As featured in Forbes Councils.
The demand for AI isn’t coming—it’s already here. The same is true about the demand for capital for renewable energy, an essential partner to the fossil fuels that largely power the technology’s data centers.
This boom in innovation and the resources required to back it are opening up investment opportunities that have experts talking.
Closing The Technological Gap
As the adoption of artificial intelligence becomes more widespread, the electricity required to run it has increased. The International Energy Agency expects that the demand for electricity at data centers will double in the next five years, leaving many to wonder how our current power grid will support this rapid expansion.
While MIT Technology Review anticipates the demand will largely be met by the high-emission fuel sources of today (think coal and natural gas), they also say renewable energy sources like wind and solar power will have their moment. This will require an uptick in investments in renewable energy infrastructure.
Therein lies good news: In addition to the rising popularity of moving to greener and cleaner materials for energy generation, the technology maturation and accessibility behind renewable resources have made it cost-competitive—particularly over the last two years. In 2023, 81% of renewable energy added to the global grid were cheaper than their fossil fuel counterparts.
This cost competitiveness is a triumph over historically high interest rates that have held renewable energy companies back. This accessibility is also a vote of confidence for investors, creating promising investment opportunities.
Good Conditions, Greater Possibilities
Private equity investors launched more than 300 new funds to support the environmental, social and governance (ESG) sector between 2019 and 2022, and as external obstacles wither, new funds continue to emerge. Clean energy exchange-traded funds (ETFs) are cropping up to fund the alternative energy sector. Clean energy ETFs are an opportunity to diversify your portfolio while investing directly into a burgeoning industry. According to Morningstar, renewables made up 99% of new generation capacity in the first quarter of 2025, a testament to the undeniable need to meet a gap in technological demand.
Nuclear energy is also seeing record growth thanks to ascending energy consumption. Bloom Energy, a stock held across many ETFs, is just one example of a publicly traded company that has provided investors significant returns through its mission to deliver clean, alternative energy through oxide fuel cell technology.
Whether you invest in ETFs that include support for companies producing energy from renewable sources or for companies creating, developing and installing clean energy tech like fuel cells, investing in these funds offers a chance at stable returns. For instance, First Trust Nasdaq Clean Edge Green Energy—a company who uses the latter strategy—has returned 152% over the last five years.
Financial planners at NerdWallet suggest, due to the relative newness of the clean energy market, investors purchase stocks of different ETFs rather than multiple stocks of one ETF to spread out risk and strengthen your portfolio.
While clean energy ETFs are convenient, there are alternatives like:
- Buying a share of a publicly traded company with strategic goals focused on owning or investing in clean energy
- Investing in a fund or mutual fund that supports multiple clean energy companies
- Investing in specific real estate investment trusts (REITs) or trusts that invest in clean energy infrastructure and properties
- Investing in privately held businesses (PHBs) within the clean energy sector
Each alternative comes with its own benefits and risks, such as higher fees for more control over investment choices (mutual funds) or varying levels of access to performance data and other reports (PHBs).
Across the board, a benefit of investing in renewable energy is directly working to reduce carbon emissions and make the planet healthier as it faces extreme demand for its resources—known as alternative or, for many, passion investing. Rather than relying on political or personal activity to fight climate change, eco-investing means supporting companies putting your money to work in real time.
Powering Your Future
While the geopolitical and other circumstances around renewable energy investing cannot be predicted, the demand for infrastructure investment to power AI will continue to expand. McKinsey estimates renewables have the potential to provide 61% to 67% of 2050 global power mix.
To determine the best investment move for you, consider your current portfolio and what clean energy investment model might work best. Sure, you want to be a part of building out the energy grid, but what option aligns with your future goals?
Ask yourself the following:
- What are my investment goals around renewable energy?
- Am I interested in financing the evolution of a specific kind of renewable energy?
- What is my tolerance for risk when it comes to investing in this industry?
- What are my general expectations as an investor?
If you work to understand your selected investment and its impact, you’re already halfway to a sound decision.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
