The renewable energy sector enters 2026 at a pivotal moment. On one hand, clean energy is on the verge of a historic milestone—the International Energy Agency projects renewables will surpass coal as the world's largest source of electricity as early as this year. On the other hand, policy headwinds from Washington threaten to slow the sector's momentum. For investors willing to look past near-term uncertainty, this tension may create compelling opportunities.

The Milestone Year

By 2026, renewables are projected to account for 36% of global power generation compared with coal's 32% share. This shift represents the culmination of decades of technological advancement and cost reduction that have made solar and wind increasingly competitive with fossil fuels on pure economics.

In the United States, the Energy Information Administration projects the share of electricity generation from renewables will increase from 22% in 2024 to 24% in 2025 and reach 25% in 2026. This growth is driven primarily by continued expansion in solar capacity, which has seen dramatic cost declines over the past decade.

The numbers from 2025 underscore the sector's underlying strength: renewables dominated U.S. capacity growth, accounting for 93% of additions (30.2 gigawatts) through September, with solar and storage comprising 83% of that total.

Policy Headwinds Create Uncertainty

The new tax legislation, commonly referred to as the One Big Beautiful Bill Act, has rolled back many clean energy tax credits and imposed new restrictions that are pressuring early-stage wind and solar project pipelines. The impact is already visible: wind and solar investments in the first half of 2025 fell 18% to nearly $35 billion compared to the same period in 2024.

However, the policy picture is more nuanced than headlines suggest. Projects already in development or with established tax credit eligibility continue to move forward. And the fundamental economics of renewable energy—particularly solar and battery storage—remain compelling even with reduced subsidies.

AI Creates Unexpected Demand Tailwind

One of the most significant developments for renewable energy in 2026 is the surge in electricity demand from AI data centers. Tech giants have made substantial commitments to powering their operations with clean energy, and these corporate renewable procurement agreements are creating demand independent of government policy.

The fast expansion of data centers requires substantial and reliable electricity supplies—demand that renewables, particularly when paired with battery storage, are increasingly well-positioned to meet. This creates a natural synergy: AI companies need massive amounts of power, and renewables offer a path to meeting that demand while honoring corporate sustainability commitments.

Top Stocks to Watch

NextEra Energy (NEE)

NextEra Energy stands as one of the world's largest producers of wind and solar energy, with a diversified portfolio that includes both regulated utility operations and a massive clean energy development business. The company expects to add 36.5 to 46.5 gigawatts of new renewables between 2024 and 2027.

Management has guided for earnings growth at or near the top end of its 6% to 8% annual target range through 2027, paired with dividend growth of approximately 10% annually through at least 2026. For investors seeking renewable exposure with dividend income, NextEra offers a compelling combination of growth and yield.

Canadian Solar (CSIQ)

Canadian Solar operates as a global provider of solar modules and energy storage solutions, with manufacturing operations spanning key international markets. The company's diversified approach—combining solar module manufacturing with large-scale project development—provides multiple avenues for growth.

With operations across residential, commercial, and utility-scale markets, Canadian Solar is positioned to benefit from solar adoption trends regardless of which segment leads growth. The company's energy storage business adds exposure to one of the fastest-growing segments of clean energy infrastructure.

Dominion Energy (D)

Dominion Energy represents a more conservative approach to renewable exposure, operating as a major regulated electric utility with an increasing focus on clean energy assets. The Zacks Consensus Estimate projects Dominion's 2026 earnings will improve 22.47% from 2025, with revenues up 8.4%.

The company's regulated utility structure provides earnings stability, while its renewable development pipeline offers growth potential. For investors seeking lower volatility with meaningful clean energy exposure, Dominion merits consideration.

FuelCell Energy (FCEL)

For investors willing to accept higher risk for higher potential returns, FuelCell Energy offers exposure to stationary fuel cell technology. The Zacks Consensus Estimate projects 2026 revenue growth of 21.5% and earnings improvement of 58.9%. The stock has gained 31.6% over the past six months, suggesting improving investor sentiment.

FuelCell's technology produces clean electricity through electrochemical processes rather than combustion, offering zero-emission power generation that can complement intermittent solar and wind resources.

Battery Storage: The Hidden Catalyst

Perhaps the most significant development for renewable energy isn't in generation at all—it's in storage. By October 2025, the United States had 37.4 gigawatts of operating battery storage capacity, reflecting a 32% increase year-to-date. An additional 19 gigawatts is under construction through 2026, with a pipeline of 187 gigawatts expected by 2030.

Battery storage addresses the intermittency challenge that has historically limited renewable energy's ability to replace baseload power plants. As storage costs continue declining and deployments accelerate, the economics of renewable energy improve further—creating a positive feedback loop for the sector.

Investment Considerations

Investors considering renewable energy stocks should weigh several factors:

  • Interest rate sensitivity: Renewable projects are capital-intensive, making the sector sensitive to financing costs. If rates remain elevated, project economics could face pressure.
  • Policy uncertainty: While the worst-case policy scenarios haven't materialized, further changes to tax credits or regulations could create headwinds.
  • Execution risk: Converting pipeline projects to operating assets requires successful permitting, construction, and grid interconnection—each step carrying potential delays.
  • Valuation: Some renewable stocks trade at premium valuations that assume continued rapid growth. If growth disappoints, multiples could compress.

Despite these risks, the long-term trajectory for renewable energy appears firmly established. The milestone of overtaking coal represents not an endpoint but a waypoint on a longer journey toward a cleaner energy system. Investors with appropriate time horizons and risk tolerance may find 2026's uncertainty creates attractive entry points in a sector with powerful secular tailwinds.