What happened
Clean energy stocks had another good day on Wednesday, continuing a wild week of trading for the industry. On Monday, renewable energy stocks plunged on very little news. On Tuesday, they bounced back and the gains continue today. For the week, some stocks are even in positive territory.
The most notable solar movers today are Enphase Energy (ENPH -2.74%), which has risen 5.8%, Sunworks (SUNW -40.48%) and its 19.4% rise, and ReneSola (SOL -2.17%), which was up 9.9%. At 11:30 a.m. EDT the stocks were up 5.1%, 18.3%, and 0.3% respectively. On the hydrogen side of the industry, Bloom Energy (BE -4.72%) rose as much as 8.5% and is now up 3.9% while Plug Power (PLUG -2.15%) climbed 6.9% at its peak and is now up 2.1%.
Image source: Getty Images.
So what
Multiple factors are at play today to help clean energy stocks. One is simply that growth stocks are rising on the market today and that's helping renewable energy stocks across the board.
On a more fundamental level, investors are reacting to the fact that President Joe Biden is expected to announce a $2 trillion eight-year plan to speed up the transition to renewable energy in the U.S. The comment that's captured the most attention is a goal to get the U.S. to 100% carbon-free electricity by 2035.
For solar energy, a goal of going-carbon neutral will simply mean a bigger market and likely more accommodating policies for both large-scale solar power plants and rooftop solar. More growth is always good and that's what investors are hoping for.
For hydrogen stocks, the stakes could be even higher. Bloom Energy and Plug Power are both making electrolysis and industrial-scale hydrogen fuel cell products that could provide long-term energy storage for the grid, which is essentially a brand new market. Batteries are a great solution for storage of electricity for minutes or hours, but hydrogen could provide backup for days and on a much larger scale than batteries. If a $2 trillion package does get passed, it could effectively create a market for hydrogen companies, like the investment tax credit did for solar companies a decade ago. And that could open up a multi-billion dollar opportunity for these companies.
Now what
Today's move should be taken with a bit of a grain of salt by investors. Clean energy stocks have been extremely volatile lately and you can see below that today's recovery has still left most of these companies down over the past month.
Much of the positive policy changes under the Biden administration were also likely priced into stocks, which ran up sharply in the second half of 2020.
With all of that context laid out, it would still be positive for clean energy stocks if a $2 trillion infrastructure package is passed that would expand clean electricity production and decarbonize the grid. And that's been enough for investors to be bullish on these stocks the last two days.
