A service road near the site of potential AI data centre "Wonder Valley" in Alberta. Data centres are contributing to revived demand for renewable energy.Kelsey McMillan
Global clean energy stocks are having their time in the sun as geopolitical strains around oil and gas and AI-driven energy demand drive sentiment.
The appetite for clean energy started to grow in early 2025 and the sector has continued to outperform. The S&P Global Clean Energy Transition Index is up almost 40 per cent this year.
That’s a significant shift for a sector that spent years feeling the pressure of rising interest rates, supply chain issues and policy uncertainty in the U.S.
Now, investors are looking at renewable energy through a different lens. Climate concerns still matter, but so do energy security, grid reliability and the growing realization that AI infrastructure will require enormous amounts of electricity – and quickly.
“Over the summer of 2025, people were nervous about what [U.S. President Donald] Trump was going to do,” says Jeff Osborne, senior equity research analyst at TD Cowen, who covers sustainability and disruptive technology. “But as the AI revolution happened, the appetite for power and having it quickly exploded.”
At the same time, the traditional energy industry has struggled to keep up with demand. Gas turbine manufacturers such as GE Vernova Inc. GEV-N, Siemens AG and Mitsubishi Power Ltd., are effectively sold out for years, Mr. Osborne says, creating fresh interest in solar and battery storage projects that can be deployed faster.
“The interest in solar and storage really has had a renaissance,” he says, “particularly for what they call utility-scale applications versus homeowner rooftop-type solar applications.”
Europe’s recent energy insecurity has also revived investor interest in renewables, with the energy shock from the Ukraine war and fresh concerns about energy instability from the U.S.-Iran war.
Mr. Osborne says some renewable energy companies with heavier exposure to Europe have recently outperformed their U.S. counterparts as countries in Western Europe and parts of Asia revisit domestic energy production and renewable installations.
According to Morningstar Inc., European investors poured about €900-million into funds with clean energy exposure during the final quarter of 2025, after months of outflows.
Jehangir Vevaina, global chief investment officer of Brookfield Asset Management Ltd.’s energy group, says geopolitical shocks consistently renew interest in clean energy.
“We have always viewed renewables as being the ultimate energy security,” he says. “It doesn’t require any commodity-driven inputs such as natural gas or oil.”
Mr. Vevaina says governments are accelerating permitting and project timelines in some markets as countries attempt to reduce their exposure to global energy disruptions.
“We always see an uptick in demand for renewable power when that happens,” he says.
AI is adding to that demand, but manufacturing reshoring, industrial electrification and electric vehicle adoption are also putting pressure on grids that, in many regions, were built based on decades of relatively flat electricity growth.
This could create a bottleneck, Mr. Osborne says, comparing the electricity grid to an overcrowded highway system suddenly dealing with a surge in traffic after years of relatively stable demand.
“This is the first time in, like, 25 years that we have load growth in America,” he says.
Mr. Vevaina says data centres are now one of the fastest-growing contributors to rising electricity demand, with tech hyperscalers dramatically increasing spending projections in the past year.
“All of that requires power demand,” he says. “And renewables are structurally a very low-cost source of generation.”
Battery storage is becoming a closely watched area as utilities look to smooth out renewable power generation and avoid expensive transmission upgrades.
Mr. Osborne says batteries are increasingly being paired with data centres because they can help absorb fluctuations in electricity supply and demand.
Mr. Vevaina adds that battery storage could become one of the sector’s biggest growth stories over the next decade as costs continue to decline and utilities search for ways to ease pressure on aging grids.
Speed is also becoming one of the sector’s biggest advantages. As electricity demand rises, utilities and governments are focused increasingly on how quickly new power sources can come online.
“You can build renewable projects fairly quickly,” Mr. Vevaina says, “and renewables are structurally a very low-cost source of generation.”
Despite the volatility, long-term investors continue to see clean energy as a structural growth story rather than a short-term trade.
“The trends we see today, such as AI and transportation and industrial electrification – are structural, decades-long trends,” Mr. Vevaina says. “You really have to have a long-term mindset to see how this all plays out.”