Investing in wind energy stocks – a growing industry

Investing in wind energy stocks – a growing industry

For more than 2,000 years, humans have been harnessing the power of the wind. Windmills are still widely used for grinding grains and seeds and were even used historically for drainage in the Netherlands and some parts of Germany.

Most traditional mills have been replaced by modern technology, but the wind still plays a crucial role in our lives. Thanks to technological advances, producing energy is now possible thanks to wind turbines. In Switzerland, there are a growing number of wind farms.

There has been an increase in installed wind turbines worldwide. That’s why in this article we want to delve deeper into this promising topic and show you how you can invest in wind energy stocks, and which companies are at the forefront of this growing industry. Let’s get started!

Why should you invest in wind energy stocks?

The market for generating electricity using wind energy has grown steadily in recent years. More and more governments have enacted laws to switch to renewable energies as a building block for achieving the desired climate targets.

Moreover, individuals have a better understanding of energy production than ever before and are demanding sustainable alternatives. We can see this simply by evaluating the most important topics for Inyova impact investors – renewable energy is by far the most popular topic for our community, with 93% of all impact investors choosing to focus on this important area when creating their personalised investment strategy. In addition, the efficiency of wind turbines is improving rapidly. Whilst the maximum power capacity of a wind turbine was “only” 7,000 kW in 2015, by 2020 it was 12,000 kW and the maximum rotor diameter has also increased – coming a long way from a power capacity of 30 kW in 1980. This makes the production of green energy more and more effective.

Watch out for sector-specific investments

All of these are good reasons to invest in wind energy stocks, but they are based on what we’ve already experienced. No one knows what the future holds and whether wind energy will continue to be so important, or whether it will be replaced by new technology.

We saw this with the era of CDs. Sony developed the MiniDisc, which succeeded the classic CD, but then came along the MP3 player.

Investing in such a specific sector, in which you rely exclusively on wind energy companies, also has potential risks that you must be aware of. As with any investment, there’s always a possibility of losing some or all of the money you’ve invested.

Diversification is therefore an important strategy when it comes to creating a portfolio. At Inyova, all portfolios contain 30 to 40 stocks compiled from different industries, countries, and other factors. This minimises the impact an individual share has on the total value of your portfolio.

Wind energy stocks that may be of interest in 2022

We’d now like to introduce you to three companies whose wind energy stocks you could invest in. All three can be included in your diversified Inyova portfolio. Please keep in mind that this is not investing advice.

Ørsted – Wind energy stocks (Denmark)

Ørsted is one of the largest companies in the wind energy industry. It produces and operates wind turbines for onshore and offshore use and also operates solar farms as well as plants for producing bioenergy and green hydrogen.

In 2020, Ørsted was voted the most sustainable company in the world. One of the reasons for this is that the firm has reduced CO2 emissions by 80% since 2006. It is also the only energy company in the world with a scientifically based net-zero emission target that has been confirmed by the Science Based Targets Initiative. 

This is an incredible change for a company that used to be responsible for one third of Denmark’s CO2 emissions. Formerly called Dong (Danish Oil and Natural Gas), Ørsted’s core business was the production of energy from oil and gas.

In 2017, the oil and gas business was finally abandoned, and the focus was placed on offshore wind farms. Investors, as well as Ørsted itself, recognise that in the long term, wind energy generation will become a serious competitor to the fossil fuel industry.

But it’s not just the financial and future-proof technology that drives the business. CEO Henrik Poulsen has a vision of supplying the whole world with green energy – and Ørsted’s activities give reason to consider this as a serious goal.

With a 25% market share in the offshore wind industry, Ørsted is an interesting choice if you want to invest in offshore wind farm stocks.

Here’s a summary of the most important information and figures: 

  • As of 2022, Ørsted is 50% owned by the Danish government
  • Under the former name Dong, the company was previously an oil and gas giant
  • 25% market share in offshore wind farms
  • Listed on the Nasdaq Copenhagen stock exchange

Nordex – Wind energy stocks (Germany)

Nordex is one of the pioneers in the mass production of onshore wind turbines. The German company has been developing, producing, and marketing wind turbines around the world since 1985.

In 2021, Nordex achieved the goal of converting 100% of its production to renewable energy. The company has installed wind turbines in more than 40 countries and is one of the 10 largest manufacturers in the world.

In 2020, the wind turbines produced by Nordex saved around 60 million tonnes of CO2 emissions. For comparison, this is about 10x as much as the total greenhouse gases of the Swiss agricultural sector in 2021.

But not everything has been smooth sailing. In 2021, there was an active court case in Norway in which Nordex was accused by local Sámi reindeer herders of having disrupted the reindeer migration routes by building the Øyfjellet wind farm.

In addition, producing wind turbines generates hazardous waste, and little was previously known about Nordex’s disposal of this hazardous waste. Thanks to stricter transparency requirements, the company must now identify the types of hazardous substances used and must find alternatives. The 2020 annual report mentioned the replacement of 12 specific substances.

Here are the key facts summarised:

  • One of the top 10 largest companies for the production of wind turbines
  • 100% of production is generated by renewable energy sources
  • Increasing transparency and alternatives in the use of hazardous substances

Vestas – Wind stocks (Denmark)

Vestas is one of the best known companies in the wind energy industry. It was founded as a family business in Denmark at the end of World War II in 1945, and has been a technological pioneer in generating electricity using wind energy since the 1970s. These wind energy stocks can therefore be supported with a clear conscience.

Vestas’ facilities are among the most efficient commercially available models and frequently replicated in new regions. In 2021, Vestas’ wind turbines supplied wind power to more than 86 countries.

It was also the first company in the world to install plants with a total output of 100 GW. In perfect conditions, this would be sufficient to feed 12.5% of the total energy consumption into the EU. As of mid-2022, Vestas remains the market leader.

However, if you’re considering investing in Vestas’ wind turbine shares, you should also be aware of the controversy the company has faced. Since 2012, it has been involved in a wind farm project in Kenya, which allegedly obtained land illegally from local communities.

In 2021, the responsible authorities were blamed, but it was also mentioned that the companies involved didn’t comply with their duty of care. Talks are underway with the communities concerned to mitigate negative impacts.

SF6 gas (sulphur hexafluoride) is generally used in the construction of wind turbines. This gas is 23,500 times more potent than CO2 and there are frequent leaks. Vestas is actively researching alternatives.

Here’s a brief overview of the most important facts:

  • Market leader in wind turbines
  • Systems with a total output of more than 100 GW
  • Researching alternatives for SF6 gas

Invest in wind energy with Inyova

If you want to invest sustainably and are interested in wind power stocks, Inyova is here to help. Impact investing involves selecting the topics or causes that are important to you, such as renewable energy, gender equality, and human rights. Inyova will then put together a portfolio of companies that embody these values.

This way, you can make a positive contribution with your investment and at the same time invest your money in the stock market. Here at Inyova, we value broad diversification, which means that your Inyova portfolio will consist of approximately 30 – 40 stocks from different industries, countries, and focuses.

By diversifying your portfolio, you avoid the risk that a solely industry-specific investment will not materialise, or that an individual company will have an extreme impact on the value of your assets. As seen over the past hundred years, a diversified portfolio can generate an annual return of about 6-7%.

Investing with Inyova, and therefore contributing to a more sustainable future, is easy.

Create your free Impact Investing Strategy now.

Wind energy stocks: Does wind have a bright future?

Thanks to technological advances, increased consumer awareness of green energy, and governments that are starting to think long-term, wind power generation has grown steadily in recent years.

If you want to invest in wind turbine stocks, there are a number of companies available to you. Remember: if you invest your money in a single wind energy stock and your chosen company doesn’t perform as you had hoped, you put yourself at risk of losing all your money. If you invest with Inyova, you’ll invest in a broadly diversified portfolio of companies from different countries and industries.

With any investment, there’s always the risk of losing money, but past evidence shows that a diversified portfolio is much more likely to cushion market fluctuations.

How to invest in wind power stocks with Inyova in 3 easy steps

Creating your portfolio and corresponding strategy with Inyova is fun, fast, and easy – you can start with as little as CHF 100 for pillar 3a investments or regular investments. Here’s how:

  1. Create a free Inyova account
  2. Choose the impact topic “renewable energies” and other topics that are important to you
  3. Answer the questions and allow us to create your strategy.

It’s that simple. You’re now ready to make an important contribution with your investment. Have fun investing!

Disclaimer: The past performance of financial markets and instruments is never an indicator of future performance. The statements or information contained in this document do not constitute a recommendation, offer, invitation to buy or sell securities or financial instruments. Inyova AG accepts no liability whatsoever for the reliability and completeness of the information contained in this article. Liability claims against Inyova AG are published in this document are excluded. In addition, the statements contained in this document reflect an estimate at the time of publication and are subject to change. References and links to websites of third parties are outside the area of responsibility of Inyova AG. Any responsibility for such websites is disclaimed.
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