A couple months ago I noticed that the 5 top holdings in my portfolio were all in the green energy sector - perhaps something you might expect from someone whose pseudonym is "Solar Investing." However, I initially invested only small to moderate amounts in each of these companies - it was the huge appreciation that propelled them to the top 5.
The companies are SolarEdge (SEDG), Tesla (TSLA), Enphase (ENPH), BYD Company (OTCPK:BYDDY), and JinkoSolar (JKS). As I wrote this, a day Joe Biden was on the cusp of winning the presidency, the solar companies, SEDG, ENPH, and JKS were up an amazing 12-26% on the day. EV makers TSLA and BYDDY are up a more modest 2-3%. No, it was not a 1-day aberration, all 5 were up strongly for the year before the U.S. election.
Photo: Author
Wind and solar lead the way in the booming non-hydroelectric renewable energy sector
The EIA predicts that, despite COVID-19, utility-scale solar will soar in 2020 even as coal's decline accelerates. The trend is even more pronounced when one considers that distributed (roof top) solar is also booming. With wind and solar costs continuing to decline, the trend will likely only accelerate.
The market sees this. In the 3-year chart below you can see how clean energy equities have strongly outperformed both the SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust (QQQ). I have not put fossil fuel equities in the chart as their decline is absolutely abysmal over the last 3 years.
Why is clean energy, especially wind and solar electricity generation, growing so quickly? There are two main reasons:
First, as noted above, wind and solar are now the cheapest way to generate electricity in most of the world. This is why you see utilities building solar and wind