Best Alternative Energy ETFs

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Contributor, Benzinga
July 21, 2023

Invest in the top alternative energy ETFs on advanced trading platforms like Interactive Brokers.

As the world continues to transition towards clean energy, investments in alternative energy exchange-traded funds (ETFs) are becoming more attractive. Governments are setting targets to reduce greenhouse gas emissions, and businesses are investing more heavily in this area.

The shift toward cleaner energy amid a rise in concern about climate change is creating a number of investment opportunities. As a result, alternative energy ETFs can be a great way to get involved.

7 Best Alternative Energy ETFs

Several strong reasons may make you interested in alternative energy ETFs. Below are some of the best alternative energy ETFs to invest in.

1. iShares Global Clean Energy ETF (NASDAQ: ICLN) 

The iShares Global Clean Energy ETF is one of the most popular energy ETFs, with over $4 billion in assets under management. The ETF tracks the S&P Global Clean Energy Index and includes businesses such as First Solar, Enphase Energy and SolarEdge Technologies.

These companies focus on the development, production and distribution of renewable energy, offering potential in the sector. The ETF’s combination of value and growth stocks provides a reasonable blend of risk and reward. 

The ETF focuses on global companies, with just a 45% weighting to U.S. stocks. This strategy spreads its geographical risk across multiple countries.

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

The SDPR S&P Kensho Clean Power ETF focuses on alternative energy stocks across developed markets. Investments include Eos Energy Enterprises, Generac Holdings and Tesla. 

The ETF aligns with the S&P Kensho Clean Power Index, which tracks companies looking to drive innovation across the renewable energy field, offering significant potential in the long run.

As a result, technology makes up the largest sector among its investments, with 340 million total assets under management (AUM).

3. Invesco Solar ETF (NYSEARCA: TAN) 

Despite Invesco Solar ETFs' poor performance so far this year, the ETF has been a top performer over the last five years, boasting over 170% return over the previous five years. Its recent declines could offer huge potential over the coming years.

This ETF holds exposure to several companies across the solar energy industry, including First Solar, GCL Technology Holdings and Sunrun. 

Its investments include mid-cap growth stocks, with a strong weighting to U.S. stocks. Given the demand for renewable energy, Invesco Solar ETF could be attractive over the long run.

4. First Trust NASDAQ Clean Edge Green Energy Index (NASDAQ: QCLN) 

This diversified ETF tracks the NASDAQ Clean Edge Green Energy Index, which holds a number of investments involved in the development and production of alternative energy. 

The ETF is heavily weighted to U.S. stocks, including investments such as Tesla, Enphase Energy and Albemarle Corp. Its strong track record has seen the ETF outperform the S&P 500 over the past five years, highlighting its returns.

The fund currently holds 1.56 billion in total assets and has a net expense ratio of 0.58%.

5. ALPS Clean Energy ETF (NYSEARCA: ACES) 

The ALPS Clean Energy ETF is a diversified ETF spread across a wide range of clean energy firms. 

Rivian Automotive, Plug Power and Albemarle Corp. are just a few of its top holdings that focus on the production and manufacturing process of clean technology. 

The ETF currently holds $487 million in AUM has an expense ratio of 0.55%. The ETF has fallen significantly since its highs shown in 2020, suggesting it still has a lot of room to build back up to these heights, especially as the market continues to grow in popularity.

6. Invesco WilderHill Clean Energy ETF (NYSEARCA: PBW)

Invesco WilderHill Clean Energy ETF is an alternative energy ETF that helps investors build exposure to strong performers across the sector, including Joby Aviation, Enovix and Xpeng.

The ETF currently holds $706 million in total assets, although its net expense ratio of 0.62% is much higher than its counterparts on this list.

7. First Trust Global Wind Energy ETF (NYSEARCA: FAN)

The First Trust Global Wind Energy ETF is invested in the development of wind energy. The $257 million fund focuses on international businesses, such as Orsted, EDP Renovaveis and Vestas Wind Systems.

Investment in this fund will depend on just how bullish you are toward wind turbines and the potential in this sector.

What is an Alternative Energy ETF?

An alternative energy ETF invests in companies focused on the development of alternative energy.

The world’s climate has been a growing worldwide concern, and alternative energy sources such as solar, wind and hydropower are becoming more popular.

As a result of increasing demand, investment opportunities across these ETFs have been deemed attractive among investors.

Why Invest in Alternative Energy ETFs?

There are many reasons to invest in ETFs because the growth of this market is compelling as it continues to expand rapidly. The market is driven by concerns about climate change, government mandates and improvements in renewable energy.

These ETFs can offer the potential for strong returns over the long term, which could outpace the S&P 500.

If you have a fondness for sustainable investing, when you buy these types of ETFs, you contribute to social and environmental projects that are sustainable and potentially beneficial to the climate over the long term.

Where to Invest in Alternative Energy ETFs

Here is a comparison of some of the best brokerages to buy alternative energy ETFs.

Renewable Energy Here to Stay

Alternative energy, to many, is the future. The market continues to grow rapidly as costs fall, supply increases and technology advances. Investment and mandates from the government to transition to a net-zero economy in the future also buoy these companies.

Alternative energy ETFs are the best way for investors to get involved in the rapid transition and grow their returns. These investments can create a win-win situation for both parties, as renewable energy looks like it is here to stay.

Frequently Asked Questions 


What are the best alternative energy stocks to buy?


There is no outright best alternative energy stock to buy, but some of the best over recent years include NextEra Energy, First Solar and SolarEdge Technologies.


What is the best clean energy ETF?


The best clean energy ETFs include iShares Global Clean Energy ETF and Invesco Solar ETF, which have produced strong returns over the last five years.


What is the largest renewable energy ETF?


The largest renewable energy ETF is the iShares Global Clean Energy ETF, with over $4 billion in total assets.

Best Alternative Energy ETF Methodology

These ETFs were chosen based on some of the strongest performers over the last five years, as well as some of the top holdings and potential over the long term.

Sam Boughedda, Stock Market Analyst

About Sam Boughedda, Stock Market Analyst

He is an expert in the following spaces: stock market news writing, analysis, and research.