Is the future of investments in renewable energies?

March 13 (Renewables Now) - There are so many diverse investment opportunities, from commodities to shares, it can be difficult to know where to start, but now could be a good time to consider renewable energy investments.

Despite the Trump administration’s pro fossil fuel stance, renewable energy is experiencing rapid growth, reaching a landmark last August, as the worldwide capacity for wind and solar power generation passed the 1 TW mark. As acceptance of renewable energy increases and the market grows, so does the range of options for investment. Here’s a run-down of some options to consider.

Buy shares in renewable energy companies

A straightforward approach to investing in renewable energy would be to buy shares in companies that provide it. This can be risky though, as share prices tend to fluctuate significantly. The potential returns could be great, but you would need to be prepared to lose some, or even all of your investment. To limit your exposure to these risks, consider companies that offer more than just renewable energy, for example Siemens or General Electric. For higher risk with higher returns you could look at pure renewable companies, for example First Solar or Vestas Wind Systems. 

If you want to avoid putting all your investment eggs in one company, you could spread your risk by building your own portfolio.

Consider renewable energy Exchange Trading Funds (ETFs)

Exchange Trading Funds operate on an exchange platform, accessible via a share dealing account, and can provide access to a broad range of investments. ETFs consist of bonds, commodities, currencies or equities, so a renewable energy ETF tracks the combined performance of a wide range of renewable energy organisations. Although this spreads the risk further, ETFs are still subject to volatility, so it is important to be aware of the risks. 

Invest in a community project

Communities can club together to start a local renewable energy project, such as a solar energy farm. The benefit of doing this rather than installing rooftop panels is you can move houses and still reap the benefits. Local community members each put in money to build an energy farm. Once it is running, everyone shares the profits made, and also benefits from the energy produced.

Start your own project

If you really want to go to town you could even start up your own renewable energy farm. The initial outlay would be significant, especially in terms of equipment, but the rewards could be great. It is a risky strategy and would require a great deal of commitment, but anyone with a large enough commercial property to house such a project could in theory benefit from the income generated while also improving their company’s eco-credentials. A power purchase agreement would be required, plus interconnection authorisation.

With rapidly depleting fossil fuels, and carbon dioxide emissions reaching their highest level for four million years, further investment in alternative energy is essential in preserving the planet. If you want to invest with a clear conscience, and support the planet as well as your portfolio, renewable energy could be worth considering.

       13 March 2019