What happened

Shares of renewable energy stocks fell off a cliff Monday. As of 1 p.m. EDT, Plug Power (PLUG 10.71%) stock had declined 7.6%, Bloom Energy (BE 12.36%) was down 8.9%, and Blink Charging (BLNK 5.83%) had dropped 9.6%.

At least in part, you can probably blame The Wall Street Journal for that.

Three red arrows crashing into the floor

Image source: Getty Images.

So what

In a column this morning, the WSJ described the growth of a "clean-energy stock mania" in the markets over the past several months, and in particular the "badly designed" but "massively popular" S&P Global Clean Energy index.  

As the newspaper reports, money has been pouring into index funds that track the S&P's clean energy index, causing both the funds and the stocks they contain to as much as quintuple in value in five months through their January peak. The problem is, these gains were largely technical in nature, caused by too much money chasing too few stock opportunities as the index funds struggled to pour money into the small number of stocks available to trade.  

Simply put, these stocks weren't necessarily going up because the companies behind the tickers were good companies. In large part, they may have been going up because of mere momentum and artificial constraints on buying and selling.

Now what

For investors counting their winnings, that may have been just fine at the time -- but here's the problem, and here's why "green energy" stocks that went up so much late last year and early this year are coming back down now:

The Journal warns that the S&P is now expanding the size of its cleantech index -- from 30 companies to 81 companies to perhaps as many as 100 companies, and "the mere act of changing has hit the stocks already in the 30-stock index, which the ETFs will have to sell some of to buy the new members." This is introducing volatility into the stock index and the stocks alike, and driving at least some of those stocks down (as we're seeing today).

Until the index reaches its final form, investors should probably buckle up for even more volatility to come.