPC’s 2025 earnings per share is pegged at a loss of 30 cents, which implies a solid improvement from the prior-year quarter’s loss of 89 cents. The stock boasts a four-quarter average earnings surprise of 21.09%. BEPC currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price & Consensus: BEPC
Bloom Energy: Based in San Jose, CA, the company generates and distributes renewable energy. On July 31, 2025, Bloom Energy announced its second-quarter 2025 results. Its revenues improved a solid 19.5%, while its adjusted gross margin expanded 650 basis points to 28.2%.
The stock holds a long-term earnings growth rate of 28%. The Zacks Consensus Estimate for 2025 sales implies an improvement of 20.3% from the previous year’s reported figure. The company currently carries a Zacks Rank #2.
Price & Consensus: BE