3 Alternative Energy Stocks to Watch Despite Rising Cost Pressure

Wind energy and EV adoption are accelerating due to supportive policies, falling costs and technological advances. This momentum is driving strong capacity additions, rising EV sales and long-term growth opportunities for clean energy companies. However, higher steel prices, import tariffs, and the expiration of key U.S. tax credits are pushing up wind project costs, creating financial pressure for developers despite robust demand. The forerunners in the U.S. alternative energy industry are GE Vernova Inc. GEV, Constellation Energy Corporation CEG and Montauk Renewables MNTK.

About the Industry

The Zacks Alternative Energy – Other industry can be fundamentally segregated into two sets of companies. While one group is involved in the generation and distribution of alternative energy and electricity from sources like wind, natural gas, biofuel, hydro and geothermal, the other is engaged in the development, design and installation of renewable projects involving these alternative energy sources. The industry also includes a handful of stocks that offer fuel cell energy solutions, which have gained popularity as affordable, clean energy options lately. According to a BloombergNEF report published in January 2025, global investment in the energy transition reached a record $2.3 trillion in 2025, up 8% from the previous year. Such investments provide the industry with strong growth opportunities for its participants.

3 Trends Shaping the Future of the Alternative Energy Industry

Wind Energy – A Major Driver of Growth: Wind energy is growing rapidly because governments are encouraging clean power, people are more concerned about climate change and wind electricity has become relatively cheap. As one of the most cost-effective energy sources, wind power continues to gain an edge over conventional fuels, thanks to ongoing technological improvements. Continuous advances in technology, especially the development of larger and more efficient turbines, allow wind farms to produce more power from the same locations. This boosts energy output, lowers costs per unit and improves profits for developers. A Wood Mackenzie report has highlighted the sector’s rapid acceleration, projecting that the global wind industry will reach its second terawatt of capacity by 2030. The firm also expects approximately 9.1 GW of wind additions per year over the next five years, totaling 46 GW by 2029, with cumulative wind capacity projected to reach 196.5 GW. These factors, along with supportive policies, cost advantages and technological improvements, have made wind energy an attractive and fast-growing market.

EV Market Surge to Accelerate Clean Energy Adoption: Electric vehicle (EV) companies and charging networks are increasingly using renewable energy sources like solar and wind to power vehicles, reducing fossil fuel usage and emissions. EV adoption is being supported by governments, especially the U.S. government, via subsidies, tax credits, grants and non-cash incentives. Another key driver is the steady decline in battery costs, which lowers the overall price of EVs and makes them more competitive with gasoline-powered cars. These factors have contributed to strong global sales growth. According to a Benchmark Mineral Intelligence report, nearly 2.1 million EVs were sold worldwide in December 2025, bringing the total for the year in the passenger car and light-duty vehicle segment to 20.7 million units. Per a report by Grand View Research, the global EV market size is projected to reach $6,523.97 billion by 2030, at a CAGR of 32.5% from 2025 to 2030. This strong growth outlook benefits clean energy companies, particularly those that operate large EV charging networks in the United States, as rising EV adoption directly increases demand for charging infrastructure and related services.

Increasing Costs Driven by Tariffs and OBBA: Escalating renewable installation costs have become a major hurdle for clean energy developers. In particular, higher steel prices, critical for manufacturing large wind turbine components, have recently pushed wind installation expenses even higher. The U.S. government’s elevated import tariffs, introduced in early 2025, have further increased cost burdens across the wind sector.

A Wood Mackenzie report has warned that tariff uncertainty, particularly import duties on materials and components, could disrupt cost forecasts for the U.S. wind industry. According to the same report, these tariffs are expected to push wind turbine costs higher in 2026, even though the impact may ease in later years. This projects a 5% increase in capital expenditure for U.S. onshore wind projects between 2025 and 2029, meaning developers will need to spend more upfront to build wind farms. The OBBBA brought significant changes to the tax credits available for eligible clean energy components and facilities, including terminating the advanced manufacturing production tax credit for wind components sold after Dec. 31, 2027. In this context, the expiration of tax credits increases project costs far more than tariffs. Since these credits substantially lower expenses, their expiration makes renewable energy development and production considerably more expensive.