What led to a Decline in the US Clean Energy Stocks This Year

Shares of U.S. renewable energy companies performed extremely well in the last year. President Joe Biden’s win and COVID-19 pandemic led to a positive stimulus in the stock performance. Clean energy has made tremendous progress over the last decade with prices going down by more than 80% and technology improvements by leaps and bounds. There is also a growing excitement around electric vehicle and hydrogen fuel cell companies. However, the situation has reversed starting this year with stock prices falling, which leads us to think that if clean energy is the future then why are the stocks retreating.

The major reason for this decline could be rising interest rates which has led to investors putting their money in other attractive options. Industry experts are pointing that the overall growth in this sector might not return to pre-pandemic levels this year. Oil and gas prices are also looking favorable at the moment. Rising competition in the renewable energy sector has led to saturated supply and lower profit margins. If stock prices continue to fall, investors will also shy away from this sector.

Also, read What makes India a Lucrative Market for Solar Investors

Whatever said and done, renewable energy will be “the normal” for the future. Investing in clean energy companies is a good way of investing in the future with strong long-term fundamentals. It has become cheaper even without subsidies and is reducing the overall global carbon footprint. Advancements in hydrogen and energy storage are further adding to the value chain. Companies and countries globally are making aggressive investments in this sector. The U.S. has also reentered the Paris Agreement and is strongly focusing on climate change. Renewable energy is poised to become the dominant source of energy in the world in the near future.