Renewable energy stocks are on the rise, with fund inflows driving their strongest quarterly gain since the sustainability boom. A shift in U.S. power demand outlook and policy certainty are attracting investors back, despite challenges from Trump’s tax credit rules. Clean energy indices, ETFs, and individual stocks are seeing double-digit gains.

Lipper data shows alternative energy funds had their first net monthly inflow in June after 25 months of outflows, totaling around $24 billion. Outflows shrank to their lowest since Q2 2023, coinciding with a surge in clean energy indices and ETFs. Bloom Energy’s shares rallied 300% in four months, becoming a top weight in the iShares Clean Energy ETF.

Private equity is looking for value in renewable energy despite political noise. Global Infrastructure Partners is reportedly in talks to buy AES, potentially one of the largest deals involving a Wall Street power company. The MSCI Global Alternative Energy Index rose 17% in the three months to September, more than double the broader market’s gain.

The rally in renewable energy is driven by rising electricity demand from Big Tech’s data center build-outs and grid infrastructure upgrades. U.S. power consumption is forecasted to grow sharply, with solar-plus-storage emerging as a scalable solution. The sector is shifting from policy-driven to demand-led, with all forms of energy needed to meet strong demand.

Cumulative new U.S. power generation demand is projected to reach 450 gigawatts by 2030, with renewable energy earnings picking up as electricity demand forecasts surge. The sector is valued below the broader market, offering room for valuations to rise. Despite risks like higher interest rates and policy reversals, some managers believe unwinding bearish bets could sustain the rally.

Read more at Yahoo Finance: Why renewables stocks are back in play