The advent of artificial intelligence (AI) is seen by many as one of the modern era's most incredible developments. And to be fair, it is a game changer.
To say AI is the only innovation that's changing the world in a big way right now, however, ignores another revolution that's just as impressive... even if it's a little less exciting. That's the advent of renewable energy. For the first time in history it at least seems possible the planet could eventually wean itself off of fossil fuels. Although that point in time is still decades away, Straits Research believes this continued progress will grow the renewable energy industry's revenue at an average pace of 9.5% through 2033.
Here's a closer look at three companies well positioned to capitalize on this brewing growth.
NuScale Power
NuScale Power (SMR +0.34%) is anything but a household name. Part of this lack of notoriety stems from its relatively small size; the company's market cap is a mere $2 billion. Another part of it reflects disinterest due to its lack of any real revenue.
For long-term-minded risk-takers, though, there's a compelling bullish argument to be made here.
Simply put, NuScale Power develops small modular (nuclear) reactors, or SMRs. Just as their name suggests, these are small-scale power plants meant to provide electricity at a specific site for a specific purpose, such as powering data centers, desalination plants, or facilities that split water into oxygen and hydrogen that can be used in a wide range of industrial applications. Thanks to advancements in nuclear fission reactor designs and waste disposal approaches, the nuclear power business's future is more promising than its spotty past.
NYSE: SMR
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As was noted, NuScale's got no reliable revenue to speak of, with none on the near-term horizon. It took years to design and prove its initial reactor plans, and even longer for the United States' Nuclear Regulatory Commission to approve it. Then the company adapted these plans to produce more power. The regulatory body is expected to make a fresh approval decision for this new design sometime in the middle of this year. Even if it is approved -- and it likely will be -- it still takes years to construct a small modular reactor site.
Potential customers are still warming up to the idea of localized nuclear's affordability and reliability though. Indeed, Romania's Nuclearelectrica and RoPower Nuclear are moving ahead with plans to commission the construction of up to six NuScale modular reactors. Straits Research suggests the global SMR market is set to grow at an average yearly pace of just over 9% though 2032 before demand accelerates for what should then be a much more proven technology.
Given that so few other outfits are working on small modular reactors (with even fewer being the pure plays that NuScale is), this company stands to capture more than its fair share of this growth.
The chief risk? This is a long-term, all-or-nothing kind of trade that could remain difficult to judge in the interim.
Plug Power
You're probably familiar with combustion engines and battery-powered electric vehicles like those made by electric vehicle (EV) powerhouse Tesla. These options aren't the only means of providing mechanical power to a moving machine, however. Fuel cells can generate an electric current by splitting hydrogen into positively and negatively charged particles, essentially becoming a battery... at least until all the hydrogen is consumed. Plug Power (PLUG 2.49%) has been manufacturing these hydrogen fuel cells for years now, and deploying them in forklifts, short-range haulers, robotics, and more recently, longer-range vehicles like delivery vans.
Mobility isn't the only application of fuel cell technology though. Increasingly, this solution is proving to be a viable, cost-effective alternative for supplying electricity (or at least backup power) to entire buildings, data centers, EV charging stations, and telecom service providers, just to name a few.
The problem? Creating and handling pure hydrogen isn't exactly cheap, nor is it easy. That's a big part of the reason Plug Power's been consistently unprofitable for years now.
But a turning point may be on the horizon.
NASDAQ: PLUG
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The aforementioned NuScale's small modular reactors are ideally suited for providing cost-effective power to the electrolysis facilities that split water into hydrogen and oxygen. The prospect of accessible hydrogen for fuel cells has never been more promising than it is right now. More common solar is an even more promising source of electricity for these electrolysis plants, which as the Motley Fool's internal research points out, is most states' preferred source of renewable energy.
The point is, fuel cells may be on the verge of entering the mainstream.
As is the case with NuScale Power, Plug Power's potential upside is paired with significant risks. Chief among them is a tricky, unpredictable regulatory environment. The latest chapter in this legislative saga is uncertainty regarding just how much -- if any -- of a tax credit it will be eligible to receive for sourcing hydrogen made by nuclear power. The Treasury Department may have even posted its decision by the time you're reading this, in fact.
Just don't sweat it too much no matter what the Treasury Department decides. Fuel cells are a proven technology. It's just going to take some time along with more infrastructure to get it (and Plug Power) over the proverbial hump. It's coming though. Straits Research predicts the worldwide fuel cell market is poised to grow by an average of more than 21% per year through 2033.
Occidental Petroleum
Last but not least, add Occidental Petroleum (OXY 0.91%) to your list of renewable energy stocks to buy in 2025 and hold for a few decades.
OK, it's not a renewable energy stock. Occidental is categorized as an oil and gas name, and rightfully so. After all, it's one of the world's biggest producers, cranking out a little over 1.4 million barrels of crude or crude-equivalent every single day.
The fact is, however, while renewable energy is the future, it's going to take decades to get there. The world's still going to need lots of oil and gas in the meantime. Goldman Sachs' researchers believe yearly usage of oil is going to keep growing before peaking at 110 million barrels per day in 2034. And even after that, consumption of oil is only going to gradually inch lower over the next few decades.
NYSE: OXY
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The kicker: Demand for natural gas is still expected to continue growing at least all the way through 2050. Now all of a sudden Occidental Petroleum's well-run operation looks and feels very investment-worthy.
Whatever the case, Occidental Petroleum is evolving into a renewable energy stock by virtue of a technology it's developing that could prolong the world's consumption of fossil fuels like natural gas, crude oil, and even coal. Just like the name suggests, the company's direct air carbon-capture platform literally sucks CO2 molecules out of the air and chemically combines them with filters that turn it into a form that can be safely and permanently stored underground.
It's still a relatively young technology that's more developmental than finalized. But it works. Demand for it is expected to grow at a strong double-digit pace over the next several years.
