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10 Cheap Renewable Energy Stocks to Buy Now

Fahad Saleem
Updated 8 min read

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In this article, we will take a look at the 10 cheap renewable energy stocks to buy now. To see more such companies, go directly to 5 Cheap Renewable Energy Stocks to Buy Now.

Renewable energy stocks are in the spotlight after the European Union reached a provisional deal to increase the percentage of renewable energy in its total energy mix to 42.5% by 2030, up from its current target of 32%. The move is driven by climate change emergency and the Russian invasion of Ukraine which has highlighted the continent’s heavy reliance on Russia for energy. Data suggests that wind and solar energy accounted for about 22% of the EU's electricity in 2022, surpassing gas for the first time.

The latest development is in-line with the expectations that suggest that the world is on its way to cut its reliance on traditional energy sources as companies and governments move to electrification and cut back on carbon emissions. According to a detailed report by McKinsey, electricity demand in the world could triple by 2050, driven by global electrification and the rise of hydrogen-based fuels.

The firm also said in its report that renewable energy generation would account for a whopping 80% to 90% of the global energy mix by 2050. This estimate is based on the firm’s projection that the global build-out rates for solar and wind will grow by a factor of five and eight, respectively.

An important and surprising data point shared by McKinsey shows that the energy consumption in the world is expected to stay flat in the coming decades despite a growing global population. The firm believes energy consumption in the world in the coming decades will grow by only 14%, while population is expected to increase by 2 billion people. One of the factors causing this is the trend of energy efficiency in the world. Governments in the developed world are focusing on increasing energy efficiency of buildings, cars and industries.

In the renewable energy equation, solar and wind are expected to make the biggest dent in the traditional energy markets, according to McKinsey. This is because of low costs of these energy sources. McKinsey expects solar and wind to account for about 43% and 26% of energy generation, respectively, in 2050.

But not all is well for the solar and wind energy companies. The renewable energy business is vulnerable to rising interest rates and the current state of the economy. Most of the companies in the sector are heavily reliant on debt. According to Wall Street Journal, wind and solar companies use debt for a whopping 85% to 90% of capital expenditures. Most of the renewable energy companies were formed after 2009, an era of almost zero interest rates. The 2022 market crash ushered in an era of volatility and not-so-easy money for these companies.

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