What You Need to Know About Investing in Wind Energy

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What You Need to Know About Investing in Wind Energy

With global warming and climate change becoming more prominent in discussions around the world, there’s no wonder why wind energy is becoming such a talked about topic in the power industry.

By the end of 2023, it accounted for approximately 116.6 gigawatts worldwide, which has clearly been an uptrend from the beginning of renewable wind power. And although onshore wind energy makes up the large majority of the wind capacity today, technology is always advancing to newer heights, so we don’t know what’s in stock for us in the future.

Therefore, that’s why, in today’s article, we’re going to look closer at actually investing in wind energy stocks or funds and whether this could be not only a good investment for our future but a good investment for your portfolio returns too. Keep that in mind as we go more in-depth on whether it’s right for you or not.

 

What Are the Different Types of Wind Energy?

As wind is an infinite source, it is counted as a renewable resource for everyone who chooses to use it. In fact, there are two main categories of wind energy (not types) which are utility-scale wind and distributed wind.

Today, however, we’ll look further into utility-scale wind energy, as this is where most investors are putting their chunk of change. This is due to them often being larger projects, making them more accessible to the public. Let’s take a look at the main types of utility-scale wind energy projects you can invest in:

 

Onshore Wind Energy

The most popular form of wind energy is onshore wind energy, by far. In fact, out of the 1021 gigawatt capacity worldwide in 2023, onshore wind power accounted for most of that (946 gigawatts in 2023).

Onshore wind farms are located no less than 3 km from the coast and are always easy to access from the electricity grid. This means that they’re generating electricity through wind farms, typically, with the main goal of providing energy security and lower energy costs for the public.

 

Offshore Wind Energy

Although onshore wind accounts for the majority of the gigawatt capacity worldwide, in the UK especially, offshore wind energy makes up the majority of the investments. In fact, between 2016 and 2021, nearly £19 billion was invested into offshore wind farms or projects in the UK, showing the prevalence of this investment for jobs, construction, and project development.

Offshore wind is definitely a leader when it comes to renewable wind power and is now being recognised for its benefits around the world, slowly but surely. It is now giving homes more energy than ever before.

 

What Types of Wind Stock Investments Are There?

Although there are many different types of wind energy overall, there are actually only three different types of wind stock investments that you can choose from:

  1. Wind turbine companies: The companies that make, install and maintain wind turbines
  2. Wind farm companies: The companies that have large wind farms ready to produce lots of energy
  3. Wind energy companies: The companies that actually distribute energy that wind farms make

 

As you can see, they all have different roles and levels of responsibility within their daily operations, and this is what you have to consider if you want to invest in the wind energy market.

 

The Benefits and Drawbacks of Investing in Wind Energy

Like any investment, there are advantages and disadvantages, but, of course, different benefits and advantages can be perceived differently. That’s why investments are subject to your own goals and objectives, as what may resonate with you may not resonate with someone else. Let’s take a look at the main benefits and drawbacks of investing in wind energy, however.

Benefits Drawbacks
It is expected to play a huge role in the global shift towards net zero in 2050 Like any investment, there’s a lot of risk involved
The world is always becoming more ecologically knowledgeable, making more room for renewable energy stocks Putting your investments into one sector or one company is very risky, and could end up losing you a lot of money
It is a relatively new sector within the stock market (potential to grow) It may or may not be able to compete with the other renewable energy sources
It is genuinely good for our environment and future as a generation May impact the job market, housing prices, and potentially increase the average energy production costs
It is an infinite source of power A lack of diversification in your investment portfolio

Note: These are just a few of the main benefits and drawbacks of wind energy investment, but there are a lot more to explore if we’re just talking about wind energy as a whole. That’s why we always recommend detailed research before making any decisions about where you want your investments to go.

 

Should You Invest in Wind Energy?

Whether investing in wind energy is for you or not depends on many different factors, but in short, if you’re investing in wind energy for the future of your country and global development, it could be a great investment for you. However, if you’re doing it solely for monetary gain, investing in just wind energy could be an extremely risky investment with a lack of diversification.

If you’re investing in singular companies, this can be even more prevalent, because if that one company goes bust, you’re going to lose all your investments. Therefore, if you feel as though wind energy is something you want to add to your portfolio, we recommend investing in a fund with lots of companies, along with diversifying with other sectors and indexes.

This way, you can mitigate the risk if something goes wrong with the wind energy sector and believe you have a backup in your portfolio to carry you through tough times.

 

Examples of Popular Wind Energy Stocks

If you believe wind energy is for you and it’s something you want to look into further, here are some of the most popular wind energy stocks, based on many factors, such as attention, performance, market cap, etc.

  • General Electric Vernova: Market Cap = 179.78 billion USD and the returns over 5 years have been positive (24.62%)
  • Engine SA: Market Cap = 33.29 billion USD and the returns over 5 years have been positive (1.78%)
  • Ørsted: Market Cap = 164.41 billion USD and the returns over the last 5 years have been negative (30.50%)
  • First Trust Global Wind Energy ETF: Market Cap = Mid Investment Style and the returns over the last 5 years have been positive (24.57%)
  • Invesco Wind Energy UCITS ETF: Market Cap = Mid Investment Style and the returns over the past 5 years have been positive (14.66%)
  • Ripple Energy: Not available to buy on the market yet, but is making noise within the industry.

 

How to Invest in Wind Energy Stocks

To be invested in a stock, ETF (exchange-traded fund) or any other type of wind energy investment, there are two ways you can do this:

  1. Through an investment platform and buying shares of them
  2. Using spread bets and CFDs

 

While you take full ownership when using an investment platform and buying shares, you use leverage to buy wind energy stocks with spread bets and CFDs. While spread bets and CFDs may be okay short-term, if you’re investing long-term, we would recommend using a reliable, trustworthy investment platform to get started.

 

The Future of Wind Energy in Our Lives

Although the future looks promising for wind energy, this first of all, doesn’t mean that it’s going to continue at the rate it is currently, and secondly, it doesn’t mean that the stocks and ETFs are going to continue to grow year on year.

Nothing is guaranteed with investing, and that’s why you’ve always got to do your due diligence research and make sure the investment aligns with your values before you get into this, or any sector for that matter.

It may go up, or it may go down. However, as long as you have a diversified portfolio and one that you can keep track of easily, investing in your future should be something you take time with but also take pride in.

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