The alternative fuel and renewable energy industry is currently one of the fastest-growing sectors globally. Examples of alternatives include wind, solar, nuclear, hydropower, and biofuel energy. According to the Business Research Company, the global alternative fuel or renewable energy market was valued at $1.10 trillion in 2024 and is projected to reach $1.55 trillion by 2028, growing at a CAGR of 8.8%. Growing environmental concerns and stringent environmental regulations in many developed countries have significantly boosted the renewable energy sector, leading to an increase in installed capacity for renewable sources. The increasing power demand and energy consumption are also key drivers of the growing demand in the alternative or renewable fuels industry.
According to the International Energy Agency (IEA), global energy demand is expected to increase by 3.4% annually by 2026, with 85% of this additional demand coming from China and India. India’s electricity demand alone is predicted to grow by over 6% annually until 2026, driven by economic growth and rising air conditioning use. Southeast Asia is also expected to see a 5% annual increase in electricity demand through 2026. In the United States, a moderate rise in electricity demand is anticipated in the coming years, primarily driven by data centers. The electricity consumption by data centers, artificial intelligence, and cryptocurrency could potentially double to 1,000 TWh by 2026. The IEA forecasts that the surge in electricity generation from low-emission sources will meet global demand growth over the next three years, with renewable energy expected to surpass coal as the leading energy source by early 2025.
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Uncertainty in U.S. Alternative Energy Market
On November 11, Reuters reported that hedge funds rapidly increased their investments in bank stocks, marking the fastest pace in three years, while simultaneously reducing their holdings in renewable energy companies, according to a note from Goldman Sachs. This shift in investment strategy came in response to Donald Trump’s win in the U.S. presidential election. Financial stocks, including banks, have become the most favored and most net-purchased sector on Goldman’s prime brokerage trading desk.
Additionally, hedge funds placed long bets on consumer finance, capital markets, and financial services companies, with a focus on US stocks and equities in developing Asia and Europe, where they exited short positions and added long ones. In contrast, utility companies, especially independent power, and renewable electricity producers faced heavy selling, with hedge funds taking two short positions for every long position in U.S. utility companies.
Despite short-term challenges, the rapid growth and increasing investment in alternative fuel and renewable energy reflects a global shift towards sustainable and environmentally friendly energy solutions. As renewable technologies continue to advance and become more cost-effective, they are increasingly becoming the preferred choice for new energy projects worldwide. With that in context, let’s take a look at the 10 best alternative fuel stocks to buy according to hedge funds.
An industrial facility floor with employees walking around PEM fuel cell applications.
Our Methodology
To compile our list of the 10 best alternative fuel stocks to buy according to hedge funds, we used Clean Energy ETFs plus online rankings to compile an initial list of 25 alternative fuel stocks. We then used Insider Monkey’s Hedge Fund database to rank 10 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
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 Best Alternative Fuel Stocks To Buy According to Hedge Funds
10. Fluence Energy, Inc. (NASDAQ:FLNC)
Number of Hedge Fund Holders: 27
Fluence Energy (NASDAQ:FLNC) is a global leader in energy storage technology and specializes in battery-based energy storage solutions. The company designs, manufactures, and delivers energy storage solutions and software that improve the efficiency, reliability, and sustainability of energy systems. Moreover, the company’s products improve grid reliability, integrate renewable energy, and manage energy costs.
Fluence Energy (NASDAQ:FLNC) is taking a proactive approach to building a resilient and localized supply chain in the United States. The company has established six US production facilities, including a dedicated battery module production line in Utah and two battery cell production lines in Tennessee. These facilities are equipped with advanced robotics and automation technology, which enhance production efficiency and product quality. By localizing its supply chain, Fluence Energy (NASDAQ:FLNC) aims to reduce reliance on Chinese imports, mitigate the risks associated with potential tariff increases, and capitalize on the incentives provided by the Inflation Reduction Act (IRA).
Fluence Energy (NASDAQ:FLNC) is also expanding its market presence by diversifying its geographic footprint and increasing its pipeline of projects. The company is looking for opportunities in the US, Germany, Australia, Canada, and Chile. Additionally, the company is focusing on recurring services and digital businesses.
9. Shoals Technologies Group, Inc. (NASDAQ:SHLS)
Number of Hedge Fund Holders: 27
Shoals Technologies Group, Inc. (NASDAQ:SHLS) is known for its electrical balance of systems (EBOS) solutions tailored for utility-scale solar and wind energy projects. The company’s innovative products are designed to simplify solar installations and enhance system performance. In addition to improving efficiency, Shoals Technologies Group, Inc.’s (NASDAQ:SHLS) EBOS components play a key role in reducing costs in the deployment of solar power projects.
Shoals Technologies Group, Inc. (NASDAQ:SHLS) is actively pursuing several strategic initiatives to drive growth and expand its market presence. One of the key areas of focus is the company’s transition to 2kV electrical systems, which enhances the efficiency and cost-effectiveness of solar installations. This technology increases the voltage in solar projects to 2,000 volts and is expected to significantly reduce the cost per watt of energy production. Shoals Technologies Group, Inc. (NASDAQ:SHLS) is collaborating with industry leaders such as GE Vernova on pilot projects to demonstrate the benefits of 2kV systems and developing strong relationships with key players in the solar industry to drive adoption and secure a competitive edge in the market.
Shoals Technologies Group, Inc. (NASDAQ:SHLS) is also focusing on the commercial, community, and industrial (CC&I) market. This segment represents approximately 10% of the size of the utility-scale solar market in the US but is growing at an attractive pace and aligns well with the company’s existing strengths and product offerings. The company has made investments in building a dedicated commercial and product development team to address this market.
8. Clearway Energy, Inc. (NYSE:CWEN)
Number of Hedge Fund Holders: 29
Clearway Energy Inc. (NYSE:CWEN) is a leading renewable energy company operating across the United States. The company operates a portfolio of 6,000 MW of installed renewable energy capacity, which includes a diverse range of wind and solar energy projects. Additionally, Clearway Energy, Inc. (NYSE:CWEN) manages 2.5 GW of natural gas generation facilities.
Clearway Energy Inc. (NYSE:CWEN) is actively pursuing a multi-faceted approach to drive future growth, starting with the strategic expansion of its renewable and storage assets. The company has recently committed to the Pine Forest Solar Plus Storage project, a project that is expected to contribute significantly to the company’s cash flow and earnings. Additionally, on November 25, Clearway Energy Inc. (NYSE:CWEN) announced its agreement to acquire the Tuolumne Wind Project, a 137 MW facility located in Washington State. The project will operate under a new 15-year power purchase agreement (PPA) with Turlock Irrigation District.
Clearway Energy Inc. (NYSE:CWEN) has received an offer for Phase 1 of the Honeycomb battery hybridization program, which, if approved, will further enhance the company’s position in the storage market. The company is also selectively engaging in M&A opportunities that are right-sized and complementary to its fleet, focusing on assets that offer accretive returns and align with its underwriting requirements.
7. Array Technologies, Inc. (NASDAQ:ARRY)
Number of Hedge Fund Holders: 36
Array Technologies, Inc. (NASDAQ:ARRY) is a leading manufacturer of ground-mount solar tracking systems, which enhance the efficiency of solar power generation. The company’s solar tracking systems primarily cater to utility-scale solar projects. Array Technologies, Inc. (NASDAQ:ARRY) works closely with major developers and utilities to help optimize energy production.
Array Technologies, Inc. (NASDAQ:ARRY) is leveraging its strong domestic manufacturing capabilities to capitalize on favorable legislative support and emerging market opportunities. The company’s new Albuquerque manufacturing facility is a strategic investment that aligns with the Inflation Reduction Act (IRA) and the 45X tax credits and incentivizes domestic production and onshoring of critical components. By increasing its domestic production, Array Technologies, Inc. (NASDAQ:ARRY) aims to reduce supply chain risks and enhance its ability to deliver projects on time.
Array Technologies, Inc. (NASDAQ:ARRY) is also expanding its international presence and diversifying its revenue streams. The company is also making targeted investments in Europe, where it is confident that its customer activities will support share growth in the coming quarters.
6. Enphase Energy, Inc. (NASDAQ:ENPH)
Number of Hedge Fund Holders: 38
Enphase Energy, Inc. (NASDAQ:ENPH) is a prominent global energy technology company specializing in the design, manufacture, and sale of home energy solutions. The company’s products include solar microinverters, home energy storage systems, and energy management software. The company serves both residential and commercial clients and is known for its user-friendly and high-performance solar technology.
Enphase Energy, Inc. (NASDAQ:ENPH) is aggressively expanding its product portfolio and market presence. In the US, the company is leveraging the benefits of the Inflation Reduction Act (IRA) by increasing domestic content in its products which qualify for a 10% domestic content ITC. The company is also ramping up production at its US contract manufacturing facilities, aiming to ship 1.3 million microinverters in Q4. Additionally, Enphase Energy, Inc. (NASDAQ:ENPH) is introducing new products such as the commercial IQ8P-3P microinverters and residential IQ8X microinverters, which are designed to meet the specific needs of small commercial and residential markets, respectively. These products are expected to drive growth in both the US and international markets.
In Europe, Enphase Energy, Inc. (NASDAQ:ENPH) is launching several new products, including the three-phase battery backup solution for Germany, Austria, and Switzerland, which has received positive feedback and is expected to address the growing demand for backup power in these regions. The IQ Balcony Solar product targets a 400-megawatt market in Germany and aligns with the company’s strategy to capture niche markets with high growth potential.
5. Sunrun Inc. (NASDAQ:RUN)
Number of Hedge Fund Holders: 43
Sunrun Inc. (NASDAQ:RUN) is a prominent company in the residential solar energy market that provides solar installations, battery storage, and energy services. The company is known for its customized solar solutions tailored to homeowners on flexible financing options, including leasing and purchase agreements. Sunrun Inc. (NASDAQ:RUN) is the first and only solar and storage company that has 1 million customers.
Sunrun Inc. (NASDAQ:RUN) is evolving into a multi-product company, offering a suite of clean energy solutions to both new and existing customers. The company is actively testing and scaling new products and services, such as additional storage offerings to its existing customer base. With nearly 87% of its one million customers not yet equipped with the company’s storage systems, Sunrun Inc. (NASDAQ:RUN) is focusing on upselling and cross-selling. The company is leveraging its user-friendly app as a key channel for engaging customers and facilitating these sales, allowing for quick and cost-effective fulfillment. Additionally, the company is actively exploring international markets and leveraging its expertise in grid services to create new revenue streams.
Sunrun Inc. (NASDAQ:RUN) is also expanding its reach through strategic partnerships and new market opportunities, particularly in the new homes sector. The company is working with nine of the top ten new home builders in California and over half of the top twenty home builders in the US. These partnerships enable the company to offer immediate value to new home buyers, including energy savings, resiliency, and backup power, without increasing the cost of purchasing a home.
4. First Solar, Inc. (NASDAQ:FSLR)
Number of Hedge Fund Holders: 59
First Solar, Inc. (NASDAQ:FSLR) is a global leader and innovator in the development and production of thin-film photovoltaic (PV) solar panels. The company specializes in utility-scale solar power plants and delivers energy solutions tailored to utilities and large corporations. Headquartered in Tempe, Arizona, First Solar, Inc. (NASDAQ:FSLR) manufactures internationally, with facilities located in the United States, Malaysia, India, and Vietnam.
First Solar, Inc. (NASDAQ:FSLR) is positioning itself for sustained growth and leadership in the solar industry through a multifaceted strategy. The company is launching the CuRe production at its lead line in Ohio, with plans to produce and sell approximately 0.4 gigawatts of CuRe product in Q1 of 2025. Upon successful field performance validation, First Solar, Inc. (NASDAQ:FSLR) intends to permanently convert the Ohio lead line to CuRe by Q4 2025 and replicate this technology across its global manufacturing facilities. This initiative aims to enhance the efficiency and reduce the environmental impact of its solar modules, aligning with the company’s commitment to ultra-low carbon solar technology.
In addition to technological advancements, First Solar, Inc. (NASDAQ:FSLR) is significantly expanding its manufacturing capacity. The company has inaugurated a $1.1 billion facility in Alabama, which, when fully scaled, will add 3.5 gigawatts of vertically integrated nameplate solar manufacturing capacity. The company is also on track to begin operations at its Louisiana facility in the second half of 2025, which will further boost its U.S. manufacturing capacity. By 2026, First Solar, Inc. (NASDAQ:FSLR) aims to achieve over 14 gigawatts of annual U.S. nameplate capacity and over 25 gigawatts of global nameplate capacity.
3. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 69
NextEra Energy, Inc. (NYSE:NEE) is a leading player in the renewable energy and utility sectors. Headquartered in Juno Beach, Florida, NextEra Energy, Inc. (NYSE:NEE) operates through its subsidiaries, Florida Power & Light Company (FPL) and NextEra Energy Resources, to deliver low-cost, reliable, and clean electricity to millions of customers across the United States by using alternative fuels such as solar, wind, and nuclear.
NextEra Energy, Inc. (NYSE:NEE) is actively expanding its renewable energy portfolio through a combination of new project developments and strategic partnerships. The company has added approximately 3 gigawatts of renewables and storage to its backlog in Q3, bringing the running four-quarter total to approximately 11 gigawatts. NextEra Energy, Inc. (NYSE:NEE) is also focused on driving cost efficiency and innovation across its operations. Additionally, the company is investing in battery storage technology, as storage can be deployed quickly and paired with renewables to provide both energy and capacity. By leveraging its extensive experience and technical expertise, NextEra Energy, Inc. (NYSE:NEE) is well-positioned to capitalize on the significant growth opportunities in the renewable energy market.
FPL, a subsidiary of NextEra Energy, Inc. (NYSE:NEE) is making substantial investments in building a stronger, smarter, and more resilient grid. This includes significant hardening, undergrounding, and automation initiatives, which will be effective in mitigating the impact of severe weather events. The company’s commitment to grid resilience is not only crucial for maintaining reliable service to customers but also for supporting the integration of renewable energy sources.
2. Constellation Energy Corporation (NASDAQ:CEG)
Number of Hedge Fund Holders: 78
Constellation Energy is one of the largest suppliers of carbon-free electricity in the United States. The company boasts over 23,000 megawatts of generating capacity across its nuclear, solar, wind, and hydroelectric power facilities. The company is known for its strong emphasis on environmental sustainability and technological innovation. Constellation Energy Corporation (NASDAQ:CEG) has committed to an ambitious goal of delivering 100% carbon-free electricity by 2040.
Constellation Energy Corporation (NASDAQ:CEG) is leveraging its extensive nuclear fleet, which is the largest and most reliable in the United States, to add additional nuclear generation to the grid. The company is focusing on the restart of the Crane Clean Energy Center, a 1,100-megawatt nuclear plant scheduled to come online in 2027. Constellation Energy Corporation (NASDAQ:CEG) is also pursuing uprates at existing nuclear facilities, aiming to add at least 1,000 megawatts of additional nuclear generation to the grid. Additionally, the company is advancing research and development in new nuclear technologies, such as small modular reactors (SMRs) and natural gas with carbon capture and sequestration (CCUS), which will play a vital role in the long-term transition to a sustainable energy future.
Constellation Energy Corporation (NASDAQ:CEG) is also urging U.S. regulators to establish new rules for connecting customers directly to power plants. The company argues that the current lack of clear guidelines has allowed electric utilities to unfairly obstruct efforts to site, or co-locate, data centers at nuclear facilities. On November 27, Reuters reported that Constellation Energy Corporation (NASDAQ:CEG) filed a complaint with the Federal Energy Regulatory Commission (FERC) against grid operator PJM Interconnection, claiming that some of its projects to develop data centers at power plant sites are being hindered by the absence of clear regulations and is posing a threat to the project’s progress.
1. GE Vernova Inc. (NYSE:GEV)
Number of Hedge Fund Holders: 89
GE Vernova Inc. (NYSE:GEV) is a prominent manufacturer and service provider in the energy equipment sector. The company’s portfolio includes the Power segment, which specializes in gas turbines and services; the Electrification segment, which focuses on grid solutions and power conversion; and the Wind segment, which encompasses both onshore and offshore wind solutions. GE Vernova Inc.’s (NYSE:GEV) technology supports approximately 55,000 wind turbines and 7,000 gas turbines operating across more than 100 countries.
GE Vernova Inc. (NYSE:GEV) is actively expanding its manufacturing capacity to meet the growing demand for gas turbines, particularly in Aeroderivative and Heavy-Duty Gas Turbines, which provide efficient power and flexible fuel options. The company plans to deliver between 70 to 80 heavy-duty gas turbines annually starting in 2026, up from 55 in recent years. This expansion is driven by the increasing demand from hyperscalers and the need for baseload power in data center parks.
Moreover, GE Vernova Inc. (NYSE:GEV) is implementing lean manufacturing practices across its operations to improve quality, reduce costs, and increase efficiency. For example, the heavy-duty gas turbine team has enhanced standard work processes, resulting in a 20% improvement in quality control. Additionally, the company is leveraging lean principles to double the manufacturing output of its power transmission business with minimal capital expenditure, primarily through better asset and labor utilization.
While we acknowledge the potential of GE Vernova Inc. (NYSE:GEV) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GEV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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