With over 200 companies signing the Climate Pledge, renewable energy stocks have caught my eye. More and more businesses are committing to achieving net-zero carbon emissions by 2040. The Paris Agreement has opened new investment opportunities for companies in the renewable energy space. As such I believe, renewable energy stocks are on track to explode in the coming years. 

Today renewable energy is the fastest-growing energy source. In the United States, there was a 100% increase between 2000 and 2018. Furthermore, there was a 3% increase in renewable energy use in 2020 as demand for alternatives declined. Despite this rapid growth, there is still massive room for expansion, in my opinion. And that presents an exciting opportunity. Here are two stocks on my radar that I’m considering adding to my portfolio today.

NextEra Energy Partners LP  

This company’s stock is up about 14% Year-to-date. And over the last 12 months, its performance is closer to 29%. That’s higher than the Dow, NASDAQ Composite, and S&P 500 indices.

NextEra Energy Partners LP (NYSE:NEP) is a partnership formed to acquire, manage and own contracted clean energy projects. Its revenue mainly originates from selling electricity generated by renewable sources. And the company has an interest in wind, solar projects and natural gas infrastructure assets in Texas. Given that the demand for clean electricity isn’t likely to slow down with the rise of electric vehicles, I believe NextEra’s revenue stream will continue to grow over time.

Its historical performance has been quite impressive. Excluding its most recent quarter, the company has beat earnings expectations for three quarters in a row. However, as promising as this is, past performance doesn’t guarantee future success. And the competition within renewable energy infrastructure is rising, adding additional pressure and risk. Nevertheless, I see NextEra Energy Partners as one of the best renewable energy stocks to buy now for my portfolio.

A biofuel renewable energy stock

Renewable Energy Group (NASDAQ:REGI) focuses on producing cleaner, lower carbon transportation fuels. The company manufactures and supplies alternative fuels such as biodiesel, renewable diesel, renewable chemicals and other products.

The stock has actually had a fairly rough year so far. After spiking in February, it has fallen considerably on a missed earnings estimate. Year-to-date, the renewable energy stock is down 25% and down just under 10% over the last 12 months. But recently, shares have started climbing again as many investors, including myself, are seeing this as a buying opportunity. That’s why it’s among the best renewable energy stocks on my personal buy list.

Having said that, there is some potential disruption on the horizon with the rise of hydrogen fuel. As new technologies emerge that extract hydrogen in a cost-efficient manner, the biofuel market may begin to suffer, taking Renewable Energy Group with it. 

Final thoughts

From what I can tell, renewable energy stocks are only just getting started. These businesses are seeking to provide environmentally-friendly solutions for generating electricity. And with power demands continually on the rise, the industry potential is promising. Therefore, I’m considering adding both these companies to my portfolio. 

But they’re not the only renewable energy stock I’ve got my eye on…