Some discussions of climate-change action tend to trick us into thinking there are only two options: Maintain the status quo or get rid of airplanes and dairy farms in 10 years. But there are an infinite number of options between those two positions. There are also plenty of reasons for optimism.

Case in point: The United States is expected to add 22,000 megawatts of wind power capacity in the 18-month period ending December 2020. Based on the average output of new wind turbines, upgrades to existing wind farms, the steady rise of solar power, and the epic collapse of coal-fired power plants, the country could generate more electricity from renewable power sources than it does from coal as soon as 2022.

Here's how it could happen -- and which renewable energy stocks stand to benefit.

A cartoon globe with wind turbines and butterflies surrounding it.

Image source: Getty Images.

Is this really possible?

According to the U.S. Energy Information Administration (EIA), coal-fired power plants will account for just 25% of total American electricity production in 2019 and 22% in 2020. That's down from 28% in 2018 and nearly 50% in the early 2000s. The EIA also estimates that all renewable power sources -- primarily hydropower, wind, and solar -- will provide up to 19% of American electricity in 2020.

That's a trend that doesn't seem to be getting enough attention. In fact, the EIA's near-term estimates for renewable energy have historically underestimated the real-world growth of wind and solar. So, how quickly could renewables generate more electricity than coal? Sooner than you may think.

The United States counted 97,000 megawatts of installed wind power capacity at the end of June 2019 and is expected to have roughly 120,000 megawatts spinning by the end of 2020. However, an estimated 11,000 megawatts of the expected growth won't come on line until the final four months of 2020, which means it won't provide meaningful contributions until 2021. 

Considering the average American wind farm operated at 37% of its rated capacity in 2018, the United States could lean on wind power for 10% of its total electricity in 2021. Add in expected contributions from hydropower (7%), solar (4% to 5%), and other renewables (1% to 2%), and the nation could generate at least 22% of its electricity from renewables as soon as 2021. A handful of coal-fired power plant retirements could help renewables top coal in 2021 or 2022 for the first time since the American Civil War.

A row of wind turbines in a field.

Image source: Getty Images.

The renewable energy stocks making it happen

While the numbers discussed above are at the national level, the reality is that America's renewable energy potential is heavily dictated by geography. Case in point: Texas is expected to account for 22% of the country's total non-hydro renewable-electricity generation in 2020. California will chip in another 14% (a declining share from 2019), while the Midwest and Central regions will add another 32% combined. 

Investors should take that into account. For instance, American Electric Power (NYSE:AEP) serves 5.4 million customers in 11 states, but has a heavy presence in Texas and the Midwest for both electricity generation and delivery. It owns a 75% interest, of 227 megawatts, in the Santa Rita East Wind Farm that was placed in service in July 2019 in Texas. It's also investing $2 billion to build 1,485 megawatts of new wind farms in Oklahoma, which are coming on line in late 2020 and late 2021 and are expected to operate at 44% of their rated capacity -- well above the national average.

Those projects underscore the company's recent push into renewables, but they're not the only moves being made. American Electric Power also recently acquired Sempra Energy's renewables division and its 724 megawatts of renewable power assets, is building 400 megawatts of solar in Ohio by the end of 2021, and expects to bring a total of 8,600 megawatts of wind and solar on line across its territory by 2030 -- a number that could increase in the near future. 

There are also renewable energy stocks NextEra Energy (NYSE:NEE) and Xcel Energy (NASDAQ:XEL). The former builds a significant share of the nation's wind and solar power capacity through its power generation subsidiary, NextEra Energy Resources, which also generates more electricity from the wind and sun than any other company on the planet. The latter is shuttering coal-fired power plants and building new wind turbines, aided by its location in the American wind corridor. It expects to generate 46% of its total electricity from wind and solar by 2027 thanks to new wind projects and repowering investments.

Inject some optimism into your portfolio

Despite the doom-and-gloom tone of most climate change discussions, the reality is that the United States is rapidly decarbonizing and well on its way to 100% zero-carbon electricity by midcentury (the country's former commitment under the Paris climate agreement). Judging from the published plans of power generators and utilities across the country, the near-term surge in wind power will likely be surpassed by a surge in solar power investments beginning in the mid-2020s.

Yes, there are some pragmatic government actions that could be taken to speed up the nation's path to zero-carbon energy. But don't let your portfolio fall victim to the pessimism -- you could be missing out on significant growth opportunities.