On November 11, the Financial Times reported that the U.S. clean energy industry faces a significant setback following Donald Trump’s election victory. The article highlights that several developers have halted projects, and investors are selling shares due to uncertainties about policy direction and federal funding under the incoming Trump administration. According to Mike Carr, president of Solar Energy Manufacturers for America, approximately half a dozen clean energy projects are awaiting policy certainty before proceeding.

Trump’s election, combined with the prospect of a Republican-controlled Congress, has led to a sharp decline in renewable energy stocks. The iShares Global Clean Energy ETF dropped 7% after the election. Additionally, short sellers of renewable energy stocks reportedly profited over $1 billion in the aftermath.

Despite the turbulence, some industry leaders and analysts remain cautiously optimistic, suggesting that the economic case for renewable projects could persist under a Trump administration. They also believe that existing tax credits for power generation and manufacturing may remain intact. However, they warn that sectors such as offshore wind and electric vehicles may face significant challenges. Trump has pledged to repeal the Inflation Reduction Act, a major driver of U.S. clean energy investment, and vowed to expand oil and gas production while halting offshore wind projects and EV mandates.

Biden’s target to reduce emissions by 50-52% from 2005 levels by 2030 is at risk under a second Trump term. Such a shift could result in an additional 500 million tonnes of carbon emissions in the energy sector by the end of the decade.

US Renewable Energy Sector Continues to Grow, Despite Challenges

While uncertainties loom over the renewable energy sector, the industry continues to demonstrate resilience. According to a report by Rhodium Group, a New York-based research institute, the renewable energy and transportation investment in the United States has continued to break records, reaching a new high of $71 billion in the third quarter of 2024. This marks a 12% increase from the same period in 2023 and a nearly unbroken quarter-on-quarter growth trend over the past three years.

The report highlights that renewable investment accounted for 5% of total US private investment in structures, equipment, and durable consumer goods, up from 4.5% in the third quarter of 2023. Retail investment was a major driver of this growth, increasing by 9% relative to the previous quarter, largely due to a surge in zero-emission vehicle (ZEV) sales. However, investment in renewable technology manufacturing remained flat quarter-on-quarter, while investment in deploying technology to decarbonize energy and industrial production slipped 7% quarter-on-quarter.

The report also assessed the progress of the US renewable electricity transition and found that the current pace of capacity expansion is falling short of what is needed to deliver a 40% reduction in net GHG emissions below 2005 levels by 2030. The analysis of projects in the pipeline suggests that both solar and wind are underperforming, aligning more closely with a scenario that would yield only a 30% reduction by 2030.

Despite the challenges and uncertainties facing the renewable energy sector, the industry’s resilience and potential for growth remain evident. With that in context, let’s take a look at the 10 best renewable energy penny stocks to invest in.

Our Methodology

To compile our list of the 10 best renewable energy penny stocks to invest in, we used clean energy ETFs plus online rankings to compile an initial list of 25 renewable energy stocks trading below $5 as of November 22. From that list, we narrowed our choices to 10 stocks according to their hedge fund sentiment, which was taken from the database of 900 elite hedge funds as of Q3 of 2024. The list is sorted in ascending order of their 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 Renewable Energy Penny Stocks to Invest In

10. Gevo, Inc. (NASDAQ:GEVO)

Number of Hedge Fund Holders: 7

Stock Price as of November 22: $1.39

Gevo, Inc. (NASDAQ:GEVO) is a company focused on developing and selling renewable fuels, including gasoline, jet fuel, and diesel. The company places a significant emphasis on sustainable aviation fuel (SAF) and is exploring commercial opportunities in renewable natural gas (RNG), hydrocarbons for gasoline and diesel fuel, and other sustainable chemicals and materials like polyester. Gevo, Inc. (NASDAQ:GEVO) also holds intellectual property aimed at the large-scale deployment of net-zero hydrocarbon fuels and chemicals.

During the third quarter that ended on September 30, Gevo, Inc. (NASDAQ:GEVO) entered into a definitive agreement to acquire Red Trail Energy’s ethanol production, carbon capture, and sequestration assets, which is expected to make the company’s adjusted EBITDA positive in 2025. This acquisition, combined with the company’s existing renewable natural gas (RNG) business, Verity, and other initiatives, positions Gevo, Inc. (NASDAQ:GEVO) for significant growth and profitability.

Additionally, Gevo, Inc.’s (NASDAQ:GEVO) acquisition of CultivateAI is also aimed to enhance the company’s Verity platform and provide comprehensive, data-driven solutions for carbon abatement in food, feed, fuels, and industrial markets. This acquisition supports the company’s ability to identify and capitalize on emerging trends in the sustainability space.

9. Montauk Renewables, Inc. (NASDAQ:MNTK)

Number of Hedge Fund Holders: 8

Stock Price as of November 22: $4.43

Montauk Renewables, Inc. (NASDAQ:MNTK) is a leader in the renewable energy sector, specializing in converting waste into renewable energy. The company pioneered the landfill gas-to-energy industry, transforming biogas from landfills into renewable natural gas (RNG) and electricity. Montauk Renewables has expanded into the agricultural sector, focusing on anaerobic digestion (AD) technologies to convert waste from dairy and swine farms into RNG.

On November 12, Montauk Renewables, Inc. (NASDAQ:MNTK) announced its third quarter for the three months ended on September 30. Despite facing challenges from severe weather events, including Hurricane Beryl, which caused widespread power outages in the Houston, Texas region, the company’s revenues increased 18.4% to $65.9 million year over year. Whereas net income increased 31.8% to $17.0 million

Montauk Renewables, Inc. (NASDAQ:MNTK) produced 1.4 million MMBtu of RNG in the third quarter, flat compared to the same period last year. While the company’s Texas facilities were impacted by severe weather, the Pico facility’s expansion project helped to offset some of the lost production.  The company also announced a pilot project to recover and convert biogas into green methanol, which has the potential to transform biogas from waste streams into carbon-negative fuel, further solidifying Montauk’s position as a leader in the renewable energy space.