By Avi Salzman

The Iran war is leading to a windfall today for Western oil and gas producers as prices spike. In the longer term, some of the biggest beneficiaries could be renewable energy companies.

There are already signs that demand for clean-energy products is rising. Early data on exports and sales of solar energy products, batteries to store clean energy, and electric vehicles show that consumers are going green -- not just for the environment but also to protect themselves from high prices.

Exports of solar equipment from China -- the largest producer of solar components by far -- doubled in March from February levels, according to Ember, an energy think tank.

Batteries to store the electricity generated by clean energy are getting a boost, too. China's battery exports jumped 44% in March.

And consumers in Europe and Asia are shifting to electric vehicles as they look to avoid surging gas and diesel prices in those regions. Registrations for "new energy vehicles," which include EVs and plug-in hybrids, more than doubled in Japan, Korea, and New Zealand year over year, and rose more than 50% in India, Australia, and several European markets, according to Leah Fahy, senior China economist at Capital Economics.

China dominates the supply chains for most of those products, making around 80% of the key components used in solar energy systems, so the country will see an outsize benefit from any shift toward renewables and EVs. Fahy thinks the ramp-up is only just beginning. China is still using only a fraction of its solar production capacity, with some solar firms running at just 40% capacity, she says. "China is extremely well placed to respond to a surge in global demand," she wrote.

For investors, it's best to avoid most Chinese renewable energy stocks. The companies are subject to the whims of the government and have a habit of overproducing, leading to oversupply and falling profits. JinkoSolar, a leading Chinese name traded on the New York Stock Exchange, has been through a half-dozen boom/bust cycles in the past 15 years. This year, the stock is down 21% despite the surge in demand.

The better bet may be the stocks of firms that install and manage solar and wind farms around the world. That includes Iberdrola, a Spanish utility that has become a dominant player in renewables in Europe and elsewhere. Enel, an Italian power company, is also investing aggressively globally through its subsidiary Enel Green Power. Another winner could be Brookfield Renewable, a multinational company with extensive renewable projects and a stake in a nuclear developer.

In considering which companies will benefit the most, it's important to note that the energy transition won't happen immediately and is moving at much different paces in different regions. There are few signs, for instance, that the war is causing U.S. consumers to give up their combustion cars, or convincing them to put solar panels on their roofs. In fact, rooftop solar installations in the U.S. are set to fall this year because tax breaks went away.

In addition, several countries will likely double down on fossil fuel production as a way to ensure their own energy security and to profit off exports. Canada, for instance, is considering building new pipelines to export more of its oil and gas.

But other countries see the war as a wake-up call.

"Although the fossil economy will continue to have a leading role after the war, countries will advance their transition because the ability to generate their own energy will generate independence and sovereignty," said Edwin Palma Egea, Colombia's minister of Mines and Energy, in an interview with Barron's. "They won't be at the mercy of fossil fuels or foreign wars."

Colombia has attracted investment from clean-energy companies in China and the United States. Power-generation company AES, which is in the process of being taken private, and Tesla have both been investing there, Palma notes. The country is hoping that American firms keep expanding those investments.

Europe also seems more determined than ever to move away from fossil fuels. "We must accelerate the shift to homegrown clean energies," said Ursula von der Leyen, president of the European Commission, in late April. Europe is facing a severe jet fuel shortage and soaring costs. Its fossil-fuel bill jumped by 24 billion euros ($28 billion) in the first seven weeks of the war.

Iberdrola is a major player in installing all that renewable energy. Ben Bielawski, a portfolio manager at Duff & Phelps Investment Management, holds the stock in the Virtus Duff & Phelps Clean Energy exchange-traded fund. The war, he wrote in an email, should be "a tailwind for Iberdrola's global renewables business, while the company's steady, lower-risk global grids business has defensive characteristics in a more volatile macro environment." Iberdrola trades at 20 times its expected 2026 earnings and has a 2.7% dividend yield.

Enel, the Italian power company, has similar aspirations and trades at just 13 times its expected earnings this year, with a 4.9% dividend yield. It has more debt and slimmer margins than Iberdrola, which may account for the lower valuation.

Brookfield Renewable, which is part of Canadian asset manager Brookfield, owns 46 gigawatts of renewable assets all over the world -- enough to power tens of millions of homes. It also has a stake in Westinghouse, which designed the most prominent large next-gen American nuclear reactor. Brookfield's earnings tend to be negative because high depreciation costs eat into its stated results. But its funds from operations, a metric that takes out those costs, has grown steadily at around 10%, and the stock has a 3.9% dividend yield.

Write to Avi Salzman at avi.salzman@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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April 30, 2026 01:00 ET (05:00 GMT)

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