Renewable Energy ETFs Could Be a Stable Play During Distressing Times

Renewable energy or clean energy ETFs that track industries like wind and solar farms are attracting more interest among investors seeking low-risk opportunities during this volatile period.

“There is certainly some increased interest and discussion around uncorrelated yields, and renewables falls into that category,” David Giordano, global head of renewable power at BlackRock Inc, told the Wall Street Journal. “As I’m trying to stock my cupboard with canned goods, we have an awful lot of calls happening.”

ETF investors who are interested in this space have a number of options to choose from. For example, the Invesco Solar ETF (NYSEArca: TAN) provides exposure to the solar sector. The First Trust Global Wind Energy ETF (NYSEArca: FAN) focuses on wind generation. Additionally, something like the iShares Global Clean Energy (ICLN) provides a more diversified play on the clean energy space.

Similar to what happened during the 2008 financial crisis, investors turned to renewable wind and solar farms as a safe-harbor investment with attractive yields. Wind and solar farms have long-term contracts to sell their electrical output to utilities and companies with good credit ratings for long periods, which makes their returns stable and relatively low risk.

“It was a strange day,” Kevin Smith, chief executive of the Americas at Lightsource BP, told the WSJ, projecting that they will close a further $750 million in solar financing this year, including a large solar farm in Colorado. “I’d like to think that there will be more investors from infrastructure funds looking at renewable markets as a safe haven from the volatility.”

Corporations made up 46% of the 20.2 gigawatts of renewable energy added to the U.S. electricity grid last year, with the largest including prominent names like Facebook Inc., Alphabet Inc. unit Google and AT&T Inc.

“No one has yet indicated that they intend to slow their purchase,” Miranda Ballentine, CEO of Renewable Energy Buyers Alliance, told the WSJ.

For more information on the renewables space, visit our renewable energy category.