Now is the time to invest in clean energy stocks, according to financial analysts who predict their value will increase as the world transitions to green energy.
As Net Zero Investor reported, experts believe it's now a "buyer's market" in renewable energy stocks.
Tancrede Fulop, senior equity analyst at Morningstar, told the publication that stock prices for renewable energy developers are lower than expected, meaning it's an excellent time to invest, as the green energy market is anticipated to grow significantly in the coming years.
While renewable stocks have taken a significant hit due to high interest rates and inflation, experts say the market has reached the end of a downward trend and will soon start to reverse.
Fulop explained that prices for power purchase agreements and construction costs for onshore wind are steady, while solar project costs continue to drop. These factors have contributed to a favorable renewable energy market; however, a drop in interest rates would likely facilitate more development, thereby providing additional opportunities for investors.
Due to uncertainties in the geopolitical outlook over the next several years, Chris Berkouwer, equity portfolio manager at Robeco, told Net Zero Investor that investors should stick with companies that have a proven track record of financial and operational success, rather than taking excessive risks.
Although the clean energy market has experienced fluctuations recently, investing in sustainability-focused companies is a wise decision for the future, as the green energy economy continues to grow rapidly.
According to Statista, the renewable energy market is expected to reach over $2 trillion by 2030, with the International Energy Agency predicting that global renewable electricity generation will "be enough to meet the combined power demand of China and the United States" by then.
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The expansion of renewable energy is also spurring massive growth in clean energy jobs. A Department of Energy report found that green careers are growing at a rate more than twice that of overall employment in the U.S.
As more clean energy comes online, it will not only benefit the economy but also the planet by replacing the dirty fuels that are contributing to rising global temperatures and more extreme weather.
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Yes — it sets a positive example ⛪ Because of the positive developments in green stocks, Berkouwer told Net Zero Investor that "expectations have been reset" and the "hunting ground for climate transition investors looks attractive once again."
"Stock prices haven't done well over last few years, but in the real economy clean is booming," Aniket Shah, head of sustainability and transition strategy at Jefferies, told Bloomberg. "When sentiment around something is low, it's a good time to be a buyer."
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