8 Best Energy Stocks: Balancing Renewables and Fossil Fuels for 2025

Introduction:

The global economy is transitioning toward renewable energy, yet fossil fuels continue to play a crucial role. For energy investors, this creates a strategic opportunity to balance investments in both sectors and benefit from their interplay.

When oil prices rise, renewable energy becomes a more attractive alternative. Conversely, when oil prices fall, traditional energy companies often outperform. Understanding these dynamics and key drivers like government policies, trade decisions, and technological demands is essential for building a resilient energy portfolio.

We’ll discuss the importance of straddling fossil fuels and renewables and highlight eight energy stocks to help you navigate this transition.

Summary

A. Why Invest in Both Fossil Fuels and Renewables?

B. Key Drivers Influencing the Energy Sector

C. 8 Energy Stocks to Diversify Your Portfolio

1. NextEra Energy Inc. (NEE)
2. Bloom Energy Corp. (BE)
3. Gevo Inc. (GEVO)
4. Quanta Services Inc. (PWR)
5. Darling Ingredients Inc. (DAR)
6. BP PLC (BP)
7. HF Sinclair Corp. (DINO)
8. Schlumberger Ltd. (SLB)

A. Why Invest in Both Fossil Fuels and Renewables?

A diversified energy portfolio offers several advantages:

1. Natural Hedge: Oil and gas price movements often work inversely to renewable energy stocks, balancing risks.
2. Policy Shifts: Changing administrations and regulations influence sector growth. Balancing exposure reduces political risk.
3. Technological Growth: Rising energy demand, driven by AI, electrification, and infrastructure expansion, supports both renewables and traditional fuels.
4. Transition Period: Fossil fuels remain essential as transition fuels while renewables scale up globally.

B. Key Drivers Influencing the Energy Sector

1. Government Policy
   • Pro-renewables policies like Biden’s Inflation Reduction Act (IRA) drive growth.
   • Fossil fuel-friendly administrations may create headwinds for renewables.
2. Trade Policy
   • Potential tariffs on Chinese solar and battery components could slow renewable energy adoption.
3. OPEC and Oil Prices
   • Production cuts, price wars, and economic trends—especially in China—impact crude oil prices.
4. Technological Demand
   • AI, electric vehicles (EVs), and global infrastructure expansion drive energy demand across sectors.

C. 8 Energy Stocks to Diversify Your Portfolio

1. NextEra Energy Inc. (NEE)

• YTD Return: 24.7%
• Why Invest: A leader in renewable energy with strong utility operations in Florida. NextEra’s wind, solar, and battery storage projects position it as a stable, long-term growth pick.
• Highlight: Added 3,000 megawatts of renewables to its project backlog in Q3 2023.

2. Bloom Energy Corp. (BE)

• YTD Return: 73%
• Why Invest: A top player in green hydrogen and fuel cell systems. Bloom Energy serves sectors like utilities, steelmaking, and shipping, helping hard-to-decarbonize industries.
• Highlight: Fuel cells powered by renewable hydrogen align with global clean energy goals.

3. Gevo Inc. (GEVO)

• YTD Return: 32.8%
• Why Invest: Gevo produces sustainable aviation fuel (SAF) and renewable natural gas (RNG) from biomass and animal feed waste. It’s well-positioned as aviation moves toward low-carbon fuels.
• Highlight: Its innovative approach to converting waste into clean fuel supports the global energy transition.

4. Quanta Services Inc. (PWR)

• YTD Return: 56.6%
• Why Invest: Quanta builds and maintains energy infrastructure for utilities and pipelines, balancing traditional and renewable projects.
• Highlight: Its expertise in grid upgrades and natural gas pipelines makes it adaptable for both current and future energy needs.

5. Darling Ingredients Inc. (DAR)

• YTD Return: -29.6%
• Why Invest: Darling turns food by-products and waste into renewable diesel, fertilizers, and sustainable products.
• Highlight: Its joint venture with Valero (Diamond Green Diesel) converts animal fats and cooking oil into clean fuel.

6. BP PLC (BP)

• YTD Return: -10.6%
• Why Invest: BP blends its strong fossil fuel operations with investments in renewables, hydrogen, and battery storage.
• Highlight: Recent projects include a 25-megawatt green hydrogen plant in Spain and full control of solar operator Lightsource BP.

7. HF Sinclair Corp. (DINO)

• YTD Return: -29.9%
• Why Invest: A diversified energy company with operations in refining, transportation, and marketing. HF Sinclair also supports renewable fuels infrastructure.
• Highlight: Its midstream segment gives it flexibility as renewable natural gas gains momentum.

8. Schlumberger Ltd. (SLB)

• YTD Return: -20.8%
• Why Invest: As a global leader in oilfield services, Schlumberger also invests in energy transition technologies like carbon capture, geothermal, and hydrogen.
• Highlight: Recent acquisitions include Aker Carbon Capture and ventures into lithium production.

FAQs

Q.1: Why should investors balance renewables and fossil fuels?
A.1: Balancing both sectors helps mitigate risks tied to oil price volatility or policy changes while capturing opportunities in both markets.

Q.2: How do government policies influence energy investments?
A.2: Government support for subsidies, tax credits, or tariffs can significantly impact renewable energy growth or fossil fuel profitability.

Q.3: What impact could trade tariffs have on renewables?
A.3:Tariffs on imported components, like solar panels or batteries, can raise costs and slow renewable energy adoption.

Q.4: Why are natural gas and hydrogen considered transition fuels?
A.4: They offer cleaner alternatives to coal and oil while renewable infrastructure scales up, ensuring a smoother energy transition.

Q.5: How do oil prices impact a diversified energy portfolio?
A.5: Higher oil prices often benefit traditional energy stocks, while falling prices may shift investor focus to renewables. Diversification ensures balance.

Conclusion:

The energy sector is in the midst of a significant transition, and investors have a unique opportunity to build diversified portfolios that straddle fossil fuels and renewables. By investing in companies that balance traditional energy with future-focused solutions, you can position yourself for both short-term gains and long-term growth.
The eight stocks outlined—ranging from renewable energy leaders like NextEra Energy and Bloom Energy to diversified players like BP and Schlumberger—provide exposure to the full spectrum of energy investments.
Understanding global trends, government policies, and technological demands will help you navigate the evolving energy landscape and achieve sustainable investment success.

Important Note: Please Read Before You Invest

We're just sharing some helpful tips, but remember, investing comes with risks. We can't promise that these tips will always work or that you'll make money. Everyone's financial situation is different, so it's smart to do your research or talk to a financial advisor before you invest. Using these tips, you agree that you're responsible for your investment decisions and results.