The renewable energy industry has come to life in just the last few weeks because the market expects interest rates to decrease over the next two years, making project financing more cost-effective. After a tough 2023, that's a welcome relief for the industry.

Many renewable energy stocks are trading at levels not seen for years, and that's where there's opportunity for investors. I think SunPower (SPWR 5.85%), Enphase Energy (ENPH 3.80%), and NextEra Energy Partners (NEP -0.89%) are all well-positioned for a big recovery in 2024.

1. SunPower

SunPower is a residential solar installer, technology, and finance company. It spun off its manufacturing unit in 2020 and now focuses on providing technology and financing for both owned and third-party installers.

In 2023, the company faced pressure from higher interest rates that hurt both volumes and margins. But that could turn around as rates fall and utilities raise their prices. And SunPower's technology position allows it to scale more effectively because it can lean on regional dealers to be the "boots on the ground."

SunPower is well-positioned to grow in residential solar, which will likely be the first area of recovery in renewable energy.

2. Enphase Energy

You may know Enphase Energy as a growth stock in solar energy, but it's the company's position in the market that's been so valuable. Enphase makes microinverters, which are like the brains of a solar energy system, providing monitoring solutions along with control down to the solar panel level. But it's energy storage where the company's differentiation really shines.

In states like California, which have made it less lucrative to send electricity back to the grid, the inverter and energy storage system make decisions about when it's time to send electricity to the grid, when it should be consumed on-site, and when the battery should be charged.

Enphase Energy will see pressure on margins as installers try to cut costs, but it's still a highly valuable piece of the residential solar power system and will generate high margins and grow along with the rest of the industry.

3. NextEra Energy Partners

Few companies were affected by rising interest rates as harshly as NextEra Energy Partners in 2023. The company plunged in value in large part because analysts and investors were worried that $2.2 billion of the company's debt would be refinanced before 2026 at higher rates. That would ultimately leave less money for dividends, and a recent sale of $750 million in 7.25% senior notes due 2029 showed that rates are increasing.

But falling rates may reduce that risk. In the last month alone, U.S. 10-year government bond rates have fallen 60 basis points, which would save $6 million in interest on each $1 billion in debt.

There's no doubt that higher rates are still a challenge for NextEra Energy Partners. Management has revised dividend growth expectations from 12% to 15% to a range of 5% to 8%, with a target of 6% through at least 2026. And with an expected annualized $3.52 per share distribution at year-end, shares are trading with an 11.6% dividend yield today.

Renewable energy stocks are still a steal today

After getting crushed in 2023, there are a lot of opportunities in renewable energy stocks. SunPower, Enphase, and NextEra Energy Partners should be at the top of your buy list before year-end.