We recently published a list of the 11 Best Renewable Energy Stocks To Buy Now. In this article, we are going to take a look at where NextEra Energy Inc. (NYSE:NEE) stands against the other best renewable energy stocks to buy now.
The future of President Joe Biden’s landmark climate legislation, the Inflation Reduction Act (IRA) plays a significant role in promoting renewable energy by offering a wide range of tax incentives and funding mechanisms to encourage investment in clean energy technologies, including solar, wind, and geothermal power, hangs in the balance as the incoming Republican-controlled White House, Senate, and House of Representatives prepare to take office in 2025.
However, an area of concern is the future of the Department of Energy’s Loan Programs Office (LPO), which provides financing for green energy projects. The LPO has been instrumental in funding large-scale renewable energy projects and it expanded significantly under the IRA. However, Trump’s appointees, particularly Wright, who has expressed skepticism about the climate crisis, may be inclined to scale back or dismantle this program entirely, which could have a significant impact on the green energy sector.
READ ALSO: 12 Best Technology Penny Stocks To Buy According to Hedge Funds and 12 Best Energy Stocks To Invest In Now.
Renewables as the Key to Meeting Rising Demand
In an interview with Bloomberg on December 23, Tom Steyer, Co-Founder of Galvanize Climate Solutions, a climate-focused global investment firm, discussed the role of renewable energy in the United States. Steyer emphasized that while the year 2025 is often discussed in the context of climate regulations, it is more accurately about meeting the growing energy demand. He argued that renewable energy should be at the center of any energy bill, regardless of political persuasion. Steyer highlighted that market costs are the primary drivers of the energy transition to renewables. He cited the fact that in 2023, 86% of new electricity generation was predominantly from renewable sources, driven by economic rather than purely environmental considerations.
Steyer pointed out that the phrase “drill, baby, drill” might still be part of the political conversation, but the cost differential between renewable and fossil fuels drives the reality. He noted that renewables are now cheaper than fossil fuels and are becoming increasingly cost-effective. For instance, the cost of natural gas in the U.S. has risen to nearly double its previous levels, while in Europe, it is even higher. However, the cheapest electricity is increasingly coming from renewable sources, both in the U.S. and globally. This economic reality is driving business decisions, international competitiveness, and national security by industries such as tech, that require large amounts of electricity and are increasingly turning to renewables to meet their energy needs.
When asked about the potential impact of deregulation in the energy sector, Steyer suggested that deregulation could help accelerate the adoption of renewables if it includes faster permitting and lower oversight for all energy projects, including renewables. He noted that the Trump administration’s push for faster permits and reduced oversight for oil and gas drilling could extended to renewables, and will lead to a significant expansion of low-cost, abundant renewable energy.
Regarding nuclear energy, Steyer acknowledged its potential but noted the challenges associated with cost, safety, and public perception. He pointed out that nuclear energy has historically been expensive, with the last nuclear plant in Georgia costing at least four times its original estimate. While nuclear energy could provide a stable baseload power source, the high costs and safety concerns have made it a less attractive option compared to renewables.
As the United States enters 2025, the future of the Inflation Reduction Act (IRA) remains uncertain under a Republican government. However, the cost-effectiveness of renewable energy compared to fossil fuels makes it increasingly dominant in the global energy mix.
A wind turbine, its blades spinning to generate clean renewable energy.
Our Methodology
To compile our list of the 11 best renewable energy stocks to buy now, we used clean energy ETFs plus online rankings to compile an initial list of 25 renewable energy stocks. We then used Insider Monkey’s Hedge Fund database to rank 11 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).
NextEra Energy Inc. (NYSE:NEE)
Number of Hedge Fund Investors: 69
NextEra Energy Inc. (NYSE:NEE) is an electric utility company and a global leader in renewable energy, specializing in wind and solar power generation. The company operates through its subsidiaries, including Florida Power & Light and NextEra Energy Resources.
NextEra Energy Inc. (NYSE:NEE) is leveraging its expertise in developing renewable energy projects to collaborate with other utility companies and expand its footprint to meet the growing demand for clean, sustainable power. The company recently collaborated with Salt River Project (SRP), a leading utility in Arizona, to complete the Babbitt Ranch Energy Center, a 161-megawatt (MW) wind project located in Coconino County, Arizona. The clean energy produced by the Babbitt Ranch Energy Center will be fully allocated to Google’s future data center in Mesa, Arizona, supporting the tech giant’s commitment to 24/7 carbon-free energy.
NextEra Energy Inc. (NYSE:NEE) is also actively expanding its renewable energy portfolio through a partnership with Phillips 66 to power its refinery in Rodeo, California, with a new solar facility. This 30.2-megawatt solar plant drives the creation of new renewable assets, scheduled to begin operations in January 2025, and will be constructed on 88 acres of land adjacent to Phillips 66’s renewable fuels facility in the San Francisco Bay Area. Moving forward, NextEra Energy Inc. (NYSE:NEE) has announced incremental framework agreements with two Fortune 50 customers for the development of renewable and storage projects, with a combined capacity of up to 10.5 gigawatts by 2030.
Overall, NEE ranks 3rd on our list of best renewable energy stocks to buy now. While we acknowledge the potential of NEE to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NEE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
