The rapid electrification of transportation is set to drive strong growth in the U.S. electric vehicle market in the near term, benefiting alternative energy stocks. However, rising wind turbine costs and strained U.S.-China relations could slow their growth. Despite these challenges, the U.S. Energy Information Administration (EIA) forecasts a 4.5% year-over-year increase in U.S. wind generation in 2025. This growth should support the alternative energy sector, offsetting some headwinds. Overall, while market uncertainties persist, expanding renewable energy production presents opportunities for investors in alternative energy stocks. The forerunners in the U.S. alternative energy industry are Constellation Energy CEG, Expand Energy Corporation EXE, Bloom Energy BE and Opal Fuels Inc. OPAL.
About the Industry
The Zacks Alternative Energy industry can be fundamentally segregated into two sets of companies. While one group is involved in the generation and distribution of alternative energy and electricity from sources like wind, natural gas, biofuel, hydro and geothermal, the other is engaged in the development, design and installation of renewable projects involving these alternative energy sources. The industry also includes a handful of stocks that offer fuel cell energy solutions, which have gained popularity as an affordable clean energy lately. Per the BlooombergNEF’s latest Energy Transition Investment Trends report published in January 2025, global spending on clean energy reached record levels of $2.08 trillion in 2024. With similar or more investments expected in clean energy in the coming years, the industry boasts solid growth opportunities for its participants.
3 Trends Shaping the Future of the Alternative Energy Industry
Wind Energy – A Key Growth Catalyst: Among alternative energy sources, wind energy has been making noticeable progress in the United States. Per a report by the American Clean Power Association, land-based wind remains the most abundant U.S. clean power technology in 2024, with 154.6 gigawatts (GW) installed last year. Looking ahead, per the latest Short-Term Energy Outlook published by the U.S. Energy Information Administration (EIA) in February 2025, wind generation in the United States is projected to increase 4.5% year over year in 2025, with 7.7 GW of wind generation capacity expected to be added to the U.S. grid this year. This reflects a solid growth opportunity for the U.S. wind market at present, which, in turn, should boost the overall expansion of the alternative energy industry.
EV Market Boom to Boost Clean Energy: Electric vehicles (EVs) are playing a pivotal role in decarbonizing the transportation sector. Rising electrification, supported by government subsidies, tax rebates, grants, and incentives like carpool lane access, is encouraging more people to switch from gasoline-powered vehicles to EVs in the United States. Additionally, declining battery costs are further driving growth in the U.S. EV market. Consequently, 408,688 EVs were registered in the United States during the third quarter of 2024, marking an 8% increase year over year (according to data from the Alliance for Automotive Innovation. Looking ahead, the U.S. EV market size is expected to register a CAGR of 10.5% between 2025 and 2029, as estimated by a report from Statista. Such an impressive outlook bolsters the prospects of clean energy stocks, which offer the largest electric vehicle charging network in the United States.
Rising Costs & Other Headwinds: The steadily rising cost of renewable installations in recent times has been posing a significant challenge for clean energy installers. In particular, the rising price of steel, which is used to make giant wind turbine blades, has been pushing up the cost of wind installation lately.
Apart from steel, the most significant mineral requirements in the wind industry are copper, zinc, manganese, chromium, nickel, molybdenum and rare earths. The average price of these seven metals has risen 93% between January 2020 and March 2023 (as stated by an IMF report). Resultantly, the levelized cost of electricity of a subsidized U.S. offshore wind project has increased almost 50% in 2023 from the 2021 level in nominal terms, according to a report published by BloombergNEF in August 2023.
Further, the fallout in the bilateral relationship with China can have a direct impact on the green energy industry. This is because China accounts for up to 90% of refining capacity for the so-called rare earth elements used in electric motors, wind turbine generators and other green energy products, per the Energy Transitions Commission. So, any deterioration in the relationship with China might impact the green energy supply chain in the United States, thereby impacting the alternative energy industry.
Zacks Industry Rank Reflects Bright Outlook
The Zacks Alternative Energy industry is housed within the broader Zacks Oils-Energy sector. It carries a Zacks Industry Rank #82, which places it in the top 33% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects.
Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Before we present a few alternative energy stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Beats Sector and S&P 500
The Alternative Energy Industry has outperformed its sector as well as the Zacks S&P 500 composite over the past year. The stocks in this industry have collectively surged 47.4% in the past year against the Oils-Energy sector’s 1.8% decline. The Zacks S&P 500 composite has gained 14.3% in the same time frame.
One-Year Price Performance
Industry’s Current Valuation
On the basis of the trailing 12-month EV/EBITDA ratio, which is commonly used for valuing alternative energy stocks, the industry is currently trading at 4.18 compared with the S&P 500’s 17.07 and the sector’s 16.25.
Over the past five years, the industry has traded as high as 18.72X, as low as 8.69X and at the median of 10.18X, as the charts show below.
EV-EBITDA Ratio (TTM)
4 Alternative Energy Stocks to Buy
OPAL Fuels: Based in Boston, MA, the company is a vertically integrated renewable fuels platform involved in the production and distribution of renewable natural gas for the heavy-duty truck market. On March 5, 2025, OPAL Fuels announced that it has entered into five new fuel station services agreements to support customer hauling operations in Canada. Per the terms of the deal, OPAL Fuels will design, build, own and operate these new stations, which are expected to be operational by the fourth quarter of 2025 and are supported by long-term fuel supply agreements.
The Zacks Consensus Estimate for the company’s 2025 sales implies an improvement of 24.3% from the previous year’s estimated figure. The Zacks Consensus Estimate for OPAL’s 2025 earnings, pegged at $1.58 per share, suggests an improvement of 97.9% from the previous year’s expected figure. The company currently sports a Zacks Rank #1 (Strong Buy).
Price & Consensus: OPAL
Expand Energy Corporation: Based in Oklahoma City, OK, the company is an independent natural gas producer, principally in the United States. On Feb. 26, 2025, EXE released its fourth-quarter 2024 results. Its quarterly revenues improved 2.7% year over year to $2 billion.
The Zacks Consensus Estimate for 2025 sales is pegged at $8.42 billion, implying an improvement of 183.8% from the previous year’s reported figure. The Zacks Consensus Estimate for EXE’s 2025 earnings is pegged at $5.62 per share, implying an improvement of 298.6% from the previous year’s reported figure. EXE currently holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price & Consensus: EXE
Bloom Energy: Based in San Jose, CA, the company generates and distributes renewable energy. On Feb. 27, 2025, Bloom Energy reported its fourth-quarter 2024 results. Revenues of $572.4 million reflected an increase of 60.4% year over year. BE’s operating income of $104.7 million reflected an increase of $91.8 million year over year.
The stock holds a long-term (three-to-five years) earnings growth rate of 40.8%. The Zacks Consensus Estimate for 2025 sales implies an improvement of 18.4% from the previous year’s reported figure. The company currently carries a Zacks Rank #2.
Price & Consensus: BE
Constellation Energy.: Based in Baltimore, MD, the company provides electric power, natural gas and energy management services to 2 million customers across the continental United States. On Feb. 18, 2025, the company posted fourth-quarter 2024 results. Its adjusted EPS improved 38.1% year over year to $8.67.
CEG has a long-term earnings growth rate of 12.5%. The stock boasts an average four-quarter earnings surprise of 10.16%. The company currently carries a Zacks Rank #2.
Price & Consensus: CEG
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