Private Investors On Green Energy Buying Spree As Big Oil Retreats
March 25, 2025
ByAlex Kimani– Mar 25, 2025, 7:00 PM CDT
- Green energy investors are taking advantage of the strong momentum in the renewable energy sector to snap up clean energy assets on the cheap.
- Trium Capital: the broad retreat by oil majors from renewables projects has left clean energy markets less crowded and more attractive.
- Trump’s pledge to to rescind any “unspent” funds under the IRA continues to instill fear among renewable energy investors.
Over the past couple of years, renewable energy stocks have been hammered thanks in large part to high interest rates in the post-Covid era. The iShares Global Clean Energy ETF (NASDAQ:ICLN), the world’s largest green energy ETF and a catch-all bet on clean energy, has returned -13.9% over the past 52 weeks compared to a 10.7% gain by the S&P 500. The solar and wind energy benchmarks are not faring much better, either, with Invesco Solar ETF (NYSEARCA:TAN) tanking -25.0% while First Trust Global Wind Energy ETF (NYSEARCA:FAN) has only gained 2.6% over the timeframe. Clean energy projects tend to be highly sensitive to interest rates because they require developers to borrow lots of capital upfront to build projects. To make matters even more complicated, the cost of electricity generated from renewable energy tends to be impacted much more by rising interest rates compared to electricity generated from fossil fuels. Indeed, a 2020 analysis from the International Energy Agency found that a 5% rise in interest rates increases the levelized cost of electricity from wind and solar by a third but only marginally for natural gas plants.
In sharp contrast, the fundamentals of the clean energy sector remain in the pink of health: Last year, the United States installed a record-breaking 50 gigawatts (GW) of new solar capacity, the largest single year of new capacity added to the grid by any energy technology in more than two decades. And now green energy investors are taking advantage of the strong momentum in the renewable energy sector to snap up clean energy assets on the cheap. According to Hedge fund manager Trium Capital, the broad retreat by oil majors from renewables projects has left clean energy markets less crowded and more attractive.
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“We think the fundamentals of renewable power are as strong as they’ve ever been,” said Ignacio Paz-Ares, managing partner and deputy chief investment officer in the renewable power and transition group at Brookfield Asset Management. “Whenever we see a dislocation between what the market noise is and the fundamentals, that creates a very good opportunity for us to make acquisitions at very attractive entry prices.”
Lately, Brookfield has gone on a buying spree, including a €6.1 billion ($6.6 billion) takeover of French developer Neoen SA (OTCPK:NOSPF), a £1.75 billion ($2.3 billion) stake purchase in UK offshore wind farms from Orsted A/S (OTCPK:DNNGY), a $1.7 billion transaction to buy an onshore renewables business from National Grid Plc (NYSE:NGG). Paz-Ares says the firm will continue hunting for more clean energy bargains.
Brookfield is hardly alone. KKR & Co. is looking to raise up to $7 billion for its first Global Climate fund while Copenhagen Infrastructure Partners, which closed its largest-ever renewables fund with €12 billion this month, is also planning to scoop up cheap clean energy assets.
Clean Energy Out of Favor Under Trump
Clean energy stocks are, however, likely to underperform under a second Trump term. In a highly controversial move that sent shockwaves through the clean energy sector, Trump issued an executive order on his first day back in the White House that effectively halted the growth of wind energy in the U.S. The sweeping order freezes approvals for both onshore and offshore projects, pauses offshore wind lease sales and calls for a comprehensive review of existing wind energy leases. This move has created significant uncertainty about the future of wind energy in the U.S., and drawn widespread criticism from environmental groups, industry stakeholders and renewable energy advocates.
Trump has also pledged to rescind any “unspent” funds under the IRA.
“To further defeat inflation, my plan will terminate the Green New Deal, which I call the Green New Scam,” the former president said before the Economic Club of New York in September.
In 2022, the Biden administration signed the IRA, allowing hundreds of renewable energy companies to benefit from $369 billion in tax breaks and subsidies for clean energy. In the previous year, the Biden administration passed the Infrastructure Investment and Jobs Act (IIJA), with the act authorizing $1.2 trillion in spending for transportation and infrastructure; $43 billion (not including loans and tax incentives) in flexible spending could be used for battery manufacturing, retooling auto industry facilities, retraining and rehiring existing auto workers and grid updates while more than $7.5 billion will support the buildout of EV infrastructure.
Recently, Politico provided estimates that over 60% of IRA investments will be at the mercy of the Trump administration. With the GOP in control of both the Senate and the House, a unified Congress could spell doom for Biden’s signature climate bill.
By Alex Kimani for Oiprice.com
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