In this article, we will discuss the 13 most profitable renewable energy stocks. If you want to see more companies in this selection, go to the 5 Most Profitable Renewable Energy Stocks.
There has been a global energy crisis since the start of the conflict between Russia and Ukraine. European countries realized they heavily relied on Russian natural gas and crude oil and needed to transition away from these sources to reduce their dependence. During the conflict, the price of crude oil and natural gas spiked significantly due to global uncertainty, and the importance of oil and gas supply took center stage in the political landscape. As a result, there has been an acceleration in the installation of renewable energy resources. According to the International Energy Agency (IEA), the capacity growth of renewable energy is set to double in the next five years. During this process, renewable energy sources will overtake coal and become the biggest energy source for the generation of electricity.
The IEA anticipates the capacity of renewable energy to grow by 2,400 gigawatts (GW) during the 2022 to 2027 period. The increase in the capacity growth of renewable energy is 30% higher than the forecast one year ago. This reflects the positive intent of governments around the world on transforming towards renewable energy sources. The IEA also notes that 90% of the increase in electricity capacity globally will be done through renewable sources, and as a result, renewable energy will become the biggest source of electricity generation by early 2025. IEA Director Fatih Birol shared that in the next five years, the world will add as much renewable energy as in the last two decades.
Besides Europe, India, China, and the US are also aggressively pursuing the rollout of renewable energy at various levels. The 14th Five-Year Plan rolled out by China in January 2022 focuses on making China a behemoth in the field of renewable energy, as the country will be responsible for nearly 50% of new capacity additions through renewable energy during the 2022 to 2027 period. Meanwhile, the Inflation Reduction Act (IRA) passed in August 2022 in the US intends to provide long-term support to the aggressive expansion and adoption of renewable energy by various corporations. Meanwhile, India is also set to increase its investment in solar manufacturing by as much as $25 billion between 2022 to 2027. Shell plc (NYSE:SHEL), Equinor ASA (NYSE:EQNR), and TotalEnergies SE (NYSE:TTE) are some of the most profitable renewable energy stocks in the industry currently.
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Our Methodology
A thorough research was conducted on the renewable energy sector, including its current market trends, growth projections, and key players, to gain a comprehensive understanding of the industry and identify the most promising companies within it. We then shortlisted the 13 most profitable renewable energy stocks on the basis of their trailing 12 months’ net income. We have included non-pure play companies in the list as well that have significant exposure to the renewable sector. The companies have been ranked in ascending order of their net income.
Most Profitable Renewable Energy Stocks
13. Enbridge Inc. (NYSE:ENB)
Trailing 12 months Net Income: $1.91 billion
Enbridge Inc. (NYSE:ENB) is a Calgary, Alberta-based pipeline and energy company.
The company has invested more than $6 billion (C$8 billion) in renewable energy since its first investment in a wind farm back in 2002. Presently, the company produces 5,192 megawatts (MW) gross of zero-emission energy, which is enough to provide power to 969,000 homes. This makes Enbridge Inc. (NYSE:ENB) one of the biggest renewable energy companies in Canada. The company has deployed wind farms, solar energy operations, waste heat recovery facilities, geothermal projects, power transmission projects, and hydroelectric facilities to produce renewable energy. Enbridge Inc. (NYSE:ENB) is focused on becoming a net-zero emission entity by 2050 through these initiatives. The company has a headcount of over 12,000 employees, mainly across the US and Canada.
Here’s what ClearBridge Investments said about Enbridge Inc. (NYSE:ENB) in its Q3 2021 investor letter:
“We are meaningfully overweight energy, particularly within North American energy infrastructure. Enbridge and Williams, our two infrastructure holdings, possess crown jewel infrastructure assets. They each deliver meaningful proportions of the overall energy produced and consumed in North America. Their revenues are backed by long-term contracts with high-quality counterparties and have little direct commodity price exposure. Their growth has been driven by the increasing production of North American energy. The advent of unconventional oil and gas production (oil sand and shale) has made North America a low-cost competitor on a global basis. We expect strong North American production to be an enduring feature of global energy supply for decades to come.”
12. The Southern Company (NYSE:SO)
Trailing 12 months Net Income: $3.41 billion
The Southern Company (NYSE:SO) is an Atlanta, Georgia-based energy provider to homes and businesses.
The company is the holding entity for three vertically integrated state-regulated electric utilities that fulfill the needs of 9 million customers. Renewable energy accounts for 15% of the energy mix of The Southern Company (NYSE:SO) as of 2022. This reflects a significant change in the energy mix, as renewable energy was only responsible for 1% of the company’s energy mix in 2007. The Southern Company (NYSE:SO) is also focused on becoming a net zero emissions entity by 2050. The company intends to achieve a power generation capacity of 17,000 MW through renewable sources by 2030 as opposed to 11,000 MW in 2021. You can also check out The Southern Company’s (NYSE:SO) earnings call for Q4 2022 here.
11. China Yangtze Power Co., Ltd. (600900.SS)
Trailing 12 months Net Income: $3.76 billion (¥25.65 billion)
China Yangtze Power Co., Ltd. (600900.SS) is involved in the generation and transmission of hydropower electricity.
China Yangtze Power Co., Ltd. (600900.SS) owns the Three Gorges hydropower electricity generation unit, which has the highest power generation capacity of 22,500 MW. Overall, the company has a power generation capacity of 71,795 MW and has more than 110 other hydroelectric power units under its portfolio. Not only is China Yangtze Power Co., Ltd. (600900.SS) the biggest supplier of electricity in China, but it is also the biggest publicly listed hydroelectric power generation and transmission company in the world.
10. Xinyi Solar Holdings Ltd (13X.MU)
Trailing 12 months Net Income: $4.03 billion (€3.76 billion)
Xinyi Solar Holdings Ltd (13X.MU) is a Wuhu, Anhui-based maker of photovoltaic (PV) glass, along with the construction and development of PV power stations. The company is the biggest producer of PV glass in the world, with six production facilities and a daily melting volume capacity of 16,800 tons.
At the end of 2021, Xinyi Solar Holdings Ltd (13X.MU) held a 35% global share in the sales of PV glass that is used for protecting solar cells from rain and wind. Furthermore, the company has a 30% global share of production capacity. T Xinyi Solar Holdings Ltd’s (13X.MU) photovoltaic power station has resulted in standard coal savings of 1.13 million tonnes and 3.07 million tonnes in CO2 emission reduction.
9. NextEra Energy, Inc. (NYSE:NEE)
Trailing 12 months Net Income: $4.15 billion
NextEra Energy, Inc. (NYSE:NEE) is a Juno-beach, Florida-based utility company.
NextEra Energy, Inc. (NYSE:NEE) is responsible for providing power to 12 million residents of Florida and has 5.8 million customer accounts on its books as of 2023. Furthermore, the company is the world’s biggest generator of renewable energy through wind and sun. NextEra Energy, Inc. (NYSE:NEE) is moving a step forward in the race to reduce greenhouse gas emissions by introducing the concept of Real Zero, which intends to eliminate greenhouse gas emissions from the operations of the company. NextEra Energy, Inc. (NYSE:NEE) stock was given a Buy rating along with a target price of $96 in a report issued to investors on January 26 by Shahriar Pourreza at Guggenheim.
Here’s what ClearBridge Investments said about NextEra Energy, Inc. (NYSE:NEE) in its Q3 2022 investor letter:
“NextEra Energy, Inc. (NYSE:NEE) is an integrated utility business with a regulated utility operating in Florida and the largest wind business in the U.S. NextEra’s regulated business includes Florida Power & Light, which serves nine million people in Florida. NextEra’s share price rose along with the passage of the U.S. Inflation Reduction Act, which considerably expands support for renewable energy.”
8. Iberdrola, S.A. (IBE.MC)
Trailing 12 months Net Income: $4.92 billion (€4.58 billion)
Iberdrola, S.A. (IBE.MC) is a Bilbao, Spain-based electric utility company with a headcount of 34,000 employees.
Iberdrola, S.A. (IBE.MC) has a renewable energy capacity of 39,000 MW as of Q1 2022. Under the 2025 Strategic Plan, the company intends to invest $18.14 billion (€17 billion) in renewable energy businesses between 2023-2025. This will aid Iberdrola, S.A. (IBE.MC) in increasing its total renewable energy capacity to 52,000 MW by 2025. Overall, the company intends to invest $50.58 billion (€47 billion) between 2023 to 2025 to streamline its business further and drive the energy transition. Iberdrola, S.A. (IBE.MC) intends to reach a capacity of 100,000 MW by the end of this decade, which will comprise 80% of renewable energy sources.
7. Centrais Elétricas Brasileiras S.A. – Eletrobrás (XELTB.MC)
Trailing 12 months Net Income: $5 billion (€4.66 billion)
Centrais Elétricas Brasileiras S.A. – Eletrobrás (XELTB.MC) is a Rio de Janeiro, Brazil-based utility company that is the biggest utility company in the Latin American region.
The company has an installed capacity of 42,559 MW as of Q3 2022, equivalent to 23% of the installed electricity generation capacity in Brazil. Centrais Elétricas Brasileiras S.A. – Eletrobrás (XELTB.MC) further claims that 92% of its power generation is done through renewable sources like water, wind, and solar. The company intends to increase its installed capacity by 1 Gigawatt (GW) by the end of this decade. Meanwhile, the company’s transmission business covers nearly half of the lines laid out in the country through its reach of 74,087 km of transmission lines.
6. Tesla, Inc. (NASDAQ:TSLA)
Trailing 12 months Net Income: $12.58 billion
Tesla, Inc. (NASDAQ:TSLA) is an Austin, Texas-based maker of electric vehicles (EVs). The company, led by Elon Musk, is also a producer of batteries that can be charged from clean energy and provides solar energy solutions for residential and commercial customers.
The stock price of Tesla, Inc. (NASDAQ:TSLA) has more than doubled since its bottom in early January 2023. CEO Elon Musk has announced that he will reveal the “Master Plan 3” during Investor Day on March 1, which will provide a way to achieve a completely sustainable energy future for the planet. Under the Inflation Reduction Act (IRA) introduced by the US government, Tesla, Inc.’s (NASDAQ:TSLA) Model 3 and Model Y are also eligible for a $7,500 Federal Tax Credit.
Here’s what Baron Funds said about Tesla, Inc. (NASDAQ:TSLA) in its Q4 2022 investor letter:
“Tesla, Inc. (NASDAQ:TSLA) declined 54% in the quarter and detracted 26.62% from the Fund’s overall performance. We initiated our position in Tesla in February 2014 at a split-adjusted price of $11.91. Over the subsequent two years, we acquired 16.65 million shares for an average split-adjusted price of $14.22. At the time of our final purchase in February 2016, the stock represented 9.6% of the Fund’s total investments.
Tesla produced approximately 35,000 vehicles in 2014, the year of our initial purchase. In 2022, it produced 1.37 million vehicles. Not only has its production grown tremendously, but it has also significantly increased profitability per vehicle. Tesla has expanded from producing high performance electric vehicles for wealthy aficionados to a company that produces affordable luxury cars for a sizable audience. In turn, it has transformed its industry. Investors rewarded this expansion in both production and profits, and the stock price increased to $265.25 at the end of the third quarter. Since 2016, we sold 4.5 million shares, or 27.0% of the original holding, at an average price of $218.39.
Investors have recently become concerned about many external factors. Elon Musk is Tesla’s founder and CEO. His purchase of Twitter has negatively impacted the perception of Tesla’s brand in the short term. China’s COVID policies and outbreak have paused purchases and production in the company’s largest region. Global recessionary fears and upcoming Inflation Reduction Act incentives also caused some to delay new vehicle purchases in various markets…” (Click here to read the full text)
In addition to Tesla, Inc. (NASDAQ:TSLA), Shell plc (NYSE:SHEL), Equinor ASA (NYSE:EQNR), and TotalEnergies SE (NYSE:TTE) are also some of the most profitable renewable energy stocks.
Click to continue reading and see the 5 Most Profitable Renewable Energy Stocks.
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Disclosure: None. 13 Most Profitable Renewable Energy Stocks is originally published on Insider Monkey.
