Renewable energy grabbing market share from traditional energy.
Last year, fossil fuels—including natural gas, coal, and petroleum—made up 61% of U.S. electricity generation. Nuclear brought another 19% to that generation. And renewables—wind, solar, hydro, and geothermal power—tacked on the remaining 20%, according to the U.S. Energy Information Administration (EIA). The EIA expects renewables to increase its percentage of the total in the coming year. It expects renewables to account for 22% of U.S. electricity generation in 2022 and 24% in 2023.
Why it’s important
With growing concerns about climate change, the U.S. government and the private sector have been investing in the growth of renewable energies. President Joe Biden signed the Inflation Reduction Act earlier this week. The act was passed by President Biden earlier this week. The bill includes a $369-billion investment in climate and energy policies, $64 billion to extend a policy under the Affordable Care Act in order to reduce health insurance costs, and a 15% corporate minimum tax aimed at companies that earn more than $1 billion a year.
The billions in climate and energy investment will boost renewable energy infrastructure in manufacturing, like solar panels and wind turbines, and include tax credits for electric vehicles and measures to make homes more energy efficient. Democrats say the bill will lower greenhouse gas emissions by 40%.
The market has climbed nearly 10% since the news of the legislation was announced. Analysts say the reason for the climb was the many positives attached to the bill. The green energy sector is expected to get a big lift from the bill, says Stansberry Research analyst Matt McCall.
Majority of the growth is expected to come from new wind and solar projects, and the renewable industry is expected to get another boost as older coal and nuclear plants are planning to retire.
The recently passed Inflation Reduction Act will continue to funnel a lot of cash into the sector, says McCall. Stocks in the solar, wind, and battery-storage industries could see some serious wins from this.