What happened 

Renewable energy stocks surged higher on Monday morning as the market gained ground to start earnings season. The earnings reports that came out from Goldman Sachs and Bank of America both showed better than expected results, and investors took them as reasons for optimism after the market's rout over the last few months.

Some of the biggest movers in energy were solar and hydrogen stocks, which tend to move more sharply than the broader market. As of 12:45 p.m. ET, Enphase Energy (ENPH -1.66%) was up as much as 9.5%, Plug Power (PLUG -3.38%) had jumped 10%, and Bloom Energy (BE -3.54%) peaked at 8.4%. Their shares are currently up 9.4%, 9.6%, and 8%, respectively. 

So what 

The first thing to look at is oil prices. U.S. benchmark West Texas Intermediate crude was up 3.8% Monday to $101.34 per barrel. Oil prices have bounced around during the last few months, but have generally remained unusually high. If the U.S. economy is going to remain strong in the second half of the year, then maybe oil prices will remain elevated. Renewable energy sources compete with oil, natural gas, and gasoline, so rising commodity prices are generally good for the companies in that sector as they make renewable energy even more cost-competitive.

Another factor to watch is U.S. government bonds, which are actually showing higher yields Monday than Friday. Since most renewable energy projects are financed with debt, lower yields are generally a good thing for them, but the market is shaking off a 7-basis-point rise in 10-year Treasury bond yields Monday.

Shares may also be bouncing back after dropping on Friday when news that a climate bill was likely not going to move forward in the U.S. Senate. Investors had been hoping that more federal subsidies would be on their way in 2022, but that hope seems to have died. However, while helpful, subsidies haven't proven to be a great value creator for the industry, so the market is now shrugging off that news too. 

Now what 

Volatile stocks in renewable energy can move much more erratically than the market, so it helps them when the market and oil are both up significantly. While Monday's moves are understandable short-term, I don't think they change anything about the investment thesis for renewable energy stocks. 

There are still great tailwinds behind renewables, but the companies in this industry also face challenges, including rising commodity costs and supply shortages for some components. I think these conditions could make this earnings season even more volatile as investors weigh the question of how to interpret growth and margin trends. That's why I'll be sitting out Monday's pop, but I remain very bullish on renewables for the long term.