The war in Iran, which escalated in a matter of weeks, has shown just how complex wars can be. They never go as planned, especially because all parties involved have a say, and one can never predict how the other will act.
While no one doubted that the U.S. and Israel had an advantage over Iran from a military perspective, the conflict has proven difficult because Iran has used tactics to wage war on the global economy as a result of their influence over oil.
The World Will Want Less Reliance on Foreign Oil
If there’s been a weak spot for the U.S. in the war in Iran and broader Middle East conflict, it’s been the world’s reliance on foreign oil, much of which lies in the Middle East.
Once the conflict began, the Islamic Revolutionary Guard Corps (IRGC) essentially halted traffic through the Strait of Hormuz, which borders Iran. The Strait of Hormuz is a 20- to 30-mile-wide body of water through which 20% of the world’s oil flows daily in normal times. After the war broke out, the IRGC threatened to attack ships not approved for passage by Tehran.
This effectively brought activity to a standstill because oil companies didn’t want to risk ships and crews being attacked when passing through. That’s why crude oil has risen above $100 per barrel on several occasions in recent weeks. Furthermore, other energy assets in the Middle East, such as natural gas facilities, have also been damaged and could take years to rebuild.
Energy costs are embedded in so many other areas of the economy that higher prices end up serving as a tax on consumers while raising the cost of doing business. Higher oil prices came at a bad time for the U.S. economy, which has been trying to escape elevated inflation and exacerbated affordability issues since the pandemic.
This should bolster the case for reducing reliance on the global oil supply chain and increasing energy production that can be completely done in the U.S. Renewable clean energy sources, such as solar, wind, and other electrification methods, are an obvious choice.
“Renewables and its associated technologies are now commonly perceived as an energy security tool, no longer only a way to combat pollution and climate change, but a geopolitical asset supported by pragmatism rather than idealism,” Gonzalo Escribano, a senior fellow for energy and climate at the Madrid-based Elcano Royal Institute, told CNBC in an email. “Even among governments and citizens with little concern for environmental issues.”
This shift from ideological to pragmatic support broadens the political coalition backing renewable energy development. When 20% of global oil supply can be disrupted by actions in the Strait of Hormuz, the strategic value of domestic, renewable power generation becomes apparent even to those previously focused solely on cost comparisons with fossil fuels.
Reasons to Buy Renewables
While renewable energy is by no means a new concept, there is still significant runway in the sector. According to the U.S. Energy Information Administration, renewable energy made up about 9% of total primary energy production in 2024. Natural gas and petroleum still accounted for 38% and 35% of production, respectively.
The Trump administration has not emphasized renewable energy and has removed many government incentives for renewables, such as the federal tax credit for electric vehicles. Still, the sector has performed well, primarily because artificial intelligence has driven tremendous demand for power to fuel the massive data centers and other infrastructure needed to support the new groundbreaking technology.
The iShares Global Clean Energy ETF and the Invesco Solar ETF are up roughly 54% and 75%, respectively, over the past year, although both are still down significantly over the past five years. The sector’s performance despite political headwinds demonstrates underlying strength and shows that renewable energy growth no longer depends solely on government subsidies.
The combination of AI power demand and energy security concerns creates a powerful growth driver. Data centers cannot tolerate power interruptions, making reliable baseload electricity essential. While natural gas can provide baseload power, renewable energy paired with battery storage increasingly offers competitive economics without fossil fuel price volatility or supply chain risks.
NextEra Energy Inc. (NEE) is already the world’s largest electric utility holding company with a current market capitalization of $191 billion as of March 30, currently trading around $93. In addition to being a regulated utility company, NextEra has an enviable renewables division.
In 2025, NextEra reported 8.2% earnings-per-share growth. The company anticipates maintaining this growth rate through at least 2032. NextEra also set another company record in backlog growth, adding 13.5 gigawatts last year.
The backlog growth matters because it represents contracted future revenue. Unlike merchant power generators exposed to volatile electricity prices, NextEra secures long-term power purchase agreements for its renewable projects. This creates earnings visibility extending years into the future and reduces business risk.
NextEra’s stock is less volatile than the overall market, with a beta of 0.75. Yet it trades at a slight premium relative to its utility peers due to its growth prospects. The stock’s trailing P/E ratio is over 27 now, and its price/earnings-to-growth ratio is 2.67. The stock is worth the high price of admission due to its long-term revenue visibility and attractive dividend yield of 2.73%.
The regulated utility side provides stable cash flows from Florida Power & Light, while the NextEra Energy Resources division focuses on renewable energy development. This dual business model combines utility stability with renewable energy growth. The utility business provides defensive characteristics and steady growth, while the renewable energy division adds upside from project development. This combination creates lower volatility than pure-play renewable developers.
NextEra’s renewable energy portfolio includes wind, solar, and battery storage projects across North America. The company has become the world’s largest generator of renewable energy from wind and solar, providing scale advantages in project development and procurement of equipment like turbines and solar panels.
Brookfield Renewable Partners (BEPC) is another green energy company growing at an impressive rate, currently trading around $41. In 2025, the company reported $1.3 billion in funds from operations. This is a 10% year-over-year increase. The company also announced a 5% increase in distributions.
Brookfield issued C$500 million (USD $360 million) in green bonds in January 2026 and, just last week, announced an agreement to acquire Canadian independent renewable energy company Boralex alongside investment group La Caisse. This acquisition should help Brookfield further accelerate growth.
Both share classes of Brookfield stock are up by more than 40% over the past 12 months. Investors can choose to invest in the company’s limited partnership (BEP) or its regular corporation (BEPC). Both classes are based on the same underlying assets but have different tax treatments.
The limited partnership structure provides tax advantages for certain investors but comes with K-1 tax forms and complexity. The corporation structure offers simpler 1099 tax reporting suitable for retirement accounts and investors seeking to avoid partnership tax complications.
Brookfield’s strong growth is also supported by a solid annual dividend of $1.57 per share, providing a 4.57% yield. The partnership structure mandates high distribution payouts, creating this yield that significantly exceeds NextEra’s 2.73%. The global asset base provides diversification across technologies—hydro, wind, solar, storage—and geographies. Brookfield’s acquisition strategy allows faster growth than purely organic development.
Brookfield’s portfolio spans hydroelectric, wind, solar, and distributed generation assets across North America, South America, Europe, India, and China. This geographic diversification reduces exposure to any single market’s regulatory changes or weather patterns.
For income-focused investors, Brookfield’s 4.57% yield provides meaningful current return while participating in renewable energy growth. For investors prioritizing lower volatility and earnings visibility, NextEra’s regulated utility base and contracted renewables offer more predictable cash flows despite the lower 2.73% yield.
iShares Global Clean Energy ETF (ICLN) provides broad exposure to the global clean energy sector, currently trading around $18. The ETF is up roughly 54% over the past year, reflecting strong performance across renewable energy stocks as AI power demand and geopolitical factors drive interest in the sector.
The ETF offers diversified exposure to companies across the renewable energy value chain, including solar panel manufacturers, wind turbine producers, electric vehicle companies, and renewable energy utilities. This diversification reduces company-specific risk while providing participation in the overall clean energy transition.
ICLN’s holdings span global markets, with exposure to U.S., European, and Asian renewable energy leaders. This geographic diversity captures growth in different regions as countries pursue varying renewable energy policies and incentives.
The 54% gain over the past year demonstrates how quickly sentiment can shift in renewable energy. However, the ETF remains down significantly over the past five years, reflecting the sector’s volatility through changing political administrations and interest rate cycles.
Clean energy ETFs like ICLN provide exposure to the secular growth trend without requiring individual stock selection. For investors believing in the long-term renewable energy thesis but uncertain which companies will emerge as winners, the ETF approach offers diversification while maintaining sector focus.
