The clean energy industry and sector-related exchange traded funds have experienced a quick rebound this year as demand for alternative energy sources rise and growth in renewable capacity outpaces that of oil, natural gas and oil combined.
Broad alternative energy ETFs, which include solar energy along with other sub-sector exposures, have been moving. Year-to-date, the Market Vectors Global Alternative Energy ETF (NYSEArca: GEX) increased 13.9%, PowerShares Global Clean Energy Portfolio (NYSEArca: PBD) jumped 15.6% and iShares Global Clean Energy ETF (NYSEArca: ICLN) surged 30.2%.
In 2013, the world added 143 gigawatts of renewable electricity capacity, compared to the 141 gigawatts of new capacity from plants that burn fossil fuels, and the shift into clean energy is accelerating, reports Tom Randall for Bloomberg.
“The electricity system is shifting to clean,” Michael Liebreich, founder of Bloomberg New Energy Finance, said. “Despite the change in oil and gas prices there is going to be a substantial buildout of renewable energy that is likely to be an order of magnitude larger than the buildout of coal and gas.”
According to Bloomberg New Energy Finance, power generation capacity additions in fossil fuels will slowly diminish from a projected 110 gigawatts in 2015 to 64 gigawatts in 2030. Meanwhile, clean energy capacity will steadily rise from an expected 164 gigawatts this year to 279 gigawatts in 2030, with the majority of new capacity coming out of photovoltaic solar panels.
While solar makes up less than 1% of the electricity market today, it will become the largest single source by 2050, according to the International Energy Agency.
Fueling the expansion in alternative energy, costs have come down. For instance, the price of wind and solar power are now cheaper or on par to grid electricity in many areas of the world. In the automobile space, a new Nature Climate Change study from the Stockholm Environment Institute reveals that electric vehicle batteries are becoming cheaper must faster than expected, which has also helped Tesla (NasdaqGS: TSLA) see costs fall 8% a year, reports Noah Smith for Bloomberg. TSLA makes up 9.8% of GEX’s portfolio.
iShares Global Clean Energy ETF
For more information on renewables, visit our clean energy category.
Max Chen contributed to this article.