Renewable Energy Stocks Face Challenges Amid Political Uncertainty

Once valued highly in 2020-21, renewable energy stocks are now experiencing difficulties as investors pull back. Concerns surrounding the upcoming U.S. elections have added uncertainty to the sector, which is also facing stiff competition from Chinese renewables and strong returns from traditional energy sources. Additionally, supply chain issues and challenges with connecting to the grid are compounding the problems.

The Inflation Reduction Act has provided some support for renewable investments in the U.S. However, analysts caution that if Donald Trump returns to the presidency, funding might shift back to fossil fuels. Conversely, a victory for Democrat Kamala Harris could restore confidence in the renewable sector.

Despite lower interest rates, a new boom similar to the heights of 2020-21 seems unlikely. The pace of renewable growth has decelerated significantly. Over the past 17 months, the sector has experienced net outflows of more than $11 billion in 2024 alone. Major funds like the iShares Global Clean Energy ETF have seen unit numbers decrease by 28% during this period.

Finsum: This environment may present a valuable opportunity for investors to explore ETFs at current price levels.

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• renewables
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.