The world is going through a "rapid and transformational change" when it comes to energy, said Citi, naming four stocks to cash in. In particular, the solar sector should continue to see "unprecedented growth" due to geopolitical developments, a focus on ESG (environmental, social and governance), and government incentives among other factors, the bank said in a March 9 note. "Renewables remain a sector of focus for governments, investors, and consumers alike as the world goes through the most rapid and transformational change in terms of how energy is produced, stored, and consumed," Citi analysts wrote. The bank said it expects U.S. and European Union solar installations in 2023 to increase by 21% and 17% respectively year-on-year. When it comes to stocks, Citi prefers geographically diversified companies, in particular those with European exposure. Within the U.S., it likes firms with utility and commercial scale, rather than those with residential exposure. Top picks Citi named the following four buy-rated stocks as "top picks" in the space: U.S. solar company Enphase Energy (price target $285, or upside of 32%); Monaco-based renewable energy firm Eneti (price target $14, or upside of 40%); Israeli solar company SolarEdge (price target $429, or 37% upside); U.S. solar-power components maker Shoals Technologies (price target $34, or 46% upside). "These companies are leaders in their respective domains, are gaining market share, and growing more than overall growth in the sector," Citi's analysts wrote. They added that Enphase and SolarEdge have "adequate" geographic, customer, and product diversification, and named them as the largest direct beneficiaries of the U.S. Inflation Reduction Act incentives . Shoals "has no residential exposure and is looking to diversify outside the US, which should allow the company to grow at a pace exceeding industry growth," Citi said. "We like the combination of rapid top-line growth from market share gains and new products." Outlook for renewables: 'Well positioned to grow' Residential utility rates have increased by 3.9% annually over the last five years in the U.S., and Citi said those rates are expected to rise by around 2% annually over the next two years. That should increase solar penetration, as cost savings would be the main reason for consumer adoption, the bank added. "On commercial and utility scale, solar is best-placed to gain share as it is cheaper on a levelized cost basis, faster to install than other energy sources, and is a steadier energy generator than wind and hydro," Citi said.