How to invest in or trade wind energy stocks

What you need to know about the wind power industry

The wind power industry is an exciting prospect for many investors and traders given the ongoing shift from fossil fuels to renewable energy. As the world becomes more ecologically aware, it is likely that wind power stocks will become a major fixture in many investors' share portfolios.

Wind power is expected to play a key role in the global shift toward net-zero emissions by 2050, led by advanced economies. A record amount of wind power was installed across the world in 2022 alone.

Looking ahead, more than 100 gigawatts of wind capacity is expected to be added each year for the rest of the decade, according to BloombergNEF researchers, thanks to China's huge decarbonisation targets and a rapidly growing offshore wind sector.

How to invest in or trade wind energy stocks

There are two main ways for you to take a position on the wind power industry: through investing in shares and taking ownership of them directly, or by trading financial derivatives such as spread bets and CFDs.

To become a wind energy stocks shareholder with voting rights, you’d use our share dealing platform. By investing in physical shares, you can profit from selling at an increased price, as well as any dividends that a company might pay to its investors. But if you sell your shares at a price that’s lower than the original buy price, you’d incur a loss.

While the potential for profits is technically unlimited as stock prices can keep rising, your possible losses are capped at your initial outlay – the full amount of your investment (excluding any additional fees).

Alternatively, if you’d prefer to speculate on the price of wind power stocks without having to own the underlying shares, you can do so through spread betting and CFD trading. You’d use leverage, which allows you to get full exposure while only committing an initial deposit, called margin. But bear in mind that leverage magnifies both possible profits and potential losses to the full value of your trade, and you can lose more than your initial deposit. This makes it important to manage your risk properly.

Learn more about the impacts of leverage on your trading

You’d make a profit or loss based on the degree to which your prediction of an asset’s future price movement is correct. If you go short, you’ll need the price of an asset to drop for that trade to be profitable and if you go long, you’ll need the price to rise.

Get started with investing in or trading wind energy stocks

What are the types of wind stock investments?

There are a variety of stocks that provide exposure to wind energy services you can invest in or trade. These include:

• Wind energy companies, which distribute the energy produced by wind farms
• Wind farm companies, which have large offshore and onshore wind farms that are capable of producing large amounts of energy
• Wind turbine companies, which manufacture, install and service wind turbines

Best wind power stocks to watch

1. General Electric (GE) Wind Energy
2. Engie
3. Vestas Wind Systems
4. Ørsted
5. Siemens Energy
6. First Trust Global Wind Energy ETF

These wind power stocks are ranked by market capitalisation, excluding the ETF which is listed for investors seeking a more diversified option.

Engie SA

While ENGIE SA has interests across most energy sectors, the French business is arguably best known for its commitment to the energy transition. It owns and operates large-scale wind energy projects around the world, including 22 projects in North America with a production capacity of 3,275 MW.

And the aim is to develop 80 GW of renewable energy capacities by 2030, involving multiple onshore and offshore wind projects.

In full-year 2023 results, the business highlighted the high pace in renewables with 3.9GW of additional capacity installed in the year bringing the total to 41.4GW. EBIT excluding nuclear rose by 18% year-over-year to €9.5 billion, driven by GEMS and renewables, while growth capex increased by 48% to €8.1 billion. And Engie paid a dividend of €1.43 per share, representing a payout ratio of 65%.

Excitingly, the company recently launched Ocean Winds in the US, one of the largest ‘pure’ offshore wind development enterprises in the world.

Market Cap: $41.3 billion

General Electric Vernova

A spin-off from General Electric, GE Vernova LLC recently launched its IPO as an independent company on the New York Stock Exchange under the ticker GEV. CEO Scott Strazik considers that its ‘Power, Wind, and Electrification segments provide essential products and services to the electric power industry as we work to meet the growing power demands of economies.’

With a mission to decarbonise the world, the company retains 80,000 employees across more than 100 countries, with many of the world’s governments and utilities providers relying on its installed base to generate and store electricity.

For context, Vernova boasts over 7,000 wind turbines, 55,000 wind turbines, and cutting-edge electrification technology — all generating circa 30% of the planet’s electricity. And it’s planning to invest $1 billion per year into further research and development.

Market Cap: $36.9 billion

Vestas Wind Systems

Vestas Wind Systems has consistently been the top global supplier of wind turbines since 2015. At present, it boasts a Vestas installed base of 177GW of wind power, with 152GW capacity under service, and a worldwide installed wind capacity of some 906GW.

The company is based in Denmark, with factories in a number of locations including the US, China and Spain. Vestas offers a range of products and services in the wind energy sector, including turbine installation, turbine maintenance, and knowledge and resource sharing to help with the optimisation of different wind farm locations.

Vestas trades under the VWS ticker on the Nasdaq Copenhagen Stock Exchange. Its share price is up 48% over the past five years, though has fallen some distance since January 2021.

With growing interest in the wind energy sector and a shift to renewable energy, Vestas Wind Systems could be an important company to watch in the coming years.

Market Cap: $26 billion

Ørsted

Ørsted, the second largest energy company in Denmark, owns two of the largest offshore wind farms in the world: London Array and the Walney Wind Farm, both in the UK.

Formerly known as DONG Energy, this wind energy company adopted its current name in 2017. It began trading on the Nasdaq Copehnhagen Stock Exchange under its current ticker, 'ORSTED', in June 2016.

Ørsted shares have fallen by 21% over the past five years, as the world’s largest offshore wind company announced it had abandoned two windfarm projects in the US at a cost of more than £3 billion.

The company is committed to green energy, with a target of 98% reduction in its CO2 emissions by 2025.

Market Cap: $23.3 billion

Siemens Energy AG

Siemens Energy was formed in 2020 by way of a spin-off of the former Gas and Power division of Siemens Group. Trading of Siemens Energy shares on the Frankfurt Stock Exchange began on 28 September that year.

One of Siemens Energy’s main business arm is renewable energy. Wind power is one of the main pillars of the company’s renewable energy business, falling under a subsidiary called Siemens Gamesa.

Siemens Gamesa controls a market-leading position in key wind energy markets across much of the world and is well-known for sustainability pledges — including its ambition to build 100% recyclable turbines by 2040. Siemens Energy shares have fallen by 18% over the past year.

Market Cap: $15 billion

First Trust Global Wind Energy ETF

First Trust Global Wind Energy ETF is an exchange-traded fund which invests in wind energy stocks. The ETF invests 60% of the fund in companies that get at least 50% of their revenue from wind-related activities, and the remaining 40% into diversified companies involved in some aspect of the wind energy supply chain.

As of April 2024, it held 56 wind energy stocks. Top holdings include Orsted and Vestas Wind Systems, thought here is also exposure to smaller businesses with greater growth potential.

The ETF's diversified holdings across the wind energy business makes it a potential choice for investors looking for exposure to the sector without the increased risks and rewards of picking individual stocks.

What to bear in mind before trading wind stocks

As with any trading opportunity, there are inherent risks associated with trading wind stocks. So, it’s vital that you’ve got an effective risk management strategy in place before taking a position on wind stocks.

Stops and limits, for example, can be ways for you to limit your exposure to risk, by cutting losses and locking in profits. Guaranteed stops will always close a trade when the price falls to a certain level, but they’ll incur a premium if triggered. Limits on the other hand, will cap profits at a requested level, which means that there’s less risk of a winning opportunity turning into a losing trade.

Learn more about stops and limits

The outlook for wind energy stocks

Wind energy is a relatively new sector when compared to more entrenched industries such as oil and nuclear. It relies on constant development and consumer interest to continue its largely upward trajectory.

With increased public awareness of climate change and the environmental impacts of fossil fuels, it’s likely that many investors and traders will seek to add wind stocks to their portfolio in the coming years.