Renewable stocks are plummeting as investors bet going green will take longer and cost more in a "higher-for-longer" interest rate environment.
finance.yahoo.com
Higher interest rates are impacting the renewable sector because clean energy projects are capital intensive.
To make matters worse, falling valuations are making it harder for companies to tap into public markets to fund their projects. Also, bonds offering higher yields are competing against dividend yields on utility stocks.
“There is an exodus from ESG products that are suffering from outflows,” said Navellier.
The Global Clean Energy ETF (
ICLN) is down about 30% year to date. The solar and wind energy benchmarks Invesco Solar ETF (
TAN) and First Trust Global Wind Energy ETF (
FAN) are down 35% and 32% during the same period, respectively.
The selling in renewables intensified after NextEra Energy Partners (
NEP), a subsidiary of NextEra Energy (
NEE) focused on renewables, cut its growth target by half to 6% through at least 2026.
"Tighter monetary policy and higher interest rates obviously affect the financing needed to grow distributions at 12%,"
read the company statement on Sept. 27.
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