The clean energy or the renewable energy market is one of the most largest growing sector globally. Clean energy sources, such as wind, hydropower, biofuel, and solar energy, are gaining momentum due to environmental concerns and government regulations in countries around the world. These factors have significantly boosted the sector, leading to a rise in installed capacity for clean energy sources. Additionally, the growing demand for power and rising energy consumption are driving the expansion of the clean energy market.
The U.S. Energy Information Administration (EIA) forecasts a 17% increase in clean energy deployment in 2024, potentially reaching 42 GW and accounting for nearly a quarter of the nation’s electricity generation. This growth could lead to a temporary rise in clean energy costs due to higher expenses for financing, labor, and land. Despite these challenges, tax credits from the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA) are expected to help maintain the competitiveness of solar and wind energy. The solar and energy storage markets are poised for further growth, supported by tax incentives and government programs such as the DOE’s Loans Program. Conversely, the wind and hydrogen energy sectors face obstacles, with wind energy experiencing higher costs and approval delays, and hydrogen development slowed by a lack of government incentives.
In a recent interview, Bruce Flatt, CEO of Brookfield Asset Management, discussed the transformative impact of decarbonization on industries and investments, describing it as a major trend reshaping the market. The company has launched a renewable energy fund and raised $15 billion, with plans for a second fund to help companies reduce carbon emissions, with solar and wind projects in 15 countries. Brookfield’s strategy includes building renewable infrastructure and directly supplying power to corporate clients to help them meet net-zero goals. Flatt highlighted that the U.S. Inflation Reduction Act (IRA) has provided incentives that accelerate clean energy projects, which will lead to improved completion rates and benefit the sector. Brookfield targets returns of 9-10% for debt products and around 20% for equity investments in the clean energy sector, with optimism for future growth and returns as more capital flows into the market.
As the world shifts towards more sustainable energy solutions, the demand for clean energy is expected to increase significantly, driven by rising environmental concerns and government incentives. Some of the largest players in the energy market are transitioning towards clean energy and are well-positioned to benefit from the ongoing push towards a more sustainable future.
A line of wind turbines against a clear sky, reflecting the companies clean energy efforts.
Our Methodology
For this article, we sifted through several active subreddits to compile an initial list of 30 clean energy stocks that retail investors were bullish on. From that list, we narrowed our choices to 10 stocks according to their hedge fund sentiment, which was taken from our database of 912 elite hedge funds as of Q2 of 2024. We also included the market cap of these companies as of September 4. The list is sorted in ascending order of their hedge fund sentiment, as of the second quarter.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10. Eversource Energy (NYSE:ES)
Number of Hedge Fund Holders: 26
Market Capitalization as of September 4: $24.34 Billion
Eversource Energy (NYSE:ES) is a leading energy provider in New England and operates through subsidiaries such as Connecticut Light and Power (CL&P), NSTAR Electric, Public Service Company of New Hampshire (PSNH), and Aquarion Company, serving over 4 million customers across electric, gas, and water services. Eversource Energy (NYSE:ES) is committed to transitioning towards cleaner energy, with significant investments in offshore wind and geothermal projects.
Eversource Energy’s (NYSE:ES) investment in offshore wind projects, such as the South Fork Wind, Revolution Wind, and Sunrise Wind has positioned it as a major player in the clean energy sector. Notably, the Sunrise Wind project is set to be the largest offshore wind project in the U.S. by 2026 and is expected to generate 924 megawatts of power. Eversource Energy (NYSE:ES) sold 50% of the project to Ørsted which is expected to bring over $1.5 billion by Q3 2024, following similar sales in the South Fork and Revolution Wind projects, which fetched $1.1 billion earlier in 2024.
In the year 2023, Eversource Energy’s (NYSE:ES) operating income increased to $2.4 billion from $2.2 billion in 2022, a 9% year-over-year increase. The company’s ability to reduce its debt is another key strength, the proceeds from its offshore wind project aided in the repayment of $900 million in June, $450 million in fall 2024, and $300 million due in early 2025. Eversource Energy (NYSE:ES) aims to increase its FFO-to-debt ratio from 14% to 50% by 2025, which will significantly enhance its financial health.
Eversource Energy’s (NYSE:ES) stock is trading at a forward PE of 14.86, a 13.87% discount to its sector. Industry analysts have a consensus on the stock’s Buy rating, setting an average share price target at $72.82, which represents a 6.5% upside potential from its current level. As of the second quarter, the stock is held by 26 hedge funds and the stakes amount to $622.20 million. Zimmer Partners is the largest shareholder in the company and owns stocks worth $303.36 million as of June 30.
9. Bloom Energy (NYSE:BE)
Number of Hedge Fund Holders: 29
Market Capitalization as of September 4: $2.55 Billion
Bloom Energy (NYSE:BE) designs, manufactures, and sells solid oxide fuel cells (SOFC). The company’s fuel cells can run on different energy sources such as natural gas, hydrogen, or a blend of both and are used to produce clean electricity on-site, through a chemical reaction without burning fuel.
In Q2, Bloom Energy’s (NYSE:BE) revenue increased 11.5% year-over-year to $335.8 million, and gross margin improved by 1.7% year-over-year to 20.4%. Bloom Energy (NYSE:BE) is not profitable yet and reported an operating loss of $23.1 million, which is a major improvement by $31.3 million year-over-year. Bloom Energy (NYSE:BE) recently issued 3% convertible green notes to raise finance and entered into a partnership with CoreWeave to supply clean electricity to its data center in Illinois. Additionally, Bloom Energy (NYSE:BE) received approval from Silicon Valley Power to power AWS data centers in Santa Clara, California. The company reaffirmed its outlook and projects revenue between $1.4 billion and $1.6 billion and a gross margin of approximately 28% for the financial year 2024.
On August 5, Bloom Energy (NYSE:BE) announced an advancement in its SOFC technology and introduced a hydrogen-powered fuel cell that achieves 60% electrical efficiency and 90% efficiency in Combined Heat and Power applications. Bloom Energy’s (NYSE:BE) SOFC technology emits nitrogen oxides (NOx) as pollutants in negligible amounts compared to traditional combustion-based systems.
Hydrogen is currently more expensive than traditional fuels, however, Bloom Energy’s (NYSE:BE) advancement in achieving efficiency could make hydrogen more economically viable and make its fuel cells a cleaner alternative for electricity production.
As of September 4, Bloom Energy (NYSE:BE) has a market cap of $2.55 billion. Analysts expect the company to grow its earnings by 100% this year and have a consensus on the stock’s Buy rating, setting an average share price target at $17.67, which represents a 46% upside potential from its current level. As of the second quarter, the stock is held by 29 hedge funds with stakes worth $190.76 million. Graham Capital Management is the largest shareholder in the company with stocks worth $51.41 million as of June 30.
8. Clearway Energy (NYSE:CWEN)
Number of Hedge Fund Holders: 30
Market Capitalization as of September 4: $5.48 Billion
Clearway Energy (NYSE: CWEN) boasts a diverse portfolio, including wind and solar projects, as well as conventional power generation assets across the United States. The company has partnered with Global Infrastructure Partners (GIP), an independent infrastructure investment fund, and TotalEnergies (EPA:TTE), a multinational energy and petroleum firm, to harness their expertise in advancing clean energy initiatives in the U.S.
Clearway Energy (NYSE: CWEN) is developing several large-scale clean energy projects in California such as Luna Valley and Daggett I which are expected to be completed by 2025. The Daggett I is a 113.5 MW battery energy storage facility in San Bernardino County which has a 482 MW Daggett Solar along with a 394 MW Storage complex. Whereas, the Luna Valley Solar Project is a 200 MW solar project located in Fresno County that once completed, can provide enough electricity to power over 80,000 homes. These projects are backed by long-term agreements with investment-grade entities and are expected to generate significant earnings for the company.
Clearway’s (NYSE:CWEN) diversified portfolio and strategic focus on clean energy assets position it well to capitalize on the ongoing trend of global energy transition and offer long-term growth potential. As of September 4, Clearway Energy (NYSE:CWEN) is valued at $5.48 billion. As of the second quarter, the stock is held by 30 hedge funds, with stakes valued at $139.80 million. As of June 30, Point72 Asset Management is the largest shareholder in the company and owns stocks worth $25.10 million.
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