How To Invest In The Clean Energy 'Triple Crown' In 2021

Electric vehicle stocks and other alternative energy investments have performed extremely well in 2020. For investors expecting that momentum to continue in 2021, Bank of America analyst Julien Dumoulin-Smith has named seven stocks that are set to benefit from what he calls the “triple crown” of renewable energy tax credits in play in 2021.

Tax Credit Triple Crown: First, based on the text of the latest stimulus bill, the Solar Investment Tax Credit (ITC) will remain at 26% through the end of 2022.

“This incremental extension comes sooner than expected and likely drives upside to solar growth in the out years (albeit limited near-term impacts),” Dumoulin-Smith wrote in a note.

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He named Sunnova Energy International Inc NOVA, Sunrun Inc RUN and SunPower Corporation SPWR as the three stocks that will benefit the most from the solar tax credit extension.

Second, the Onshore Wind Production Tax Credit (PTC) will remain at 60% if construction begins before the end of 2021. Dumoulin-Smith named NextEra Energy Inc NEE and Avangrid Inc AGR as the two biggest winners from this extension.

Finally, the offshore wind ITC/PTC has been extended by five years, meaning any company that begins project construction by the end of 2025 qualifies for either a 30%ITC or PTC. Dumoulin-Smith said investors should expect most companies to opt for the ITC and said Acangrid, Eversource Energy ES and Dominion Energy Inc D will be major beneficiaries.

Benzinga’s Take: Just because these clean energy stocks will benefit from the “triple crown” of tax credits in 2021 doesn’t mean all of them are great investments after big runs in 2020. Of the seven stocks mentioned, Bank of America only has Buy ratings on Dominion, NextEra and SunRun.