2020 was undoubtfully the year of tech companies. Stocks like Amazon, Tesla, Google once again were the main force behind the rise in the US stock markets. Now, when we look ahead into 2021, with the entry of new US President Joe Biden into the White House and the expected massive increase in resources allocated to this green energy sector, some analysts believe that this is going to be the year of Clean Tech stocks.
Over the past decade, we have witnessed a huge increase in the awareness of investors and consumers towards environmental issues and global warming concerns. In this scenario, it was only a matter of time until new tech companies will enter to the market. CleanTech is one of the most thriving sectors in the past year, and the future seems to be even more promising. Basically, Cleantech simply refers to any product or service that reduces negative environmental pollution and ultimately drives green economic growth.
Cleantech sector outlook 2021
In 2020, cleantech stocks have performed incredibly well – an increase of more than 200% in the past year, compared to a 100% increase in S&P Global Clean Energy Index, or the solar energy index, that gained 174% last year.
Well, the good thing right now that buying these stocks actually seems like a good investment and not only a good cause. Some of these companies already have a positive cash flow that can last for decades, particularly if governments will continue pushing towards the development of a green economy. which no longer need government subsidies to survive. For example, in 2019, 18% of power generation in the United States has derived from alternative energy, compared to just 10% a decade before.
Consequently, in the last decade, investors and hedge funds pay close attention to green technology and renewable energy. Now, that the cost of alternative energy products is no longer unreasonable, it seems to be as renewable energy may become reality. For example, in the past decade, the cost of solar panels dropped by 82% drop in the costs of solar panels, the costs of wind power plants dropped by 39%, and the cost of offshore wind farms fell by 29%, according to the International Renewable Energy Agency (IREA).
Obviously, this is the first step of the integration of cleantech products into individuals’ daily life activities. Once these products are in reach of everyone, it is inevitable that the cleantech sector will thrive in 2021 and beyond.
President Biden support for cleantech growth
There’s another factor that is extremely crucial in this matter – the expected support from the US administration, and in particular Joe Biden. Now, it is no longer support for futuristic technologies, but functioning and profitable companies. During his campaign, Biden set a plan to reach 100% clean energy by 2035. In the UK, Boris Johnson has laid out the government’s plan to power all UK homes with green renewable energy by 2030.
The vision is impressive, but there is no doubt that full integration of renewable energy still far away. It will require government investment and incentives, but more importantly, it will require the business to be more involved in the cleantech sector.
While the Trump administration has already allocated funds for clean energy programs (cleantech) over the next five years, it is clearly not enough for the industry to grow. However, last week, Biden announced a $1.9 trillion fiscal plan, that includes the support and incentives for the cleantech companies and governmental projects.
On another note, the green sector has gained popularity over the past two years as the rise of social activity has grown and the concern over climate change has become a major topic around the world. As a consequence, it not only start-up companies and new firms that are entering this market but also some of the largest oil and gas producers like BP, Shell, and Exxon Mobile.
The diversity of cleantech companies
The reason that cleantech companies have performed tremendously well in the past year is the impressive mix between large-scale companies and young startups looking to develop new innovative solutions for the cause of green technology. Here, you can find the long list of cleantech companies around the globe.
All in all, the cleantech is categorized into these 6 key areas:
- Energy Generation and storage
- Waste and sustainable materials
- Built environment
- Agriculture and food services
The bottom line
The combination of small and medium-sized companies, and the fact that this is a growing sector with lots of funds coming in – will ensure that the cleantech sector is here to stay in the upcoming years. After all, these are tech companies, which offer tremendous growth potential for the next decade. Some of the most well-known and promising cleantech energy stocks include Tesla (TSLA), Bloom Energy (BE), Green Plains Partners (GPP), SunPower (SPWR), and Valvoline Inc. (VVV). Another option is to invest directly in clean energy ETFs.