Green energy stocks outperform fossil fuels amid Iran war
Renewable energy stocks are outperforming fossil fuel companies during the energy crisis triggered by the war in Iran, with Dutch and European firms emerging as some of the market’s strongest performers.
According to reporting by Trouw, investors have poured money into European renewable energy companies tied to electricity grids, wind power, and electric vehicles. German wind turbine manufacturer Nordex has surged 71 percent since the crisis began. Elia Group, which expands electricity grids in Belgium and Germany, gained 26 percent, while Danish renewable energy company Ørsted rose 40 percent. Shares of Elmos Semiconductor, a German supplier of chips for electric vehicles, have nearly doubled this year.
The gains reflect a broader shift in investor sentiment that some analysts say is accelerating across Europe, including in the Netherlands. Joeri de Wilde, an economist at Dutch sustainable lender Triodos Bank, told Trouw that rising oil prices have historically pushed investors away from renewable energy stocks, but that pattern is changing.
“If the oil price rises sharply, shares in clean energy are sometimes dumped,” De Wilde said. “But not now.” He added that the market may be reaching a turning point, with investors showing more confidence in renewables and less faith in the long-term dominance of oil and gas.
De Wilde said investors increasingly view clean energy not only as a climate investment but also as a way to make Europe more energy independent.
He noted that the S&P clean energy index has risen 14.5 percent since the start of the war, compared with 9.9 percent for fossil fuel companies. In April alone, 2.6 billion euros flowed into clean energy index funds, the largest monthly inflow since 2021.
Oil and gas companies are still benefiting from higher energy prices. Shares in Shell plc, BP, and ExxonMobil have each climbed about 30 percent this year. But analysts say the more notable development is that renewable energy stocks are no longer lagging behind fossil fuel producers during geopolitical turmoil.
Investor enthusiasm is not uniform across the clean energy sector. Milan Schut, fund manager at Dutch bank ASN Bank, said some renewable energy companies continue to struggle. U.S. solar panel producer First Solar has declined amid policy decisions under President Donald Trump, while Tesla, Inc. has faced pressure partly tied to reputational concerns surrounding owner Elon Musk.
Schut said electric vehicle stocks remain volatile because of intense competition, although suppliers of EV components continue to perform well. “All automakers need those parts,” he said, pointing to the strong rise in Elmos shares this year.
He added that fossil fuel companies may still offer short-term profit opportunities. “Of course, if you want to make a lot of money in the short term, you can do that with shares in Shell and BP,” Schut told Trouw. But he argued that financial markets increasingly recognize that the era of oil and gas is gradually coming to an end and that the war in Iran is reinforcing that awareness.
The broader shift is also being supported by political signals. Paul Smeets, professor of sustainable finance at the University of Amsterdam, pointed to a recent international meeting involving more than 50 countries focused on phasing out fossil fuels. “That sends a signal to the market,” he said.
Renewable energy companies still face structural risks. After Russia’s invasion of Ukraine, green stocks initially rallied before falling when inflation surged, and central banks raised interest rates.
Higher borrowing costs made large renewable projects, including wind farms, less attractive. Schut noted that many sustainable energy companies are relatively young and highly dependent on external financing, making them especially sensitive to interest rates.
