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In this article, we will talk about the 10 biggest green energy companies in the world. If you want to skip our detailed analysis of the green energy industry which details the trends, current situation, and future outlook of the industry, you can go directly to the 5 Biggest Green Energy Companies in the World.
Green energy refers to energy generated from renewable resources, such as sunlight, wind, and water. As global warming and climate change continue to raise alarms for economies around the world, the transition to clean and green energy is on everyone’s radar. While the pandemic caused many businesses to shut down and industries to suffer losses, the renewable energy industry flourished as investments in the sector boomed.
Green Energy Market: An Analysis
According to a report by International Energy Agency, renewables were the only energy source that saw an increase in demand in 2020 despite the Covid-19 pandemic. Annual renewable capacity additions were up to 280 Gigawatts (GW) in 2020, up 45% year over year. Global wind capacity additions were up by over 90% in 2020 and came to 114 GW, a 50% increase on pre-pandemic levels. Solar Photovoltaic development is expected to top 162 GW in annual additions by the end of 2022, a 50% increase from the pre-pandemic levels in 2019.
According to BloombergNEF, global investment in the energy sector was a record $755 billion in 2021. The major chunk of this investment was attributed to the renewable energy division, which included wind, solar, and other renewables. The investment in the renewables sector topped $366 billion, up 6.5% from 2020 numbers. The second-largest sector by investment share was electrified transport, with $273 billion invested in 2021.
An “Irreversible Path” Towards Green Energy
A major catalyst driving the demand for renewables and green-energy sources around the world is governments’ efforts to battle climate change. In 2020, President Biden laid out a $2 trillion plan to battle climate change and put the U.S. on an “irreversible path” targeting net-zero carbon emissions by 2050. The Biden administration proposed the Build Back Better plan which includes tax benefits for investments in the renewable energy sector. According to the Renewable Energy Market Outlook 2030, by Allied Market Research, the global renewable energy sector was valued at $881.7 billion in 2020 and is expected to rise to $1.97 trillion by 2030 at a compound annual growth rate of 8.4% over the forecasted period
Another catalyst that is causing green energy stocks to soar is the ongoing war between Russia and Ukraine. The sanctions placed on Russia have caused massive supply chain disruptions and commodity prices to skyrocket. BofA chief economist, Ethan Harris, estimates that oil prices could double to $200 per barrel as a consequence of losing Russia’s 5 million barrels.
“If the West cuts off most of Russia’s energy exports it would be a major shock to global markets,” said Harris.
The price per barrel of Brent Crude oil went up by 33% since Russia invaded Ukraine on February 24, 2022. It almost reached $140 a barrel earlier this March nearing its 2008 historic high. This means more business for green energy companies and has caused green energy shares to gain. Some of the biggest green energy companies in the world include NextEra Energy, Inc. (NYSE:NEE), SolarEdge Technologies, Inc. (NASDAQ:SEDG), Plug Power Inc. (NASDAQ:PLUG), and Enphase Energy, Inc. (NASDAQ:ENPH).
To determine the 10 biggest green energy companies in the world we looked at market reports published by industry analysis agencies. We then looked at each company’s market capitalization on Yahoo Finance and ranked them in increasing order of market capitalization.
We also used Insider Monkey’s database, which keeps track of 924 elite hedge funds as of Q4 2021, to determine which companies are the most popular among hedge funds and investor circles. We included the hedge fund sentiment for each company’s stock to give our readers a better view of the bullishness surrounding the company.
Without further ado, let’s look at the 10 biggest green energy companies in the world.
10 Biggest Green Energy Companies in the World
10. Canadian Solar Inc. (NASDAQ:CSIQ)
Market Cap: $2.26 Billion
Number of Hedge Fund Holders: 18
Canadian Solar Inc. (NASDAQ:CSIQ) manufactures solar photovoltaic modules and runs large-scale solar projects. The company has operations in North America, South America, Europe, South Africa, the Middle East, Australia, Asia, and internationally.
On March 8, 2022, Canadian Solar Inc. (NASDAQ:CSIQ) announced that it has signed two 10-year power purchase agreements with Axpo Italia, one of the largest renewable energy companies in Italy, to purchase 70% of the energy produced by two solar power plants totaling 84 MWp. The projects are expected to reach commercial operation in January 2024 and are expected to generate roughly 156 GWh of clean solar electricity annually.
This March, Canadian Solar Inc. (NASDAQ:CSIQ) announced that its earnings per share for the fiscal fourth quarter of 2021 came to $0.17, beating estimates by $0.04. The company’s revenue for the quarter increased by 46.90% and amounted to $1.53 billion. As of March 23, 2022, Canadian Solar Inc. (NASDAQ:CSIQ) has gained 7.25% over the past six months.
18 hedge funds held stakes in Canadian Solar Inc. (NASDAQ:CSIQ) by the close of the fourth quarter of 2021. The total value of these stakes was in excess of $39.5 billion. This is compared to 12 positions in the preceding quarter with stakes worth $35.7 million. The hedge fund sentiment for Canadian Solar Inc. (NASDAQ:CSIQ) is positive.
Citadel Investment Group was the dominating shareholder in Canadian Solar Inc. (NASDAQ:CSIQ) at the end of Q4 2021. Ken Griffin’s hedge fund upped its stakes in the Canadian energy company by 23%, which amounted to $9.44 million.
9. Bloom Energy Corporation (NYSE:BE)
Market Cap: $4.10 Billion
Number of Hedge Fund Holders: 25
Bloom Energy Corporation (NYSE:BE) designs, manufactures, sells, and installs solid-oxide fuel cell systems for on-site power generation in the United States and internationally. This February, Susquehanna analyst Biju Perincheril upgraded Bloom Energy Corporation (NYSE:BE) to Positive from Neutral and raised his price target to $33 from $18. The analyst believes that the current geopolitical situation can benefit alternative energy sources and push for hydrogen adoption in Europe and other import-dependent markets.
This February, Bloom Energy Corporation (NYSE:BE) announced earnings for the fiscal fourth quarter of 2021. The company’s revenue came to $342.47 million, up 37.33% year-on-year, beating estimates by $33.53 million. As of March 23, 2022, Bloom Energy Corporation (NYSE:BE) has gained 24.90% over the past six months.
Bloom Energy Corporation (NYSE:BE) was spotted on 25 hedge fund portfolios at the end of the fourth quarter of 2021. The total stakes of these funds in the company exceeded $92 million. This is compared to 18 funds in the prior quarter, having stakes worth $43 million. Based on these numbers we can conclude that the hedge fund sentiment for Bloom Energy Corporation (NYSE:BE) is positive.
Marshall Wace LLP was the most prominent shareholder in Bloom Energy Corporation (NYSE:BE) at the close of Q4 2021. The fund upped its stake in the company by 891% from the previous quarter. The fund’s stake in Bloom Energy Corporation (NYSE:BE) was valued at $24.6 million.
8. Sunrun Inc. (NASDAQ:RUN)
Market Cap: $6.35 Billion
Number of Hedge Fund Holders: 31
Sunrun Inc. (NASDAQ:RUN) is involved in the design, development, installation, sale, ownership, and maintenance of residential solar energy systems in the United States. This February Sunrun Inc. (NASDAQ:RUN) announced its earnings for the fiscal fourth quarter of 2021, in which the company beat revenues by $26.27 million. The company’s revenue for the quarter came to $435.23 million, up 35.84% year over year from $320.41 million.
By the end of the fourth quarter of 2021, 31 funds were bullish on Sunrun Inc. (NASDAQ:RUN) and had stakes worth in excess of $1 billion. Of these funds, Tiger Global Management LLC was the dominating shareholder in Sunrun Inc. (NASDAQ:RUN) as of March 10, 2022. Tiger Global’s stakes in the company equaled $242.61 million, which accounts for 0.52% of the fund’s investment portfolio.
As of March 23, 2022, Sunrun Inc. (NASDAQ:RUN) has a market capitalization of $6.35 billion, which makes it one of the biggest green energy companies in the world. Other major players in the green energy industry include NextEra Energy, Inc. (NYSE:NEE), SolarEdge Technologies, Inc. (NASDAQ:SEDG), Plug Power Inc. (NASDAQ:PLUG), and Enphase Energy, Inc. (NASDAQ:ENPH).
“What this table did not cover is valuation. What’s expensive, what’s cheap? A good business that is too expensive is not a good investment. The most expensive business in the table is Sunrun. Sunrun is the nation’s largest residential rooftop solar panel system seller/installer. Sunrun’s valuation might also shed Thumbnail valuation.
To start at the top of the income statement, Sunrun shares trade at 10.3x revenues. The most profitable company in the S&P 500, Microsoft, trades at 13x revenues. Sunrun operates at a loss. Obviously, not only is tremendous growth anticipated, but tremendous profitability, too.
Let’s simply accept that investors have correctly anticipated Sunrun’s future success and make that the starting point for a valuation exercise.
If, 10 years from now, Sunrun is ultimately valued at 25x net income, and if today’s $9.5 billion valuation is appropriate, that would require $380 million of net income ($9,500 million ÷ 25).
Let’s say Sunrun will have the same net profit margin as the average S&P 500 company, which is 10%. That means it would need $3,800 million of sales to generate that level of earnings ($380 mill ÷ 10%).
Since sales are now $920 million, they would have to rise by 4.1x in the next 10 years. That would require annual sales growth of 15.2%.
You see how neatly that all works: investors accept the company’s 10-year, 15% annual sales growth projections, and if a 10% net profit margin and a P/E of 25x earnings are reasonable, then the company will have a $9.5 billion market cap at that time. Except that is the current price. That means a 10-year return of zero.
In order to get a 10% annualized return from the stock, Sunrun would need to be priced at a P/E of 65x its earnings 10 years from now, if at a 10% net margin. Or it would have to have some combination of lower P/E and higher growth and/or higher profit margin.
In the meantime, this is Sunrun’s recent pattern of revenue growth and profitability (the company did recently increase its estimate of installed-capacity growth in 2021 from 20-25% to a new estimate of 25% to 30%).
For the time being, Sunrun loses an extraordinary amount of money, an amount that has been getting larger. Perhaps there are scale economies that will manifest in the future, so that it will attain profitability. Perhaps from the roughly one-half of Sunrun’s revenues that are from long-term customer service agreements that run up to 25 years. For now, though, the company would seem to require a lot of external financing, and that is one of the greatest of business risks.”
7. Clearway Energy, Inc. (NYSE:CWEN)
Market Cap: $6.99 Billion
Number of Hedge Fund Holders: 21
Clearway Energy, Inc. (NYSE:CWEN) is involved in the renewable energy businesses in the United States. This February, Clearway Energy, Inc. (NYSE:CWEN) declared a quarterly cash dividend of $0.3486 per share, up 2% from the prior dividend of $0.3400. The dividend was payable on March 15, 2022, to shareholders of record on March 1, 2022. As of March 23, 2022, the stock has a forward dividend yield of 3.77% and has gained 31.40% over the past twelve months.
At the end of the fourth quarter of 2021, 21 hedge funds were bullish on Clearway Energy, Inc. (NYSE:CWEN) and had stakes worth $182 million in the company. This is compared to 17 hedge funds in the preceding quarter with stakes worth $151 million. The hedge fund sentiment for Clearway Energy, Inc. (NYSE:CWEN) is positive.
As of March 10, 2022, Renaissance Technologies is the most prominent shareholder in the company, owning over 1.22 million shares of the stock. The fund’s stakes in the company amounted to $41.05 million, which accounts for 0.05% of its fourth-quarter 2021 13F portfolio.
Investors bullish on Clearway Energy, Inc. (NYSE:CWEN) should also look into investing in NextEra Energy, Inc. (NYSE:NEE), SolarEdge Technologies, Inc. (NASDAQ:SEDG), Plug Power Inc. (NASDAQ:PLUG), and Enphase Energy, Inc. (NASDAQ:ENPH).
6. First Solar, Inc. (NASDAQ:FSLR)
Market Cap: $8.23 Billion
Number of Hedge Fund Holders: 36
First Solar, Inc. (NASDAQ:FSLR) provides photovoltaic and solar energy solutions in the United States, Japan, France, Canada, India, Australia, and internationally. The company designs, manufactures, and sells solar modules that convert sunlight into electricity.
This March, First Solar, Inc. (NASDAQ:FSLR) reported its earnings for the fiscal fourth quarter of 2021. The company reported earnings per share of $1.23, outperforming market consensus by $0.17. The company generated revenues in excess of $907.32 million, up 48.93% year over year from $609.23 million. As of March 23, 2022, First Solar, Inc. (NASDAQ:FSLR) is worth $8.23 billion.
In the fourth quarter of 2021, 36 hedge funds were bullish on First Solar, Inc. (NASDAQ:FSLR) was a part of 36 hedge fund portfolios at the close of the fourth quarter of 2021. The total stakes of these funds in the company amounted to $200 million. Of these, Renaissance Technologies is the dominating shareholder in the company, having stakes worth in excess of $46.53 million.
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Disclosure: None. 10 Biggest Green Energy Companies in the World is originally published on Insider Monkey.