The Russia-Ukraine war saga continues to see new twists and turns. The economic sanctions on Moscow from the United States and its western allies are getting stricter and bigger as the intensity of the attacks on Ukraine is rising. President Joe Biden recently announced imposing a ban on Russian oil imports in one such attempt.
The war has been leading to a spike in oil, gasoline and natural gas prices. In fact, the international benchmark, Brent crude, recently touched its highest mark of $139.13 (since July 2008). According to AAA, the national average for a gallon of regular gas increased to $4.173 on Mar 8 (as mentioned in a CNBC article). Thus, the current situation is increasing the focus on solar and clean energy spaces. Consequently, a rally was observed in Enphase Energy
ENPH
and SunPower
SPWR
of about 10.8% and 18.7%, respectively, on Mar 8.
Furthermore, favorable government policies, impressive renewable investments, falling overall cost of generating renewable electricity and the growing adoption of electric vehicles (EV) might keep supporting the momentum in the space in 2022.
Going by a U.S. Energy Information Administration report, electricity consumption in the United States for retail sales and direct use of electricity is projected to rise 0.6% in 2022 and 1.4% in 2023. The same report forecasts electricity generation from renewable sources to rise from 20% in 2021 to 23% in 2022 and to 24% in 2023. Expanding new solar and wind capacities will make up most of the rise in renewables generation.
Moreover, technological advancements, increasing investments, growing government initiatives and rising awareness across the globe about adopting clean energy have been leading to a rise in demand for renewable energy.
Clean Energy ETFs That Can Shine
According to the International Energy Agency (IEA)
report
, renewable energy sources are expected to make up 95% of the world’s increase in power capacity through 2026. Per Allied Market Research, the global renewable energy market is expected to reach a value of $1.51 billion, at a CAGR of 6.1% between 2018 and 2025. Against this backdrop, let’s take a look at some alternative energy ETFs:
iShares Global Clean Energy ETF
ICLN
iShares Global Clean Energy ETF seeks to track the investment results of an index composed of global equities in the clean energy sector. It has 76 holdings. The fund’s AUM is $4.90 billion and the expense ratio is 0.42% (read:
Bet on These 5 ETF Areas for 2022
).
Invesco Solar ETF
TAN
Invesco Solar ETF is based on the MAC Global Solar Energy Index, which comprises companies in the solar energy industry. It has 51 holdings. The fund’s AUM is $2.24 billion and the expense ratio is 0.66% (read:
Top ETF Stories of February That Deserve a Watch in March
).
First Trust NASDAQ Clean Edge Green Energy Index Fund
QCLN
First Trust NASDAQ Clean Edge Green Energy Index Fund seeks investment results that generally correspond to the price and yield, before fees and expenses, of the NASDAQ Clean Edge Green Energy Index. It has 60 holdings. The fund’s AUM is $2.09 billion while the expense ratio is 0.60%.
ALPS Clean Energy ETF
ACES
ALPS Clean Energy ETF seeks investment results that correspond (before fees and expenses) generally to the performance of its underlying index, the CIBC Atlas Clean Energy Index. The fund’s AUM is $721.4 million and the expense ratio, 0.55%.
Invesco Global Clean Energy ETF
PBD
Invesco Global Clean Energy ETF is based on the WilderHill New Energy Global Innovation Index. It consists of 139 holdings. The fund’s AUM is $252.3 million and its expense ratio, 0.75%.
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