Economies across the world are working on switching to energy sources that cause less damage to the environment. Because of climate change concerns, more and more countries are moving away from carbon-based fossil fuels to renewable energy sources. The renewable energy industry is growing rapidly as companies look for ways to decarbonize the economy. Owners of the best renewable energy stocks will be able to make the most of the transition toward a greener and cleaner world.

In an attempt to encourage companies to move towards renewable energy sources, President Biden signed the $369 billion Inflation Reduction Act and it was one of the largest climate investments in the history of the country. The funding aimed to boost the production of renewables and provided tax credits that would help private investment in the sector. 

The renewable energy sector could be massive in the future and if you want to make the most of it, you need to get into the industry before it becomes hot. As per Allied Market Research, the global renewables market will hit a valuation of about $1.98 trillion in 2030 and this is no small feat. If you are ready to dive in, here are the three best renewable energy stocks to buy this month.

Plug Power (PLUG)

At the top of my list is Plug Power (NASDAQ:PLUG), which remains one of the best hydrogen stocks to own this month. The company is engaged in the development of hydrogen fuel systems that replaces conventional batteries. PLUG stock is up 11% over the past month and is up 30% year-to-date. The stock is trading at $15 today, almost half of its 52-week high of $32. When it comes to fundamentals, Plug Power has a few vulnerabilities and hasn’t been able to beat EPS projections over the past year due to supply chain challenges when launching new products. It expects a growth of 45% to 50% this year as compared to the expectations of 80%.

Despite being unprofitable, the company is making strong moves in the industry. It recently announced a strategic partnership with Johnson Matthey or JM where JM will supply membranes, and catalysts and will help Plug in hitting the targeted revenue of $5 billion by 2026 and $30 billion by 2030.

Both companies are expected to co-invest in the largest CCM manufacturing facility in the world which will begin production in 2025. This partnership is a sign that Plug Power is planning to go all in when it comes to the hydrogen sector. Hydrogen is a huge market and Plug aims to be at the top of it. That said, the company will also benefit from the tax credit on green hydrogen of up to $3 per kilogram that took effect at the beginning of the year.

The company expects to hit $5 billion in sales by 2026 and if the company achieves the same, there is no stopping it. PLUG is a potential leader in a hot new industry but expects the stock to take time to pick pace.

Livent Corp. (LTHM)

After a hydrogen stock, the next on the list is a lithium stock, Livent (NYSE:LTHM). Lithium-ion batteries power electric vehicles and this is where the company could win. Livent Corporation is already a global player in the market and has 6 manufacturing facilities across the world. It is taking big strides to increase production across China, Argentina, and Canada. The company expects to produce 15,000 tonnes from the Chinese operations by the end of this year and not to forget, the company has a 30-year expected mine life in Quebec by 2026. LTHM stock is one of the best renewable energy stocks for its potential to grow with the growing adoption of electric vehicles.

The company already has a long-term supply agreement with General Motors (NYSE:GM) to deliver lithium hydroxide starting in 2025 and I believe this is only the beginning for the company. It has sound fundamentals and the company managed to beat EPS estimates for the last four quarters despite the market turmoil.

In the last quarter, it reported a revenue of $231.6 million, up 124% from the same quarter the previous year. It is expanding on a massive scale with a 5,000 metric ton expansion of lithium hydroxide in Bessemer City and plans to add 10,000 metric tons of capacity in Argentina this year. LTHM stock is trading at $25 today and is up 30% year-to-date. This is a highly undervalued stock worth adding to your portfolio. It was upgraded to Buy from Underperform at BofA last month with a price target of $26.

NextEra Energy (NEE)

This is the third renewable energy stock with a huge potential to grow. NextEra Energy (NYSE:NEE) is the world’s largest renewable energy company and is engaged in the production of electricity from renewable resources and the sale of electric energy across Florida. It is also involved in green hydrogen which will continue to play a huge role in the transition towards renewable energy and decarbonising the industrial areas which account for a huge amount of carbon emissions.

The company expects the hydrogen market to grow by $60 billion annually by 2050. NEE stock is trading at $73 today and is also a solid dividend play. It has already grown the dividend at a rate of 11.6% over the last five years and enjoys a dividend yield of 2.23%. Since the demand for electricity does not change too much, the company remains insulated which makes NEE one of the best renewable energy stocks to buy. My InvestorPlace colleague Samuel O’Brient explains how NEE stock will benefit from Biden’s State of the Union Address.

In the recent earnings report, the company reported a revenue of $6.16 billion where the solar and wind business contributed $2.09 billion and the utility business, Florida Power & Light accounted for $4.07 billion. Recently, the independent director, John Stall bought $300K worth of stock which is a great sign as it boosted the holding to 101%. If there is one renewable energy stock that offers a dividend and stability, it is NEE stock.

On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.