Top Clean Energy ETFs in 2022

In November, the two-week long United Nations Framework Climate Conference (COP27) took place. While there were continued concerns about rising emissions, the even bigger concern was that “no real progress was made on raising ambition or cutting fossil fuel emissions since COP26,” according to a United Nations Environment Progress (UNEP) report. Amid the backdrop of a rapidly warming world, Russia-Ukraine crisis and the changing energy market dynamics, a lot needs to be done to make a difference for our future generations. With these pressing concerns, the International Energy Agency (IEA) estimates that clean energy investment would need to be above $4 trillion by 2030 to achieve the Net Zero Emissions by 2050.

Governments across the globe have committed to a cleaner energy future. The U.S. has set a goal to reduce nationwide greenhouse gas emissions by 50-52% in 2030 and reach net-zero emissions in 2050. A report by RMI estimates that more than $500 billion will be spent on climate technology and clean energy in the U.S. over the next ten years, while annual real federal spending on climate and clean energy in the U.S. over the next decade will likely be at least 3.5 times its level in the period from 2009 to 2017 and 15 times its levels in the 90s and early 2000s. The U.S. Department of Energy lists solar, wind, water, biothermal, bioenergy and nuclear as the main clean energy resources.

Here's a look at the top clean energy ETFs in terms of assets under management and year-to-date returns.

The Top Three Clean Energy ETFs by Asset Size

1. iShares Global Clean Energy ETF (ICLN)

Launched in 2008, the iShares Global Clean Energy ETF (ICLN) provides exposure to companies that produce energy from solar, wind and other renewable sources from around the globe. The portfolio of 100 clean energy stocks is spread across 12 nations, with a 41% allocation to the U.S., followed by China, Denmark and Spain at 11.86%, 9.28% and 8.77%, respectively. The ETF has $5.26 billion as assets under management and an expense ratio of 0.40%. The ETF tracks the S&P Global Clean Energy Index, which constitutes companies in global clean energy-related businesses from both developed and emerging markets.

• Enphase Energy, Inc. (ENPH)
• Iberdrola ADR (IBDSF)
• Consolidated Edison, Inc. (ED)
• Vestas Wind Systems AS ADR (VWDRY)
• First Solar, Inc. (FSLR)
• SolarEdge Technologies, Inc. (SEDG)
• Orsted ADR (DNNGY)
• Plug Power, Inc. (PLUG)
• Electrobras
• Adani Green Energy

2. Invesco Solar ETF (TAN)

The Invesco Solar ETF (TAN) is a solar energy focused fund that tracks the MAC Global Solar Energy Index, one of the oldest indexes representing the industry. The index is calculated and administered by S&P Dow Jones. TAN provides exposure to more than 50 companies across geographies with 50% allocation to the U.S., followed by almost 20% to China and the remaining 30% spread between eight nations. With $2.73 billion as assets under management, TAN is the second-largest ETF in the renewable space.

• Enphase Energy, Inc. (ENPH)
• First Solar, Inc. (FSLR)
• SolarEdge Technologies, Inc. (SEDG)
• GCL Technology Holdings Limited (GCPEF)
• Sunrun, Inc. (RUN)
• Xinyi Solar Holdings Ltd
• Shoals Technologies Group, Inc (SHLS)
• Array Technologies, Inc. (ARRY)
• DAQO New Energy Corporation ADR (DQ)
• Hanwha Solutions Corporation

3. First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN)

Launched in 2007, First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN) tracks the Nasdaq Clean Edge Green Energy Index (CELS). CELS primarily consists of companies which are manufacturers, developers, distributors or installers of clean energy technologies. Although a modified market capitalization weighted index, its methodology includes caps to prevent high concentrations among larger alternative energy stocks. With close to $2 billion as assets under management, the ETF is spread across 62 stocks and has an expense ratio of 0.58%.

• Enphase Energy, Inc. (ENPH)
• ON Semiconductor Corporation (ON)
• Albemarle Corporation (ALB)
• Rivian Automotive, Inc. (RIVN)
• Tesla, Inc. (TSLA)
• First Solar, Inc. (FSLR)
• SolarEdge Technologies, Inc. (SEDG)
• Wolfspeed, Inc. (WOLF)
• Lucid Group, Inc. (LCID)
• Brookfield Renewables Partners L.P. (BEP)

The Top Three Clean Energy ETFs by Year-to-Date Returns

1. Invesco Solar ETF (TAN)

TAN is the second-largest ETF in terms of assets under management and has focus on solar among other clean energy sources. Solar is now the cheapest source of new utility-scale electricity capacity in the U.S. and was dubbed as the ‘King of Electricity’ by IEA in its 2020 World Energy Outlook Report. TAN has delivered 7.71% year-to-date returns.

2. SPDR S&P Kensho Clean Power ETF (CNRG)

The SPDR S&P Kensho Clean Power ETF (CNRG) tracks the S&P Kensho Clean Power Index, which is a constituent of companies involved in advances in clean technology and clean energy. The fund has 82% exposure to the U.S., with a 5% exposure towards Canada, China and Brazil, respectively. The fund was launched in October 2018. It currently has $357.6 million as assets under management and an expense ratio of 0.45%. Its year-to-date returns are 4.47%.

• First Solar, Inc. (FSLR)
• Array Technologies, Inc. (ARRY)
• Shoals Technologies Group, Inc (SHLS)
• Enphase Energy, Inc. (ENPH)
• Constellation Energy Corporation (CEG)
• The AES Corporation (AES)
• SunPower Corporation (SPWR)
• ADT, Inc. (ADT)
• Bloom Energy Corporation (BE)
• Cummins, Inc. (CMI)

3. VanEck Uranium Nuclear Energy ETF (NLR)

VanEck Uranium Nuclear Energy ETF (NLR) tracks the MVIS Global Uranium & Nuclear Energy Index, which primarily consists of companies across the uranium and nuclear energy industry, including uranium mining, production of electricity and suppliers, and service providers. In terms of country-wise exposure, U.S. tops with 50% exposure followed by Canada, Finland, France and South Korea. NLR was launched in 2007 and currently has $57.7 millions with an expense ratio of 0.60%. Its year-to-date returns stand at 2.81%.

• Constellation Energy Corporation (CEG)
• Pacific Gas & Electric Company (PCG)
• Dominion Energy, Inc. (D)
• Public Service Enterprise Group, Inc. (PEG)
• Fortum Oyj ADR (FOJCY)
• Entergy Corporation (ETR)
• Électricité de France S.A
• Bwx Technologies, Inc. (BWXT)
• Cameco Corporation (CCJ)
• PNM Resources, Inc. (PNM)

Disclaimer: The author has no position in any stocks mentioned. Investors should consider the above information not as a de facto recommendation, but as an idea for further consideration. The report has been carefully prepared, and any exclusions or errors in it are totally unintentional. ETF data and YTD returns based on factsheets and website information as on November 25, 2022.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

ICLN TAN QCLN CNRG NLR ENPH IBDSF ED VWDRY FSLR SEDG DNNGY PLUG GCPEF RUN SHLS DQ ON ALB RIVN TSLA WOLF LCID BEP ADT CMI D

Other Topics

Energy Renewable Energy Stocks