Renewable Energy’s Momentum Builds Despite Political Fears Scaring Investors
Political headlines make it seem like renewable energy is losing momentum. But over the past year, alternative energy funds have been some of the market’s top performers — even as investors pulled billions out of them. That gap between strong returns and weak sentiment has created one of 2026’s more interesting disconnects, as geopolitics and rising electricity demand quietly reshape the energy shift.
The clean energy paradox: The First Trust Global Wind Energy ETF is up 55% over the past year, while the Invesco Solar ETF has gained 65%, both comfortably beating the S&P 500’s 19% return. Still, investors have been pulling money out. The First Trust fund alone saw $83M in outflows as many bet political headwinds would hurt the sector. As ETF strategist Ryan Issakainen points out, investors tend to overreact to politics here. The irony is that these same funds actually struggled more during 2021–24, when policy support was strongest.
- Clean energy is pulling decisively ahead, with $2.2T flowing into renewables, nuclear, grids, storage, and efficiency versus $1.1T for oil, gas, and coal in 2025.
- Solar is now the single largest energy investment, hitting $450B in 2025 and nearly doubling over the past five years.
Power Hunger Rising
The energy transition isn’t being driven by climate policy alone — it’s increasingly about economics and energy security. Calvert’s Chris Madden noted, “There’s just a massive amount of energy demand,” pointing to AI data centers, and solar stands out because it can be deployed far faster than nuclear plants, oil rigs, or gas pipelines. Geopolitics is accelerating the shift too, with Pakistan becoming the world’s fourth-largest solar importer during recent energy disruptions, and Europe rapidly scaling solar and batteries after Russia’s invasion of Ukraine.
- US data center growth is starting to slow, with Q4 additions (~25GW) roughly half of Q3 as power grid constraints begin to limit expansion.
- But demand remains enormous, with the pipeline still requiring 241GW of capacity — a 160% surge since the start of 2025.
Pricing blindspot: The sector’s momentum reflects deeper shifts that go beyond political cycles. Eli Horton of TCW calls renewables “the largest economic transition” of the coming decades, and his fund has backed that up, beating the S&P 500 with 111% returns since 2022 vs. 65% for the index. As BlackRock’s Alastair Bishop notes, clean energy stocks still aren’t priced for how much the world has changed — suggesting investors focused on politics may be missing the bigger opportunity.