The AI Energy Surge: How Clean Power ETFs Are Gaining Momentum

A significant shift is underway for the iShares Global Clean Energy ETF (ICLN). Once viewed primarily through the lens of interest rate sensitivity, the fund is increasingly being recognized as a critical infrastructure play. This transformation is fueled by a powerful and perhaps unexpected catalyst: the massive energy demands of the artificial intelligence revolution.

The fund's performance speaks volumes, with a staggering year-to-date gain of 47.6% that has outpaced broader energy indices. The driving force behind this surge is straightforward: data centers powering AI applications are consuming vast amounts of electricity, prompting technology giants to urgently seek reliable, green power sources.

The clean energy sector faced considerable headwinds in early 2024, as elevated interest rates hampered project financing. By the end of 2025, the narrative has changed. Despite persistently high rates, the sector is rallying, propelled not by monetary policy but by robust industrial demand for sustainable energy.

Investor caution, however, persists. A slight pullback in November, with the ETF declining by 1.1%, highlights ongoing concerns over political uncertainty and supply chain constraints. The sector retains its volatility, yet it continues to present profitable opportunities for investors with a higher risk tolerance.

A Portfolio Built on Established Infrastructure

ICLN tracks the S&P Global Clean Energy Index, which holds over 100 equities. Unlike portfolios heavy in speculative technology stocks, this ETF focuses on established, infrastructure-ready companies. This approach generally reduces volatility, though it may also cap some of the explosive upside potential seen in more speculative corners of the market.

Should investors sell immediately? Or is it worth buying iShares Global Clean Energy ETF?

A look at the top holdings reveals its strategic composition:

• Bloom Energy (9.54%): A major beneficiary of the "data center trade," this company provides innovative fuel cell solutions directly relevant to power-hungry computing facilities.
• First Solar (8.95%): This leading manufacturer recently launched a $1.1 billion factory in Louisiana. Despite missing third-quarter expectations, the company reported a remarkable revenue explosion of 79.7%.
• Iberdrola (6.33%): The Spanish utility giant offers defensive stability and scale within the portfolio.

The sector allocation underscores a strategic pivot: 50-52% of the fund is in utilities, with another 24% in technology. This heavier weighting toward utility companies helps dampen extreme price swings, though it may also limit growth potential compared to more aggressive, pure-play technology competitors.

Strong Performance Amidst Market Fluctuations

The critical question for investors is whether the impressive rally can be sustained. Recent performance metrics present a nuanced picture:

• Year-to-Date Return: +47.63%
• 1-Year Return: +36.03%
• November Performance: -1.11%

An interesting divergence occurred in November: while the ETF's market price fell, its Net Asset Value (NAV) actually increased by 1.45%. This discrepancy could signal a tactical entry point for investors if the discount between price and NAV narrows in the future.

With an average daily trading volume of 3 to 4 million shares, ICLN remains the most liquid instrument in its category—a key advantage for institutional investors seeking efficient market access.