Betting on green energy: The small caps emerging as the biggest winners

The global clean energy sector is significantly outperforming the broader market in 2025, with the S&P Global Clean Energy Transition Index up about 39% year to date as of October 1. For comparison, the MSCI World has gained about 16% over the same period.

According to the IEA’s World Energy Investment report, global energy investment will reach $3.3 trillion in 2025, the highest on record. Clean energy, including renewable energy, grids, storage, hydrogen, and solar, accounts for about two thirds of the total.

Bloomberg Intelligence notes that the cost of renewable and storage technologies continues to decline, improving project economics and attracting new capital. In late October, the U.S. signed a strategic agreement with Brookfield, Westinghouse, and Cameco to build at least $80 billion of new nuclear reactors using Westinghouse technology. 

On Bloomberg Intelligence estimates, the share of renewable energy M&A deals has remained near 2024’s record high, with total deal volume still above the average of the past decade. Analysts see this as confirmation of structural, long-term demand and resilient fundamentals.

Against this backdrop, analyst Aldiyar Anuarbekov has put together specially for Oninvest an index called the Equal Weight Clean Energy Small Caps Index. It has climbed 32.8% through the first three quarters of 2025, more than twice the gain of the S&P 500. It has also outperformed the broader small-cap universe: over the same period, the Russell 2000 ETF rose less than 10%.

The index includes 51 companies from multiple countries. The strongest contribution came from small caps developing battery technologies and energy-storage systems, ranging from lithium-ion manufacturers to long-duration solutions such as mechanical gravity units and next-generation chemical technologies. The index also includes niche players in solar, green hydrogen, and biofuels.

Eos Energy

Shares of Eos Energy Enterprises, a developer of long-duration storage systems based on zinc-air technology, are up nearly 180% year to date.

During the third quarter alone, its market capitalization increased from $2.0 billion to $5.7 billion. Revenue doubled quarter over quarter and grew 35 times year over year to $30.5 million, driven by a rapid increase in production and the fulfillment of backlog orders. The management reaffirmed its full-year revenue guidance of $150 million-160 million, versus $15.6 million (actual) in 2024.

Eos signed a 750 MWh supply agreement with MN8 Energy and received a 228 MWh strategic order from Frontier Power. The company is also working with Talen Energy to equip data centers with storage systems and secured $24 million in grants to expand its Pennsylvania facility.

In October, Guggenheim raised its target price from $10 to $20 per share, noting that Eos batteries have become the only domestic alternative to lithium-ion systems in the U.S. The consensus rating is “overweight.” The average target price of $15.90 per share implies almost 18% upside.

Microvast

Microvast Holdings manufactures lithium-ion batteries at facilities in the U.S., Europe, and China. The stock has risen about 77% year to date. Despite higher costs and geopolitical risks linked to U.S. tariffs and Chinese export restrictions, the company has delivered better-than-expected results: in the second quarter, revenue rose 9.2% year over year to a record $91.3 million, while the gross margin improved to 34.7% from 32.5% a year earlier due to cost reductions and supply-chain optimization.

Microvast reaffirmed its 2025 revenue guidance of $450-475 million, implying 18-25% growth. Although the company came under political pressure in 2023, when the U.S. Department of Energy canceled a grant, investor focus in 2025 has shifted toward technological progress and financial performance, which they see as outweighing the geopolitical risks.

The consensus rating is “buy,” and the average target price of $6.50 per share implies the stock could nearly double.

Energy Vault

Energy Vault Holdings, a developer of gravity-based storage systems, has gained about 40% year to date. In 2025, the company executed a major strategic shift by becoming an independent power producer (IPP). It launched the Asset Vault platform and raised $300 million from Orion Infrastructure Capital, enough to support 1.5 GW of projects in the U.S., Europe, and Australia.

Asset Vault is designed to generate stable cash flow. Within three to four years, adjusted EBITDA is expected to exceed $100 million. The portfolio is supported by 10-15-year offtake agreements and U.S. tax incentives that compensate 30-40% of capex. Energy Vault is becoming a vertically integrated operator: it designs and builds gravity, battery, and hybrid systems, and generates recurring revenue from long-term operations.

In October, Roth Capital raised its target price by 150% to $4 per share and maintained its “buy” rating. Analysts say the company’s shift to an IPP model significantly improves earnings visibility. Fundamental Research notes that Energy Vault is now one of the few independent players able to integrate multiple storage technologies and bring projects into commercial operation. The consensus rating is “overweight,” and the average target price implies 17% upside.

This material does not constitute investment advice.

The AI translation of this story was reviewed by a human editor.