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3 Renewables Set to Gain as Focus Shifts to Clean Energy

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Renewable energy seems to be the way forward to battle climate change and the United States seems to be committed toward that end. Although the pandemic-induced lockdown slowed the progress of renewable energy projects around the world, the United States managed to fare well. In fact, per a report by the International Energy Agency, (“IEA”), renewable capacity additions in the United States “almost doubled in the first half of 2020 compared with last year, mainly driven by wind developers’ rush to commission projects to meet federal tax incentive deadlines.”

The IEA report further mentioned that the share of renewables in electricity generation around the world in 2020 is predicted to increase “a record 2.3 percentage points from 2019, to reach 27% in 2020.” Furthermore, electricity generation from renewables is expected to expand to almost 50% in the next five years. Total wind and solar capacity is expected to double between 2020 and 2025. In fact, they are expected to surpass coal by 2024.

Solar adoption in the United States also made a comeback in the third quarter. Per a press release by the Solar Energy Industries Association (“SEIA”), solar companies installed 3.8 gigawatts (“GW”) of new solar photovoltaic capacity in the third quarter with residential installations up 14% from the second quarter. Moreover, the report mentioned that Wood Mackenzie forecasts 43% annual growth in solar capacity installations in 2020. Reflective of these, the adoption of renewable energy has witnessed a rise in recent years. Data from the U.S. Energy Information Administration suggests that renewable energy accounted for about 18% of electricity generation in 2019 compared to 10% in 2009, as quoted in a MarketWatch article.

Apart from the adoption of clean energy sources to drive power generation, globally, consumers are becoming increasingly aware of the adverse effects of climate change on the environment. Reflective of this, electric vehicles (“EV”) are expected to see faster adoption globally as the focus shifts to emission reductions. Analysts at Morgan Stanley predict that global electric vehicle sales are expected to grow 50% or more next year while internal combustion engine vehicle sales are expected to grow 2% to 5%, as mentioned in a MarketWatch article. The article further mentioned that as per Morgan Stanley, global EV penetration “would top 4%, rising to 31% by 2030.”

This increasing awareness on the need of clean energy can be seen as a positive for the renewable energy sector. The accelerated shift is likely to ensure that the sector is provided with more initiatives and funding. This in turn will allow for more capacity expansion and only heighten the trend of going green.

3 Renewable Energy Picks

Renewable energy seems to be the need of the hour as the world battles climate change along with emission problems. Hence, it won’t be a bad proposition now to invest in renewable energy stocks which can potentially benefit from this trend. Notably, we have handpicked three such stock that carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Portland General Electric Company (POR - Free Report) is an integrated electric utility company that engages in the generation, wholesale purchase, transmission, distribution, and retail sale of electricity in the state of Oregon in the United States. The company operates seven thermal plants, seven hydroelectric plants and two wind farms. The Zacks Consensus Estimate for its current-year earnings increased 6.8% over the past 60 days. The company’s expected earnings growth rate for next year is 67.5%.

Ameresco, Inc. (AMRC - Free Report) provides comprehensive energy services for businesses and organizations in the United States. Along with other things, the company offers renewable energy products and services, such as the construction of small-scale plants for customers that produce electricity, gas, heat, or cooling from renewable sources of energy; and sells electricity and processed renewable gas fuel, heat, or cooling. The Zacks Consensus Estimate for its current-year earnings increased 8.6% over the past 60 days. The company’s expected earnings growth rate for next year is 18.8%.

SunPower Corporation (SPWR - Free Report) delivers solar solutions worldwide. The company provides solar power components, including panels and system components, primarily to dealers, system integrators, and distributors. The Zacks Consensus Estimate for its next-year earnings increased 58.6% over the past 60 days. The company’s expected earnings growth rate for the next quarter is more than 100%.

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