Canadian Renewable Energy Stocks Might be Inconsistent for a While – But Eventually the Energy Transition Scale Will Tip Permanently

ByDan Kent Published On:

Key takeaways

Global Decarbonization Drives Demand: The push for net-zero emissions and government incentives worldwide are fueling massive growth in the renewable energy sector, positioning companies like Brookfield Renewable and Canadian Solar as long-term winners.

Diversification Offers Stability: Renewable energy stocks provide a balanced mix of predictable cash flow and high-growth opportunities.

Innovation is Transforming Energy: Advances in solar technology, energy storage, and offshore wind efficiency are unlocking new growth avenues, making this sector a critical part of the global energy transition.

3 stocks I like better than the ones on this list.

There is zero doubt the whole world is shifting to greener and more sustainable energy sources. Fossil fuels might soon be outdated, and the world stands to gain big from using renewable energy.

How long will it take before Canadian renewable companies dominate the energy scene? It’s difficult to say. But if I were to guess, not long at all. That’s why you need to have a look at these Canadian stocks before it’s too late.

Yes, a Republican Party in power likely means scaled back efforts to transition to renewable energy, but in my opinion it is simply delaying the inevitable. As the technology continues to improve, costs will come down, lifespans of the assets will increase, and ultimately we will generate cleaner, more efficient energy for fractions of the cost.

If you’re reading this post, it is likely you agree with me. So, let’s take a closer look at three renewable energy companies we think are the cream of the crop here in Canada.

What are the best Canadian renewable energy stocks?

Leading global solar technology provider

Canadian Solar Inc. (NASDAQ:CSIQ)

Canadian Solar designs, manufactures, and sells solar modules, battery storage solutions, and other solar energy technologies. While headquartered in Ontario, the company operates globally, with projects across North America, Europe, and Asia. Canadian Solar also develops and manages utility-scale solar farms, contributing to the expansion of renewable energy infrastructure worldwide.

P/E: 24.3

5 Yr Revenue Growth: 13.4%

5 Yr Earnings Growth: -28.2%

5 Yr Dividend Growth: -%

Yield: -%

  • Global leader in solar panel manufacturing with a strong market presence.
  • Diversified operations across manufacturing, project development, and energy storage.
  • Positioned to benefit from the rapid adoption of solar energy and global decarbonization efforts.
  • Long-term growth driven by utility-scale solar projects and battery storage solutions.
  • Expanding footprint in emerging markets like Southeast Asia and Latin America.
  • Attractive valuation relative to peers in the renewable energy space.
  • Solar Energy Demand: Rising global investment in renewable energy supports Canadian Solar’s growth.
  • Battery Storage Expansion: Increasing adoption of energy storage solutions drives future revenue streams.
  • Government Incentives: Policies supporting solar energy development, especially in the U.S. and Europe, are key growth drivers.
  • Cost Reductions: Ongoing innovation in solar technology improves efficiency and reduces costs, boosting margins.
  • Commodity Prices: Volatility in raw material costs, like polysilicon, can impact profitability.
  • Competition: Intense competition in the solar industry could pressure pricing and margins.
  • Trade Policies: Tariffs or geopolitical tensions could disrupt supply chains and market access.
  • Currency Risks: Global operations expose Canadian Solar to foreign exchange fluctuations.

Developer of offshore wind and renewable energy projects

Northland Power (TSE:NPI)

Northland Power is a Canadian renewable energy company specializing in offshore wind, onshore wind, solar, and natural gas power projects. It owns and operates facilities in Canada, Europe, Asia, and Latin America. The company is a pioneer in offshore wind energy, with large-scale projects that are critical to meeting global renewable energy goals.

P/E: 19.1

5 Yr Revenue Growth: 7.2%

5 Yr Earnings Growth: -9.3%

5 Yr Dividend Growth: -%

Yield: 6.1%

  • Strong expertise in offshore wind energy, a rapidly growing sector.
  • Geographic diversification reduces risk, with assets across multiple continents.
  • Long-term contracts provide stable and predictable cash flow.
  • Focus on high-growth markets, such as Taiwan and Japan, for offshore wind expansion.
  • Attractive dividend yield supported by steady operating cash flow.
  • Investments in new projects and acquisitions fuel growth potential.
  • Offshore Wind Growth: The increasing adoption of offshore wind energy is a major tailwind for Northland Power.
  • Global Expansion: New projects in Asia and Latin America diversify revenue sources.
  • Carbon Reduction Targets: Rising government commitments to net-zero emissions support Northland’s growth strategy.
  • Technology Advancements: Innovations in offshore wind turbines and infrastructure reduce costs and improve efficiency.
  • Project Delays: Large-scale offshore wind projects face construction and regulatory risks.
  • Regulatory Changes: Changes in government policies or subsidies could impact profitability.
  • Dependence on Debt Financing: Capital-intensive projects increase exposure to rising interest rates.
  • Weather Dependency: Renewable energy production can fluctuate due to variable weather conditions.

Global leader in renewable energy assets

Brookfield Renewable Partners (TSE:BEP.UN)

Brookfield Renewable Partners owns and operates a diversified portfolio of renewable energy assets, including hydroelectric, wind, solar, and energy storage facilities. With over 25 gigawatts of capacity across North America, South America, Europe, and Asia, Brookfield is one of the largest pure-play renewable energy companies in the world.

P/E: –

5 Yr Revenue Growth: 8.2%

5 Yr Earnings Growth: -%

5 Yr Dividend Growth: 0.7%

Yield: 6.5%

  • Global footprint with exposure to multiple renewable energy technologies.
  • Long-term contracts provide stable cash flow, ideal for income-focused investors.
  • Proven history of disciplined acquisitions to drive growth.
  • Positioned to benefit from increasing global investment in decarbonization and clean energy.
  • Strong parent company (Brookfield Asset Management) provides financial and operational support.
  • Attractive dividend yield with a track record of consistent growth.
  • Hydroelectric Leadership: Brookfield’s significant hydroelectric assets remain a stable revenue driver.
  • Solar and Wind Expansion: Investments in solar and wind energy drive future growth.
  • Decarbonization Push: Global net-zero goals create a long-term runway for renewable energy investments.
  • Energy Storage Growth: Increased investment in battery storage solutions diversifies revenue streams.
  • Rising Interest Rates: Higher borrowing costs could impact returns on new projects.
  • Currency Exposure: Operating globally makes Brookfield susceptible to exchange rate volatility.
  • Regulatory Risk: Changes in clean energy subsidies or tariffs could affect profitability.
  • Competition: Increasing competition in renewable energy may compress margins.

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Global leader in renewable energy assets

Polaris Infrastructure (TSE:PIF)

Polaris

Polaris Infrastructure operates renewable energy projects, primarily focusing on geothermal power generation. Its flagship asset is the San Jacinto-Tizate geothermal plant in Nicaragua. The company also owns hydroelectric projects in Peru, providing a diversified renewable energy portfolio across Latin America.

P/E: 59.4

5 Yr Revenue Growth: 1.9%

5 Yr Earnings Growth: -30.5%

5 Yr Dividend Growth: 0.6%

Yield: 7.1%

  • Strong cash flow from geothermal operations: Long-term power purchase agreements (PPAs) provide predictable revenue.
  • Diversified renewable asset base: Assets in both geothermal and hydroelectric energy spread risk across regions and power types.
  • Stable demand for renewable energy: Polaris benefits from increasing global demand for clean, sustainable energy sources.
  • High margins in geothermal energy: The geothermal plant has low operational costs, supporting strong profitability.
  • Dividend income: Polaris offers a compelling yield, making it attractive for income-focused investors.
  • Potential for project expansion: Polaris continues to explore opportunities to expand its capacity through development projects and acquisitions.
  • Regulatory Support for Renewables: Governments are pushing for more clean energy projects, potentially creating favorable conditions for Polaris.
  • Global Energy Prices: Energy prices impact the company’s revenues, especially in areas without fixed-rate PPAs.
  • Geothermal Development Innovations: Advances in geothermal technology could unlock new opportunities for growth and cost-efficiency.
  • Currency Exchange Rates: With assets in Latin America, currency fluctuations can impact reported earnings and cash flow.
  • Operational Dependence on Nicaragua: A significant portion of the company’s revenue comes from one geothermal plant, making it vulnerable to regional risks.
  • Political and Regulatory Risk: Operating in Latin America exposes Polaris to changes in local government policies and regulations.
  • Project Development Delays: Any delays or cost overruns in new projects could hinder growth prospects.
  • Exchange Rate Volatility: Revenue generated in foreign currencies can be negatively affected by adverse currency movements.

The renewable energy vs fossil fuel debate is a heated one

The effects of fossil fuels on the climate and climate change in general is an extremely touchy subject, and arguments from both sides tend to pack a sizable punch in terms of support. Plus, much like Canadian gold stocks, fossil fuel companies rely heavily on a commodity and can be quite cyclical.

But all while this is happening, green energy companies here in Canada are quietly amassing large asset bases and production capacities. This could make green energy stocks and ETFs an investment gold mine, especially with the aggressive marketing when it comes to ESG investing (Environmental, Social, and Governance).

Your best bet as an investor is to funnel out the noise and instead take a position in a strong TSX listed renewable energy stock. There aren’t too many, but there are certainly a few that are high quality.

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What exactly do Canadian renewable energy companies do?

Renewable energy is defined as such:

“energy from natural resources that can be naturally replenished within a human lifespan.” – Natural Resources Canada

Renewable energy companies provide sources of power that are often considered cleaner and more sustainable including but not limited to:

  • Hydroelectric
  • Wind
  • Solar
  • Biomass
  • Hydrogen

Renewable energy provides more than 20% of Canada’s energy supply, with hydroelectricity accounting for over half of that.

A common misconception among Canadian green energy companies

Companies in the renewable energy sector aren’t the new kids on the block, despite many thinking so.

In fact, they have been around for quite some time now, and as a result, clean energy stocks provide stable and reliable cash flows, much like regulated utility giants Fortis, Canadian Utilities and Emera.

The end result?

The best renewable energy stocks are able to provide strong dividends to go along with upside potential in an ever-growing industry.

As requested by many readers, we’ve also added a solar energy company to the list in this most recent update. Solar stocks in Canada have been around for a while, but have remained relatively unknown due to high costs, and investors are starting to gain interest.

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