Is Investing in the Renewable Energy Sector a Smart Move?

The renewable energy industry in the UK is estimated to drop by a couple of billions in 2020. However, it is still one of the most lucrative businesses that people should think about investing in. Today, you can find numerous renewable energy resources that are economically viable. With the growing concerns over the emissions of carbon monoxide, people are proactively embracing these technologies. 

Before we have a look at the top options in renewable energy investment, let’s talk about the most popular renewable energy resources:

Solar Power

Solar energy that we get from the sun is inexhaustible and plentiful. In fact, solar capacity in some of the world’s major cities has doubled – proving that there is a demand for carbon and pollution-free power for schools, workplaces, industrial and recreational areas.

Wind Power

This is one of the most popular renewable energy options because of government policies supporting research and engineering development driving technological progress, as well as falling costs. If the EU’s carbon-neutrality aims are reached, offshore wind could become the regions primary source of electricity.

Energy Storage

The drastic and continuous price fall of lithium-ion battery technology has led to record-breaking market growth and increased awareness among investors and utility asset owners. As further innovation occurs in this space, the reliance on fossil fuels decreases and alternative battery technologies are explored, entire storage systems will be updated and replaced. Today’s systems are also being integrated with the latest solar pv and offshore wind developments – which means there are huge opportunities in creating

low-carbon electricity.

Investing Options for Renewable Energy

Direct Investment

For those who do not have the capital to invest in renewable energy equipment and technology, there are plenty of community-operated solar farms and onsite renewable energy projects where direct investments can be made. This option of direct renewable energy investment offers plenty of benefits, including:

• Many smaller-scale projects have benefited from local business support, grants and project aid

Surrounding local communities are likely to benefit through the provision of free or discounted electricity offers and in many cases socio-economic enrichment through the provision of jobs

Purchasing Shares of Renewable Energy Companies

Lucrative returns are available for those who wish to purchase shares in renewable energy companies, utility companies and oil majors. While this is a popular option, the market is incredibly volatile when it comes to solar and wind power.

Worldwide martime oil majors:

• Royal Dutch Shell (RDSA)
• BP (BP.)
• Exxon Mobil (XOM)
• Chevron Texaco (CVX)
• Total Fina Elf (TTA)
• ConocoPhillips (COP)

Here are some renewable energy companies you can bank on:

• SMA Solar Technology (S92)
• Vestas Wind Systems (VWS)
• Tesla Motors Inc. (TSLA)
• Canadian Solar Inc. (CSIQ)

If you think this decision is risky for you at the moment, you can purchase shares of other companies with a portfolio that encompasses more than just renewable energy. Such as:

• Siemens (SIE)
• General Electric (GE)
• SSE PLC (SSE)
• PG&E Corp. (PCG)
• Cree Inc. (CREE)

Purchase Exchange Traded Funds (ETFs)

Compared to the above two investment options, the risk here is higher, but ETFs do promise higher potential returns. ETFs work by duplicating the performance of collections of stocks or major markets at a cost that is lower than an active fund.

The following are a couple of ETF options:

• Invesco Solar ETF (TAN)
• iShares Global Clean Energy 
• First Trust NASDAQ 

One of the biggest benefits of ETFs is that they provide instant diversification. Investments are set at a low price. You don’t have to worry about the company not doing well in a particular year. Since you have invested in multiple companies, you will get a nice return on your investment.

Create Your Own Project

Yes, we did mention that buying renewable energy assets is not that easy. The upfront cost is too high, but if you partner up with people and create your own renewable energy, you will be able to sell energy at a substantial profit. It is recommended that before you pursue an option like this, you should ensure your due diligence is to the highest of standards, therefore discuss your strategy with energy research consultants to validate your proposed development plan.

Advantages of Renewable Energy

With some of the main investment options considered, here are some points to keep in mind as to why renewable energy investments are a good idea.

Diverse Portfolio

We all know what benefits renewable energy provides — unlimited source of power, low maintenance, environment friendly energy and much more. However, as an investor, you get to add one more achievement to your portfolio. This is a lucrative business and shows other businesses that you have the mind and money to invest your time and energy into something that not only benefits you but also allows you to open doors for others. This brings us to our second point:

Economic and Environmental Benefits

When you show yourself as the authority of such a large scale project, a few responsibilities fall on you. Having a renewable energy plant will give you the benefit of investing in community projects for the betterment of your society. You can also provide grants for schools and other facilities that are struggling to keep the lights on.

Environmentally, you are providing clean and free energy, which gives you a certain sense of self-satisfaction that you are doing something good.

More Opportunities

Your success in your investment determines whether this decision worked in your favour or not. You can bring more investors into a group and instead of operating on a small scale; you can expand your project to thousand acres of land. This not only doubles your returns but also allows you to give back more to the community.

In order to find out what is the best renewable energy option based on the weather conditions in your state, talk with energy research consultants. This is a pretty risky and expensive investment option. While the returns are guaranteed, the ROI might be stretched thin throughout the years. So, we would definitely say that investing in renewable energy is a smart move!