Overall, the renewable energy sector saw a rise in 2024 but not without its challenges.

Solar

In 2024, global solar electricity generation experienced its most significant annual rise yet. Despite significant growth in global solar electricity generation, investors endured substantial losses due to plummeting share prices of major solar firms and related exchange-traded funds.

Companies involved in solar component production and installation, such as the bankrupt Sunpower, suffered considerable financial setbacks.

While solar remains crucial for planned global electricity expansions due to its rapid and cost-effective deployment, the sector faces multiple challenges including competition, labor shortages, and high costs.

Wind

Europe’s wind farms were on track to surpass coal output by 2025, with wind and coal generation closely matched in 2024. An increase in wind generation capacity by 15 gigawatts in 2024 set the stage for wind energy to surpass coal by around 6% in 2025.

In 2024, the U.S. wind energy sector achieved significant milestones. In April, wind generation exceeded coal-fired electricity for the first time, highlighting wind’s growing role in the energy mix.

This achievement was supported by substantial investments and policy incentives, including the Inflation Reduction Act, which boosted near-term deployment forecasts and attracted billions into the domestic wind supply chain.

Despite these advancements, the industry faced challenges such as supply chain constraints and regulatory hurdles, which affected project timelines and costs.

Biofuels

The U.S. Department of Energy‘s Office of Energy Efficiency and Renewable Energy released the 2024 Investment Snapshot, highlighting scientific, technical, and economic achievements facilitated by EERE funding in recent years.

The document features data, case studies, and success stories from every program in the EERE portfolio, indicating ongoing investment in bioenergy technologies.

Hydroelectricity

The Energy Information Administration expected annual solar generation to surpass annual hydropower generation in 2024 for the first time, indicating a shift in renewable energy dynamics.

U.S. hydroelectric generation experienced a rebound in 2024. After reaching its lowest output since 2001 in the previous year, hydropower generation was expected to increase by 6%, accounting for approximately 250 billion kilowatt-hours.

This recovery was particularly notable in regions like the Southeast and the Northwest, where favorable water conditions improved output. However, ongoing droughts in certain areas continued to pose challenges, underscoring the variability of hydropower as an energy source.

Renewable Energy Valuation Multiples

2024 valuation multiples declined over the year primarily due to slower growth than anticipated, rising operating costs, high interest rates that made it expensive to borrow capital for upfront costs, and a policy uncertainty around support for the traditional fossil fuel companies.

For all ~200 renewable energy companies in the dataset, the median revenue multiple decline compared to 2023 to 3.2x, the median EBITDA multiple decreased to 6.3x, and the median PE multiple also shifted downward to 15.1x.

Solar Company Valuation Multiples

The median revenue multiple for 136 solar companies in 2024 is 3.0x. The median EBITDA multiple is 5.9x. The median PE multiple is 16.2x.

Wind Farm Valuation Multiples

Wind energy companies had similar valuation multiples compared to solar energy valuation.

The median revenue multiple for 98 wind energy companies in 2024 is 3.0x. The median EBITDA multiple is 5.7x. The median PE multiple is 16.7x.

Alternative Energy Revenue and EBITDA Multiples

The median revenue multiple for 46 alternative energy companies (e.g., biofuel, biomass) in 2024 is 2.3x. The median EBITDA multiple is 6.4x. The median PE multiple is 17.0x.

Hydroelectricity Revenue and EBITDA Multiples

The median revenue multiple for 82 hydroelectricity companies in 2024 is 3.5x. The median EBITDA multiple is 5.6x. The median PE multiple is 13.4x.

Renewable Energy Valuation Landscape for 2025

Looking ahead to 2025, the renewable energy sector is poised for significant developments. In Europe, wind farms are projected to generate more electricity than coal-fired power plants for the first time, marking a milestone in the energy transition. An increase in wind generation capacity by 15 gigawatts in 2024 has set the stage for wind energy to surpass coal by around 6% in 2025.

In the United States, the Inflation Reduction Act’s tax credits are expected to continue boosting growth, with renewable deployment projected to grow by 17% to 42 gigawatts in 2024, accounting for almost a quarter of electricity generation.

However, the sector faces challenges, including competition, labor shortages, and high costs, which may impact valuations. Investors will likely focus on companies that demonstrate resilience and adaptability in this evolving landscape.

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