Here’s how to invest in Canadian renewable energy stocks on the TSX as the sector positions itself for accelerated growth.
Renewable energy has become an increasingly important part of how clean energy is produced.
From moving water and natural gas to solar, geothermal and ocean energy, renewable energy is defined by Natural Resources Canada (NRA) as “energy obtained from natural resources that can be naturally replenished or renewed within a human lifespan.”
The NRA states that renewable energy accounts for roughly 18.9 percent of Canada’s energy supply, with moving water — or hydroelectricity — accounting for 59.3 percent of its renewable electricity generation. In fact, the country is the second largest producer of hydroelectricity worldwide.
Since 2005, Canada has reduced its greenhouse gas emissions by 2 percent, but the Canadian Center for Policy Alternatives (CCPA) says that the nation will likely fall short of reaching its 2030 targets.
Climate policy in Canada is less ambitious than it has been in the past, according to the CCPA, and it has identified core roadblocks to renewable energy policy developments, including Canada’s reliance on fossil fuels such as oil, and the absence of supply-side energy policies.
Even so, Canada’s Toronto Stock Exchange (TSX) is home to a variety of publicly traded renewable energy stocks that investors who want to know more about the renewable energy sector may want to look into.
The list below was created using the most recently updated list of 29 TSX energy stocks in the cleantech sector. The companies below fall under the energy stock subsectors of renewable energy equipment manufacturing and tech, energy efficiency and renewable energy production and distribution.
All companies listed had market caps between C$50 million and C$250 million as of June 11, 2020. Companies are listed in order of market cap size from largest to smallest.
1. Atlantic Power (TSX:ATP)
Market cap: C$252.04 million; current share price: C$2.71
Atlantic Power operates 26 power generation assets in 11 US states and two Canadian provinces. The projects sell electricity to utilities and other commercial customers that are mostly under long-term power purchase agreements.
The company has hydro, natural gas, biomass and coal assets. Although it operates 262 megawatts (MW) of power, its New Jersey Chambers Cogeneration coal project is Atlantic’s only coal project in operation.
2. Westport Fuel Systems (TSX:WPRT)
Market cap: C$223.9 million; current share price: C$1.68
Westport Fuel Systems supplies renewable energy systems for the transportation industry. Through its four core divisions — light original equipment manufacturing (OEM), heavy duty OEM, aftermarket systems and Cummins Westport — Westport develops energy-efficient fuel components systems.
For example, it builds natural gas injectors and fuel tank systems. In North America, there are currently 225,000 natural gas vehicles in service. Putting this in perspective, around the world there are a total of 22.5 million natural gas vehicles in operation, indicating that natural gas output is showing few signs of diminishing growth. Additionally, natural gas prices tend to be more stable than diesel. According to the NRA, Canada can maintain its annual natural gas production output for the next 300 years.
3. Polaris Infrastructure (TSX:PIF)
Market cap: C$209.8 million; current share price: C$13.12
Polaris Infrastructure is principally engaged in geothermal and hydroelectric projects in Latin America. With 77 MW produced at its geothermal project in Nicaragua, Polaris is among the top renewable energy producers in the country. Through its subsidiary, Polaris Energy Nicaragua, Polaris operates and owns the San Jacinto-Tizate geothermal project. The company also operates the Casita project in Nicaragua.
Polaris also operates hydroelectric power plants in Peru. It currently has one project, the Canchayllo hydroelectric power plant, which has 5 MW of power. Two projects, El Carmen and 8 de Agosto, are under construction and are slated to provide a combined 17.4 MW of hydroelectric power in the future.
4. 5N Plus (TSX:VNP)
Market cap: C$140.2 million; current share price: C$1.64
5N Plus produces sustainable metal and chemical products. In addition, it manufactures critical precursors and key enablers in industries such as clean energy, electronics, pharmaceuticals, medical imaging, paint pigments, security and surveillance. Precursors are the chemicals used to manufacture pharmaceutical drugs, for example.
It also operates recycling plants to aid in the extraction of these materials. The plants are located in Canada, Germany, Laos and Malaysia.
5. Etrion (TSX:ETX)
Market cap: C$71.8 million; current share price: C$0.22
With projects across Japan and Chile, Etrion has developed over 750 MW of solar power since 2012. It has launched solar sites in Mito, Misawa, Shizukuishi and Komatsu in Japan.
Its Chilean operations are located in Salvador, where it runs a 70 MW project.
The largest shareholders of Etrion are the Lundin family, who have an estimated 36 percent stake in the company. The Lundin Group has its headquarters in Vancouver, BC.
This is an updated version of an article originally published by the Investing News Network in 2017.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.