Developed nations are rapidly moving toward their goal to achieve the most coveted ‘carbon neutral’ status. In this regard, updates on sustainability initiatives undertaken by the government or corporates are rampant. Notably, alternative energy includes any energy source that replaces conventional and non-renewable fossil fuels. These energy sources are also called renewable as they are continuously replenished through natural processes.
The renewable energy sector is expected to remain strong in 2022. According to the International Renewable Energy Agency report, the outlook till 2022 projects global renewable power expenses to decline more, with onshore wind becoming 20-27% lower than the cheapest new coal-fired generation option.
Considering the sectors’ run in 2021, there have been many factors that kept the momentum moving. Favorable government policies, impressive renewable investments, falling overall cost of generating renewable electricity and growing adoption of electric vehicles (EV) might keep on supporting the momentum in the space in 2022.
Going by a U.S. Energy Information Administration report, electricity consumption in the United States for retail sales and direct use of electricity shall rise by 0.6% in 2022 and 1.4% in 2023. The same report forecasts electricity generation from renewable sources to rise from 20% in 2021 to 23% in 2022 and to 24% in 2023. Expanding new solar and wind capacities will make up most of the rise in renewables generation. Moreover, hydropower is expected to fuel about 7% of generation in 2022 and 2023. The same report also projects utility-scale solar capacity additions in gigawatts (GW) in 2022 to surpass wind additions for the first time. Notably, 21 GW of solar photovoltaic capacity is predicted to be added by the electric power sector in 2022.
Moreover, technological advancements, increasing investments, growing government initiatives and rising awareness across the globe about adopting clean energy have been leading to a rise in demand for renewable energy.
Clean Energy ETFs That Can Shine
According to the International Energy Agency (IEA)
report, renewable energy sources are expected to make up 95% of the world’s increase in power capacity through 2026. Per Allied Market Research, the global renewable energy market is expected to reach a value of $1.51 billion, at a CAGR of 6.1% between 2018 and 2025. Against this backdrop, let’s take a look at some alternative energy ETFs: iShares Global Clean Energy ETF ( ICLN Quick Quote ICLN - Free Report)
iShares Global Clean Energy ETF seeks to track the investment results of an index composed of global equities in the clean energy sector. It has 77 holdings. The fund’s AUM is $4.90 billion and the expense ratio is 0.42% (read:
Bet on These 5 ETF Areas for 2022). Invesco Solar ETF ( TAN Quick Quote TAN - Free Report)
Invesco Solar ETF is based on the MAC Global Solar Energy Index, which comprises companies in the solar energy industry. It has 52 holdings. The fund’s AUM is $2.25 billion and the expense ratio is 0.66% (read:
ETFs to Bet on Popular Investment Themes of 2021). First Trust NASDAQ Clean Edge Green Energy Index Fund ( QCLN Quick Quote QCLN - Free Report)
First Trust NASDAQ Clean Edge Green Energy Index Fund seeks investment results that correspond generally to the price and yield, before fees and expenses, of the NASDAQ Clean Edge Green Energy Index. It has 61 holdings. The fund’s AUM is $2.48 billion while the expense ratio is 0.60% (read:
Beyond Clean Energy, 5 Best Global ETF Areas of Q3). ALPS Clean Energy ETF ( ACES Quick Quote ACES - Free Report)
ALPS Clean Energy ETF seeks to track the performance of an index containing U.S. and Canadian-based companies that primarily operate in the Clean Energy sector. The fund’s AUM is $761.8 million and the expense ratio, 0.55%.
Invesco Global Clean Energy ETF ( PBD Quick Quote PBD - Free Report)
Invesco Global Clean Energy ETF is based on the WilderHill New Energy Global Innovation Index. It consists of 141 holdings. The fund’s AUM is $278.6 million and its expense ratio, 0.75%.