The recipe for renewable energy’s 2020 breakout was so perfect it deserves a Michelin star.
Technological improvements had been simmering for years and paired perfectly with short-term seasonings like low-interest rates.
The result was a 234% surge in the Invesco Solar ETF, a 59% increase in the First Trust Global Wind Energy ETF, and tons of excitement surrounding electric vehicle (EV) and hydrogen fuel cell companies.
And then seemingly out of nowhere, the narrative shifted.
In the last month alone, the average stock in the previously mentioned solar and wind ETFs is down 24% and 16%, respectively.
Many smaller names are down over 50%. Meanwhile, the broader energy sector is up 24%. Here’s why renewable energy stocks are crashing, and the actions you can take to navigate the volatility.
A different narrative
To understand why Wall Street has suddenly turned sour on renewables, we need to determine what has changed between last year and this year.
Summed up in the table below are five short- and medium-term factors that have gone from tailwinds to headwinds. Next, we’ll break down each of these factors in more detail.
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