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Is Renewable Energy a Good Investment?

July 15, 2019
Sanjay Ramdhonee

Renewable energy is an area of the energy sector that’s developing at a pace that many industries can but dream of. As global energy demands continue to increase – developing nations, for example, are in dire need of energy infrastructure – the export of UK products and energy services could well be the fastest-growing market for those seeking credible investment opportunities.

With falling costs, improved infrastructure, and the advancement of knowledge and expertise in the sector, the breadth of potential investment opportunities is vast and enticing. Throw into the mix government pledges to reduce carbon emissions and limit the dependency on fossil fuels and nuclear power, as well as consumer demands for cleaner energy solutions, and you cannot fail to spot the capacity for industry growth.

The growth of renewable energy

Renewable energy sources have come a long way. Whether in the form of the basic hydropower water-wheels of our prehistoric ancestors, the grain milling windmills of Europe, or the introduction of solar charging, humankind has long been trying to harness the power of Mother Nature to further its own endeavours.

Of course, for the greater part of the 20th and 21st centuries, the reliance on fossil fuels has dominated the energy sector as a whole, with the value of the industry running into the trillions of pounds. But times are changing more quickly than ever, and we are almost certainly entering the denouement of gas, coal, and oil dependency. Not to mention that, in the UK alone, the Climate Change Act (2008) has committed us to an 80% reduction in greenhouse gas pollution by 2050.

Globally, we’re already making headway. As recently as 2017, the renewable energy industry represented 17.5% of energy consumption in the EU, itself a growth of two-thirds in a decade. Even BP, one of the richest energy businesses in the world, declared that 9% of the world’s electricity now originates from renewable sources, even going so far as to state that, ‘Renewables are set to penetrate the global energy system more quickly than any fuel in history.’

It would appear, therefore, that renewable energy sources are very much on the rise.

Key considerations

So, what does it mean to be investing in the energy sector and what considerations need to be taken into account? Like any investment, you need access to expert insight in order to make an educated choice, thereby mitigating the risks presented and capitalising on the best opportunities to succeed. Among those considerations that need addressing, therefore, it’s worth investigating the following:

Trading risks
In addition to the considerations you need to focus on before entering into any deal, the risks presented by this emerging market are all too real and, to some extent, remain unknown quantities. For instance, such an obvious factor as the climate could impact your investment success significantly, with the effect on wind or solar energy production falling as a result of either weather that is too ‘good’ or too ‘poor’. Then, of course, there’s the overall volatility of share indices and individual stocks. How often do we see millions wiped off the value of an organisation through market uncertainty?
Being in a position to mitigate losses is crucial for any investor, but for those in an emerging marketplace, the potential for famine is just as real as the potential for feast.

Notable investments and emerging market trends

In its Renewables 2018 report, the International Energy Agency identified bioenergy as the ‘overlooked giant within renewable energy’. Bioenergy – electricity and gas generated from organic matter known as biomass – was found to contribute almost half of all renewable energy consumed in 2017, more than four times the combined output of solar and wind energy. It’s no surprise, therefore, that this is a sector of the industry that is ripe for investment, with the chance to expand and develop technology – as well as the export of resulting energy – having untapped potential.

One such company that has recently expanded its business in the bioenergy sector is EQTEC plc. The organisation specialises in converting waste into clean synthetic gas and has struck up a deal with US-based Phoenix Energy to supply its proprietary gasifier technology in an arrangement thought to be worth €10 million. Back in the UK, meanwhile, waste funder Privilege Finance has released plans to invest £90 million in green energy projects that convert food waste into enough energy to power 28,000 homes.

With deals such as these and many more certain to become the norm in the energy industry, now is the time to focus on investment opportunities before it’s too late to capitalise.

Pangea Strategic Intelligence can provide access to an expert network that connects you to the specialists and experts you need to optimise the success of your investment. From specialists in bioenergy to those with practical experience working in hydro, wind, and solar power, we can establish the relationship between you that will lead to the best returns on your renewable energy investments.

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