The price of energy has rocketed since the beginning of March, as one of the world’s biggest shipping routes for oil and gas, the Strait of Hormuz, has effectively been blocked.
This increase has quickly been seen at places like the fuel pump, as the price of petrol rose by 15% in the UK throughout the month of March. Companies like BP and Shell have already seen investors price in a significant benefit, with total returns of 39.5% and 31.2% respectively since the beginning of the year to 8 April.
But other types of energy, such as solar, wind and nuclear power, are all over the map and that’s reflected in the share price performances of companies involved in these areas.
First Solar, the largest solar panel company in the US and member of the S&P 500, has dropped over 26% this year. Danish Company Vestas Wind Systems, one of the world’s largest wind turbine manufacturers, is up 7.6%. Constellation Energy, the largest nuclear energy producer in the US, is down 22.7%, though it is worth noting this energy source is not actually renewable, just a producer of clean energy with low carbon outputs.
Why haven’t prices rocketed for renewable energy?
The main reason we haven’t seen major positive price shifts in renewable energy is because most of these facilities operate on contracts. So, while oil is constantly being repriced, energy from renewable sources like solar and wind have a price that’s set months before.
This can be positive for customers, who don’t face rapidly changing costs, as well as for the businesses, who have a strong idea of the revenue they will bring. But it does mean that the companies don’t get the same immediate boost from an energy crisis that oil does.
At the same time, companies in the US specifically are fighting a set of political factors. Tariffs on materials these manufacturers use are hurting profits, and an unhelpful political environment for renewable energy is another headwind.
While renewables haven’t seen a short-term lift, there are some longer-term prospects that look positive for the industry.
Some energy companies outside the US, like wind and solar company Iberdrola, have managed more positive returns so far this year, at 11.1%.
Where clean energy might get a boost
The US-Iran war has put a spotlight on how traditional energy sources such as oil can be extremely sensitive to geopolitical conflict, and the importance of having energy resources at home. According to the World Nuclear Association, France gets about 70% of its electricity from nuclear power, allowing it to weather the instability of the past month well. Meanwhile, countries with larger reliance on coal and oil, such as Egypt, have introduced energy saving policies including 9pm curfews for businesses and cutting streetlights.
For countries that have been forced to make these sacrifices, or individual businesses that have found themselves in the lurch, this could create some motivation to invest in renewables. But there’s no guarantee of this, especially when governments start to dig around in their budget.
The other factor that could create a boost for alternative energy sources is the demands of AI. Because of the immense computing power needed, AI is a major user of energy, and many of the top companies, including Meta, Google and Microsoft, have made net zero promises by 2030. This means they will need to look outside of oil and coal for their energy sources, but by current projections, the International Energy Agency estimates that gas, oil and coal will still account for half of the energy used in AI in 2030.
If companies intend to keep these promises (something of which there’s no guarantee) it will mean at least a partial pivot to renewable companies, and quickly. Some evidence of this has already started to emerge. GE Vernova’s CEO has estimated that data centres will account for a quarter of its customer base this year. It has a total return of 39.5% since the beginning of the year, and 187% in the past year.
When new market opportunities emerge, it can be hard to decipher the winners from the losers. So far, GE Vernova has been able to pull ahead because it offers closer to a one-stop-shop for data centres.
This difficulty in identifying the companies which will enjoy success, means some investors may choose a fund with multiple clean energy companies, instead of becoming a stock picker themselves. Some of the most popular options include iShares Global Clean Energy ETF, Invesco Solar ETF, and WisdomTree Renewable Energy ETF.
Hannah Williford: Content Writer
Hannah joined AJ Bell in 2025 as an investment writer. She was previously a journalist at Portfolio Adviser Magazine, reporting on multi-asset, fixed income and equity funds, as well as macroeconomic impacts and regulatory changes...
