Investing Focus: Is now a good time to invest in renewable energy?
Written by Boring Money
23 April, 2026
Renewable energy has had a rough few years, battered by rising interest rates, inflation, and a hostile US administration. But the tide may be turning. The war in Iran, following Russia's invasion of Ukraine, has focused governments on energy security, with Europe accelerating its push for home-grown power. Structurally, demand is rising, driven by AI, electrification, and industrial reshoring, and renewables are now the lowest-cost power source at utility scale. After falling every year from 2021 to 2024, the sector rebounded sharply in 2025, up 46.6%. Here's what investors need to know about the opportunity — and the risks that remain.
Why is renewable energy back in the spotlight?
The crisis in the Middle East has turned the spotlight back on energy markets, and in particular, the vulnerability created by long-term dependence on fossil fuels. It has pushed governments to renew their drive for energy independence, with renewable options at the heart of their strategy.
The concept of ‘net zero’ and the broader adoption of renewable energy sources had become controversial. Plans for renewable energy development were noisily shelved by a hostile US administration, for whom ‘drill baby drill’ is the preferred approach. Investment drained away, and renewable projects stalled.
The sector has also had to deal with other problems. The problem with renewable energy is that it is intermittent, and it is not always generated where it is needed. That means rewiring grid systems from fossil fuel power plants to wind or solar plants, and introducing batteries into the system to store the energy created.
That infrastructure build-out costs money, and some renewable energy companies have borrowed heavily. That has left the sector vulnerable to rising interest rates and inflation
. Overall, it has been a difficult period for investors in the sector, who have seen share prices tumble.Nevertheless, the long-term growth story for renewable energy is sound. The motivation is not simply to decarbonise, but also to reduce dependence on volatile fossil fuels, which are often sourced from difficult regions. The US may have backed away, but Europe has accelerated its push for home-grown renewables. On 22 April, the European Commission announced its AccelerateEU strategy. The plan targets fossil fuel dependency, mobilising €660 billion in annual investment needs, and accelerating electrification and clean energy deployment. The aim, it said, is “to strengthen Europe’s long-term energy security and resilience.”
For wavering governments, the war in Iran – coming hot on the heels of the shock created by the Ukraine war - has reminded them of the importance of energy security.
Renewables are no longer a climate story, but a security and economic imperative. Against the backdrop of the largest oil shock on record, renewables demand is rising, economics are compelling, and supply remains constrained – a rare and powerful combination for investors.
“Recent events are a stark reminder of how exposed economies are when energy systems are tethered to volatile fossil fuel supply chains. Renewable assets, by contrast, are inherently domestic. Wind, solar, and hydropower cannot be embargoed, and their ‘fuel’ cannot be disrupted by a conflict miles away. In an era where energy security is inseparable from national security, that insulation carries strategic and financial value that markets are only beginning to price.
Global economies are increasingly recognising the need to reduce their dependence on the international oil supply chain. Historically, that recognition ran ahead of any realistic means to act on it. Energy systems were built around the transportation of oil and gas along the world’s trade routes, which, as recent events have again shown, are vulnerable to conflict, sanctions and geopolitical brinkmanship.
What is driving demand for renewable energy?
Structural demand for energy continues to increase. In particular, says Cooper, the demands created by AI will drive demand higher:
Data centres already consume 4-5% of all US electricity, a figure expected to reach 8% by 2030. Electrification, industrial demand, and reshoring are adding to the pressure. The result is a demand surge with no modern precedent: a multi-step change not seen since the advent of air conditioning in the 1960s.
This cannot be fulfilled with fossil fuels alone. They are increasingly expensive, pricing is volatile, and they are running out.
The current renewables opportunity has little to do with climate policy. It is accelerating because of economics: renewable energy has become, at utility scale, the lowest cost power available and, unlike fossil fuels, offers contracted, long-term cash flows.
Analysis by think-tank Ember showed that global clean power output grew faster than energy demand last year. This contributed to a small annual decrease in output from fossil fuel power stations, the first time it has fallen since 2020 (the pandemic year). The group found that renewable energy sources generated more electricity than coal-fired power stations in 2025. Ember’s managing director Aditya Lolla told the Financial Times that low carbon electricity was “scaling fast, enough to absorb rising electricity demand”.
More and more of the energy mix is coming from renewables. In the UK, wind generated almost 30% of Great Britain's electricity last year, up slightly on 2024, according to analysis of Neso data. There was also a huge change in solar power, which now generates around 6% of UK electricity. At its peak in July, solar was producing more than 40% of the country’s electricity. In total, renewables generate just under half of the UK’s electricity, and it is increasing all the time[1].
How are renewables performing now?
However, in spite of this backdrop, renewables have been a difficult place to invest in recent years. The iShares Global Clean Energy ETF is often taken as a proxy for the clean energy market, and it is down 19% over five years[2]. The ETF had fallen in every calendar year from 2021 to 2024 as the sector struggled with rising inflation and interest rates, and an unfriendly US administration. Projects were cancelled, and it appeared that the tide was turning against renewables.
The sector finally started to revive in 2025. The ETF was up 46.6% for the year as companies such as Vestas Wind Systems and NextPower saw their share prices lift. The sector was supported by falling inflation and interest rates. The sector is up another 11% since the start of the year, and prices have been relatively stable throughout the current crisis.
Many investors believe this could be a good moment for the renewable sector, as governments reignite their drive for alternatives to fossil fuels.
From a long-term perspective, the current geopolitical crisis gives further momentum to the push towards energy security and the renewable transition.
For investors, there could be a profound benefit in the change of sentiment, reinforcing the potential upside for the renewable sector as governments accelerate the deployment of domestic, low-carbon infrastructure to insulate their economies from global energy volatility.
These companies should ultimately benefit from higher power prices, though this needs to be weighed against the impact of inflation on development costs.
How can I invest in renewable energy?
For investors who believe in the long-term story for renewables, there are multiple ways to invest in it. Perhaps the most obvious area is directly in the renewable energy groups themselves. These would be companies such as Bloom Energy, First Solar, or Enphase Energy. These invest in renewable energy projects around the globe. There are also general energy companies that have a large share in renewables. This might include companies such as Total Energies or SSE.
There are also grid providers. In the UK, this would be National Grid. The company is currently undertaking the ‘great grid upgrade’ to support renewable energy, a picture that it replicated in grid companies across the world. Energy efficiency is another important area. Thomas calls this the “unsung hero” of the energy debate. “Advances in building insulation, industrial processes, smart grid management and low-energy technologies are reducing the energy that economies need to function. Every unit of demand destroyed is a unit of supply vulnerability removed.”
There are also a range of ETFs focusing on the renewable energy sector. Of these, the iShares Clean Energy ETF has become a benchmark for sector performance. It tracks the S&P Global Clean Energy Transition Index. There is also the L&G Clean Energy UCITS ETF, which focuses on wind, solar and hydrogen, and the broader Invesco Global Clean Energy UCITS ETF.
Are renewable energy investment trusts worth considering?
Investment trusts have also proved a popular route. These trusts tend to invest directly in renewable energy projects, such as wind or solar farms. Greencoat UK Wind has been one of the longest-running and most popular trusts, with a portfolio of 49 wind farms. For many trusts in the renewable energy infrastructure sector, recent weak performance has left the sector sitting on wide discounts to net asset value (33% on average) and high dividend yields, over 10% for the sector as a whole. Some consolidation and corporate activity has helped support pricing more recently.
In addition to wind and solar options, there are also a range of energy storage funds focusing on batteries (such as Gore Street Energy Storage), and generalist funds that invest in a range of different projects, such as the Renewables Infrastructure Group.
Renewable energy is coming through a very difficult period. The recent crisis will have reminded investors of its merits as the world looks again at its relationship with fossil fuels. This is already being reflected in stronger share prices.
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[1] BBC, January 2026
[2] iShares
