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Renewable Energy ETFs on Pace to See Best Year Since 2020: Here's Why
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Renewable energy stocks and exchange-traded funds (ETFs) have gained immensely in recent times. Invesco WilderHill Clean Energy ETF (PBW - Free Report) has added over 7% on Oct. 13, 2025, advanced 28.8% over the past month and surged 126.2% over the past six months (as of Oct. 13, 2025).
Note that alternative energy stocks are on the way to witness their best year since 2020. MSCI Global Alternative Energy Index (USD) recorded 108.54% gains in 2020 while the subsequent years saw steady declines. The index lost 17.4% in 2021, 6.3% in 2022, 25.2% in 2023 and 32.3% in 2024.
Let’s delve a little deeper into what’s writing the comeback story of the clean energy stocks.
Easing Policy Concerns
U.S. President Donald Trump’s "One Big Beautiful Bill" initially created uncertainty for renewables, but the outcome was less severe than feared, providing a much-needed breather to the sector.
The “One Big Beautiful Bill” phased out tax credits for new wind and solar projects unless construction begins by July 4, 2026. Under the new guidance, smaller projects such as rooftop solar installations will continue to benefit from the 5% “safe harbor” rule, which allows developers to qualify for tax credits if they have invested at least 5% of the project’s total cost and complete construction within four years, as mentioned on Investopedia.
Larger, utility-scale projects, however, will no longer be able to rely on this rule. Instead, they must demonstrate that “physical work of a significant nature” has begun to qualify for the credits, as quoted on the same Investopedia article.
The AI Boom
The sector’s rally is being driven by rising electricity demand from AI data center expansions, electrification of transport and industry, and upgrades to grid infrastructure. The AI boom requires a massive amount of energy to feed data centers. This has boosted the demand for every possible source of clean energy. Renewable energies are comparatively cheaper.
How the AI boom is shaping the future of renewable energy, can be understood from the example ofBloom Energy's (BE) stock. The BE stock jumped 26.5% Oct. 13, 2025, thanks to a deal with Brookfield to put fuel cells in AI data centers, as quoted on CNBC. The BE stock surged about 29.4% over the past five days.
Bloom has already placed hundreds of megawatts of fuel cells through deals with utilities, including American Electric Power and data center developers such as Equinix and Oracle, according to the company, as quoted on the same CNBC article.
China to Control Capacity?
Chinese solar stocks rose on Oct. 14, 2025, as state media reported that authorities were planning to strengthen controls on solar production capacity. The move has been taken to control the supply glut in the industry, (per an oilprice.com article, as mentioned on Yahoo Finance).
Cheaper Valuation of Clean Stocks
The MSCI Global Alternative Energy Index (USD) currently trades at a forward P/E of 14.56X compared with the MSCI World index’s forward P/E of 20.39X. The price-to-book value of the clean energy index is 1.85X versus the world index value of 3.87X.
Fed Rate Cuts to Benefit Clean Stocks?
The Fed has enacted its first rate cut of 2025 in September. The Fed may cut rates further this year. Lower borrowing costs are a positive for capital-intensive renewable projects. We will probably not see the return of ultra-low levels of rates seen in 2020, but the decline in the present levels is also a positive.
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Renewable Energy ETFs on Pace to See Best Year Since 2020: Here's Why
Renewable energy stocks and exchange-traded funds (ETFs) have gained immensely in recent times. Invesco WilderHill Clean Energy ETF (PBW - Free Report) has added over 7% on Oct. 13, 2025, advanced 28.8% over the past month and surged 126.2% over the past six months (as of Oct. 13, 2025).
Note that alternative energy stocks are on the way to witness their best year since 2020. MSCI Global Alternative Energy Index (USD) recorded 108.54% gains in 2020 while the subsequent years saw steady declines. The index lost 17.4% in 2021, 6.3% in 2022, 25.2% in 2023 and 32.3% in 2024.
Let’s delve a little deeper into what’s writing the comeback story of the clean energy stocks.
Easing Policy Concerns
U.S. President Donald Trump’s "One Big Beautiful Bill" initially created uncertainty for renewables, but the outcome was less severe than feared, providing a much-needed breather to the sector.
The “One Big Beautiful Bill” phased out tax credits for new wind and solar projects unless construction begins by July 4, 2026. Under the new guidance, smaller projects such as rooftop solar installations will continue to benefit from the 5% “safe harbor” rule, which allows developers to qualify for tax credits if they have invested at least 5% of the project’s total cost and complete construction within four years, as mentioned on Investopedia.
Larger, utility-scale projects, however, will no longer be able to rely on this rule. Instead, they must demonstrate that “physical work of a significant nature” has begun to qualify for the credits, as quoted on the same Investopedia article.
The AI Boom
The sector’s rally is being driven by rising electricity demand from AI data center expansions, electrification of transport and industry, and upgrades to grid infrastructure. The AI boom requires a massive amount of energy to feed data centers. This has boosted the demand for every possible source of clean energy. Renewable energies are comparatively cheaper.
How the AI boom is shaping the future of renewable energy, can be understood from the example ofBloom Energy's (BE) stock. The BE stock jumped 26.5% Oct. 13, 2025, thanks to a deal with Brookfield to put fuel cells in AI data centers, as quoted on CNBC. The BE stock surged about 29.4% over the past five days.
Bloom has already placed hundreds of megawatts of fuel cells through deals with utilities, including American Electric Power and data center developers such as Equinix and Oracle, according to the company, as quoted on the same CNBC article.
China to Control Capacity?
Chinese solar stocks rose on Oct. 14, 2025, as state media reported that authorities were planning to strengthen controls on solar production capacity. The move has been taken to control the supply glut in the industry, (per an oilprice.com article, as mentioned on Yahoo Finance).
Cheaper Valuation of Clean Stocks
The MSCI Global Alternative Energy Index (USD) currently trades at a forward P/E of 14.56X compared with the MSCI World index’s forward P/E of 20.39X. The price-to-book value of the clean energy index is 1.85X versus the world index value of 3.87X.
Fed Rate Cuts to Benefit Clean Stocks?
The Fed has enacted its first rate cut of 2025 in September. The Fed may cut rates further this year. Lower borrowing costs are a positive for capital-intensive renewable projects. We will probably not see the return of ultra-low levels of rates seen in 2020, but the decline in the present levels is also a positive.