A benchmark that tracks the performance of companies involved in renewable energy generation, clean technology, or energy efficiency. Clean energy indices vary widely in methodology — some use market-cap weighting, others use equal weighting, and newer indices like the S&P Kensho series use AI to identify eligible companies. The choice of index significantly affects an ETF’s sector exposure and concentration.

The modernised electrical grid that uses digital communications technology, sensors, and software to detect and react to local changes in electricity usage. Smart grid infrastructure includes advanced metering, energy storage systems, grid-scale batteries, power management software, and the physical hardware connecting renewable energy sources to end consumers. ETFs like GRID focus specifically on companies building this infrastructure backbone.

A company that generates electricity for sale to utilities, large consumers, or wholesale markets but is not a regulated public utility. Many renewable energy companies operate as IPPs, owning and operating wind farms, solar parks, or hydroelectric plants and selling power through long-term power purchase agreements (PPAs). ETFs like RNRG focus heavily on IPPs and renewable energy utilities.

A long-term contract between a renewable energy generator and a buyer (typically a utility or large corporation) to purchase electricity at a pre-agreed price over a set period, usually 10–25 years. PPAs provide revenue certainty for renewable energy projects and are a key enabler of project financing. Corporate PPAs from companies like Google, Amazon, and Microsoft have become a major growth driver for renewable energy deployment.

The annual fee charged by an ETF to cover management, administration, and operational costs, expressed as a percentage of assets under management. A lower expense ratio means less drag on returns over time.

The total market value of all investments managed by an ETF. Higher AUM generally indicates greater liquidity, tighter bid-ask spreads, and lower trading costs for investors. AUM fluctuates with market prices and fund inflows or outflows.

There are currently 8 US-listed ETFs providing exposure to renewable power and clean energy companies. These range from broad clean energy funds covering the full spectrum to dedicated solar (TAN) and wind (FAN) ETFs. The Global X Solar ETF (RAYS) and Global X Wind Energy ETF (WNDY) were previously available but have been liquidated. Combined AUM across the category exceeds $12 billion.

The First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF (GRID) is the largest in the category with approximately $7.66 billion in AUM. It focuses on companies involved in electric grid infrastructure, energy storage, and smart grid technology. The iShares Global Clean Energy ETF (ICLN) is the second-largest at approximately $2.18 billion.

The iShares Global Clean Energy ETF (ICLN) has one of the lowest expense ratios in the category at 0.41%. Among actively trading funds, ICLN and ACES (0.55%) offer the lowest fees.

The terms are often used interchangeably, but renewable power ETFs generally focus on companies that generate electricity from renewable sources — solar, wind, hydroelectric, and geothermal. Clean energy ETFs may include a broader range of companies involved in energy efficiency, electric vehicles, smart grid technology, and clean technology more generally. Funds like RNRG focus strictly on renewable energy producers, while PBW and CTEX cast a wider net across cleantech.

Renewable power ETFs provide exposure to one of the fastest-growing segments of the global energy market, driven by declining technology costs, supportive government policies, and corporate decarbonisation commitments. However, the sector is sensitive to interest rates, policy changes, and commodity prices. As with any sector-focused investment, renewable power ETFs should typically be used as a satellite position within a diversified portfolio rather than a core holding.