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Clean Energy Sector Shines Last Week: Top-Performing ETFs

Sanghamitra Saha

We entered into the third quarter last week and clean energy stocks and ETFs stood out again, maintaining its winning spree. Several clean energy ETFs made it to the top-10 list last week. Investors should note that despite an upbeat second quarter, classic energy ETFs are in deep red so far this year.

But clean-energy ETFs delivered a stellar performance in the first half of 2020 and continue to ride higher. Energy Select Sector SPDR Fund XLE has lost about 38% this year while Invesco WilderHill Clean Energy ETF PBW is up about 23%. Let’s tell you the outstanding developments within the clean energy industry and what drove the space last week.

Inside the Shine Behind Clean Energy Sector

“Growing consumer electric vehicle adoption, state expansions of charging infrastructure, falling battery prices and increased solar-storage installations” have acted as a tailwind for the U.S. clean energy sector for the past few quarters.

Apart from the United States, Europe and China have been focusing on this area greatly. Clean technology projects are arranging bids for a billion-euro support package from the European Union under the scheme for funding breakthrough low-carbon technologies, per Reuters.

China’s target is to shell out $360 billion on renewable energy by 2020 and have renewable energy account for 35% of its electricity consumption by 2030, per Kraneshares. China has raised its renewable energy generation target for this year to 28.2% of the total, with 10.8% to come from non-hydropower sources. This marked an increment of a modest 0.7 percentage points from 2019.

If this was not enough, the coronavirus outbreak has been acting as a boon to the segment. During the COVID-19 pandemic, lockdowns resulted in less air pollution. Researchers recently reported that this cleaner air has caused more sunlight to reach solar panels, which enhanced clean energy production. This piece of news may have been instrumental in pushing clean energy stocks higher last week.

Electric car maker Tesla’s TSLA solar venture is another positive for this space. The hottest stock of Wall Street right now may be known for its electric vehicles, but its growing solar ventures could be the next big thing.

The company's solar power and storage battery businesses are likely to drive the entire solar energy sector ahead. Solar initiative currently makes up only 6% of its revenues but could be a gamechanger in the coming days. Notably, Tesla topped Toyota to become the most-valued automaker last week.

Tesla is boosting production of Solarglass Roof, its solar panels, which look like roofing tiles instead of the traditional solar panels which aren’t preferred by many. It also sells large batteries known as the Powerwall, “which can store the excess electricity that is created during the day by the solar panels.”

All these factors explain the recent rally in the clean energy securities. Below we highlight a few clean energy ETFs that delivered solid performances last week.

Invesco WilderHill Clean Energy ETF PBW – Up 9.3%

First Trust NASDAQ Clean Edge Green Energy Index Fund QCLN – Up 6.9%

SPDR S&P Kensho Clean Power ETF CNRG – Up 6.2%

ALPS Clean Energy ETF ACES – Up 5.5%

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Energy Select Sector SPDR ETF (XLE): ETF Research Reports
 
Tesla, Inc. (TSLA) : Free Stock Analysis Report
 
Invesco WilderHill Clean Energy ETF (PBW): ETF Research Reports
 
First Trust NASDAQ Clean Edge Green Energy ETF (QCLN): ETF Research Reports
 
ALPS Clean Energy ETF (ACES): ETF Research Reports
 
SPDR SP Kensho Clean Power ETF (CNRG): ETF Research Reports
 
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