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Go Greener in 2021 With Best ETFs & Stocks of 2020

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The clean energy sector has been on fire this year primarily driven by President-elect Joe Biden’s push for going greener. Biden plans to pump $2 trillion into green energy over four years to build solar panels, charging stations and more; vows to rejoin the Paris climate in “exactly 77 days;” and aims for net-zero emissions by 2050.

Additionally, interest in environmental, social and governance investing has been rising rapidly with firms across the globe investing in clean tech business. The latest massive $900 billion coronavirus relief package approved by the Congress has set the stage for further rally in the green energy space (read: 5 ETF Areas to Gain on COVID-19 Stimulus Deal).

This is especially true as the bill includes billions of dollars to promote clean energy such as wind and solar power while limiting the use of a potent greenhouse gas in refrigerants and extending tax incentives for wind and solar energy. This is the first time in 13 years that Congress has used the energy policy to tackle global warming. The package will also reduce the use of hydrofluorocarbons (HFCs) — chemicals used in air conditioners and refrigerators that are hundreds of times worse for the climate than carbon dioxide.

New Spending Bill in Focus

The spending bill calls for massive $35 billion in clean energy research and development, including $1.5 billion for solar and $625 million for wind. Geothermal energy research will get $850 million, and hydropower and marine power will get $933 million.

Regarding the tax incentives, the residential Solar Investment Tax Credit, which saves homeowners 26% of the cost of their solar installation, has been extended by two years. The credit will stay at 26% for projects that begin construction in 2020, and drop to 22% for projects that begin construction in 2021. After 2021, the residential credit will drop to zero.

Meanwhile, onshore wind production tax credit has been extended for one year. The credit will remain at 60% for projects that begin construction by the end of 2021, rather than being reduced to 40% as called for in the previous law. After that, the production tax credit will be reduced to zero. The new rules also provide a five-year extension for offshore wind tax credits. The offshore wind projects will retain access to a full 30% credit for projects that begin construction through 2025.  

Further, the new legislation will reduce the production of HFCs, a greenhouse gas used in air conditioning and refrigerators, to 15% of 2012 levels by 2036.

With the upcoming increase in renewable spending and new legislation, investors seeking to tap the opportune moment should consider the best-performing ETFs & stocks of 2020. Below we have highlighted them:

Invesco Solar ETF (TAN - Free Report)

This ETF offers global exposure to the solar industry by tracking the MAC Global Solar Energy Index (read: 10 Top-Ranked ETFs That Have Outperformed in 2020).

Zacks Rank: #2 (Buy)
AUM: $3.2 billion
Expense Ratio: 0.71%
2020 Return: 235.1%

Invesco WilderHill Clean Energy ETF (PBW - Free Report)

This fund provides exposure to U.S. companies engaged in the business of advancement of cleaner energy and conservation. It follows the WilderHill Clean Energy Index.

Zacks Rank: NA
AUM: $1.9 billion
Expense Ratio: 0.70%
2020 Return: 217.5%

First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN - Free Report)

This fund follows the NASDAQ Clean Edge Green Energy Index and provides exposure to U.S. clean energy companies engaged in manufacturing, development, distribution & installation of emerging clean-energy technologies including solar photovoltaics, biofuels and advanced batteries (read: 5 ETF Areas of November That Are Up At Least 25%).

Zacks Rank: #3 (Hold)
AUM: $1.7 billion
Expense Ratio: 0.60%
2020 Return: 184.4%

SPDR S&P Kensho Clean Power ETF (CNRG - Free Report)

This ETF offers exposure to companies whose products and services are driving innovation behind the clean energy sector, which includes the areas of solar, wind, geothermal and hydroelectric power. It follows the S&P Kensho Clean Power Index.

Zacks Rank: NA
AUM: $228.6 million
Expense Ratio: 0.45%
2020 Return: 144.1%

Invesco Global Clean Energy ETF (PBD - Free Report)

This product tracks the WilderHill New Energy Global Innovation Index, which comprises companies engaged in the business of the advancement of cleaner energy and conservation.

Zacks Rank: #3
AUM: $253.2 million
Expense Ratio: 0.75%
2020 Return: 139.4%

Renesola Ltd. (SOL - Free Report)

This company manufactures and sells solar wafers and related products. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Rank: #3
VGM Score: CF
Market Cap: $310 million
2020 Return: 571.4%

Enphase Energy Inc. (ENPH - Free Report)

This global energy technology company delivers energy management technology for the solar industry.

Zacks Rank: #3
VGM Score: F
Market Cap: $20.8 billion
2020 Return: 553.4%

Sunrun Inc. (RUN)

This company develops, owns, manages and sells residential solar energy systems.

Zacks Rank: #3
VGM Score: D
Market Cap: $13.1 billion
2020 Return: 379.2%

Sunnova Energy International Inc. (NOVA - Free Report)

This company is a residential solar and energy storage service provider that operates primarily in U.S. states and territories (read: 8 ETFs That Have Gained More Than 100% in 2020).

Zacks Rank: #3
VGM Score: F
Market Cap: $4 billion
2020 Return: 312.9%

FuelCell Energy Inc. (FCEL - Free Report)

This company designs, manufactures, sells, installs, operates and services stationary fuel cell power plants for distributed power generation.

Zacks Rank: #3
VGM Score: D
Market Cap: $2.74 billion
2020 Return: 273.7%

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