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3 Stocks for the Future of Energy

By Matthew DiLallo - Mar 6, 2021 at 7:39AM

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These companies are focusing on the transition to cleaner and renewable energy sources.

The energy market is in transition. It's moving from a focus on producing fossil fuels to a strategy of tapping cleaner and renewable energy sources. While this shift will take time, many companies are embracing the change and focusing on the future of energy.

Three early leaders of this transition are Brookfield Renewable (BEP 0.14%)(BEPC 0.16%)SolarEdge Technologies (SEDG 4.54%), and Xcel Energy (XEL 1.09%).

A person holding a plant with a bright lightbulb in it surrounded by icons for energy such as a solar panels and wind turbines.

Image source: Getty Images.

Leading the charge

Brookfield Renewable is one of the world's largest renewable power producers. It currently owns more than 5,300 generating facilities across North and South America, Europe, and Asia that have the capacity to produce nearly 20 gigawatts (GW) of clean power. That's almost enough to power 5 million homes for a year. The company's diversified portfolio includes hydro, onshore wind, utility-scale solar and distributed generation, and energy storage assets.  

Meanwhile, it has an extensive development pipeline, with projects that will eventually produce another 23 GW of electricity across each of its existing platforms, as well as new ones like offshore wind farms in Europe. On top of that, Brookfield is helping commercialize new emissions-free energy sources like green hydrogen. It will provide hydrogen engine and fueling solutions company Plug Power (PLUG 10.35%) with 100% of the renewable energy it needs to develop its first green hydrogen production plant. Brookfield is also teaming up with Canadian energy infrastructure giant Enbridge (ENB 1.12%) for a project that will produce green hydrogen to replace some of the natural gas being used in one of Enbridge's utilities. That diversification gives investors broad exposure to several energy transition themes.

Focused on several high-powered industries

SolarEdge Technologies is a leading developer and manufacturer of optimized inverter systems, hardware that reduces the cost of generating solar energy. These components make solar more affordable, which has helped power its growth in recent years. With products that occupy a valuable niche in its industry, SolarEdge has been able to grow its sales at a brisk pace in recent years. And that upward trend could accelerate since annual solar energy installations are on track to double over the next decade.

The company has also expanded its reach beyond solar in recent years, making several acquisitions that position it to further benefit from the energy market's transition. SolarEdge Technologies' offerings now address a broad array of energy market segments, including power storage, electric vehicle charging, batteries, electric vehicle powertrains, grid service solutions, and uninterruptable power supply (UPS) systems. This approach means SolarEdge offers investors exposure to the red-hot solar market, as well as emerging energy sector end markets.

A line of wind turbines with mountains in the background.

Image source: Getty Images.

Shifting power sources

Utility company Xcel Energy has a bold plan to be delivering 100% carbon-free electricity by 2050. For starters, it intends to invest $24.3 billion through 2025 alone to upgrade its electricity transmission and natural gas distribution systems, and build out additional renewable energy capacity. These investments will allow the company to retire its current coal-fired plants by 2030.

While wind and solar will power Xcel Energy's transition over the next few years, those two technologies won't be enough to achieve its emissions goal. That's why it's investing in new carbon-free technologies to take it the rest of the way. For example, it's planning a pilot project to use nuclear power to produce emissions-free hydrogen, which it could blend with natural gas to generate power and heat homes. It's also investing in electric vehicle charging infrastructure and other alternatives to eliminate carbon emissions from its profile over the next 30 years.

As a utility, Xcel Energy is a less risky way for investors to participate in the growth of renewables and enjoy the potential upside of technological breakthroughs in the energy sector.

The future is now for these energy companies

Many energy companies are still trying to figure out what their roles in the energy transition should be. That's not the case with Brookfield Renewable, Solar Edge Technologies, and Xcel Energy. The future is now for this trio as they implement their plans to lead the sector's transition.

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Stocks Mentioned

SolarEdge Technologies, Inc. Stock Quote
SolarEdge Technologies, Inc.
SEDG
$278.54 (4.54%) $12.10
Enbridge Inc. Stock Quote
Enbridge Inc.
ENB
$46.36 (1.12%) $0.51
Xcel Energy Inc. Stock Quote
Xcel Energy Inc.
XEL
$75.78 (1.09%) $0.82
Plug Power Inc. Stock Quote
Plug Power Inc.
PLUG
$18.82 (10.35%) $1.76
Brookfield Renewable Partners L.P. Stock Quote
Brookfield Renewable Partners L.P.
BEP
$37.14 (0.14%) $0.05
Brookfield Renewable Corporation Inc. Stock Quote
Brookfield Renewable Corporation Inc.
BEPC
$37.70 (0.16%) $0.06

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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