Renewable energy: How and where to invest (2022)

Investing money in renewable energy can be one of the many ways to protect our planet from the ravages of climate change.

But we often forget that where we invest our money can make a difference.

Below, we discuss:

  • Types of renewable energy, including solar and wind power
  • How to start investing in renewable energy
  • The future growth of the sector
Renewable energy: How and where to invest (1)

The rise of renewable energy

By 2050, about half of global energy production is expected to come from renewable sources such as wind and solar power, according to the US Energy Information Administration.

That shift requires huge amounts of energy investment. And there is already evidence that Britain’s biggest energy companies are putting their money where their futures are.

Shell, for example, has spent about $2bn (£1.4bn) since 2016 on investing in renewable energy.

Institutional investors such as big pension funds are also putting vast amounts of money into the sector. A recent survey from the alternative-investment manager Octopus found that they plan to plough $743bn into renewables in the next decade.

Find out more: Take advantage of these government grants for electric cars

Types of renewable energy

The world will need several types of renewable energy in order to meet global energy demands. And it is possible to invest in all of them (as discussed below).

Here are some of the most common forms of renewable energy generation. In total, they make up almost a third of UK energy generation.

  1. Solar energy: Energy that comes from the sun can be harvested by various technologies including solar panels, either on individual homes or in large solar farms. Solar energy now accounts for about 4% of the UK’s electricity.
  2. Wind energy: Wind turbines, both on and offshore, contribute about a quarter of the UK’s electricity needs. The UK is the world leader in offshore wind farms, with more capacity than any other country.
  3. Water energy: Energy produced by flowing water, also known as hydropower, contributes 2.2% of the UK’s electricity generation needs.

Find out more: How to save money by going green

Is renewable energy a good investment?

The world needs more green energy to replace fossil fuels as an energy source. And strong demand tends to make a good case for energy investments such as wind and solar powers.

However, thereare other factors that determine whether backing renewables with your moneyis the right decision for you. These include the health of the global economy, localregulation and policy.

When the global economy is strong, demand for power soars and its price grows. This means that the value of companies producing power begins to rise.

(Video) A new way to invest in clean energy innovation: Breakthrough Energy Catalyst

Green companies are also affected by regulations and policies in different companies across the world. Governments may mandate a certain amount of energy to be renewable or penalise companies who use fossil fuels, thus benefiting green businesses.

They may also choose to withdraw green incentives, pushing prices down.

The financial strength of individual companies are also important for investors. Companies with weak balance sheets can struggle even in a growing sector like green energy.

That is why it is importantto research the different ways of investing in renewable energy before making adecision.

Find out more: I’m a vegan. How can I invest ethically?

Why invest in renewable energy?

These are some of the strongest reasons for investing in renewable energy from different sources:

  • It is ethical and offers the opportunity to invest in line with your values.
  • The sector is at the forefront of technological development. More efficient solar cells, using a structure called a“perovskite”, is just one example of the cutting-edge research that is leading to lucrative breakthroughs in increasing generation capacity.
  • It benefits from worldwide government support, including pledges from many countries to reduce their carbon footprints – requiring greater use of renewable energy.
  • Renewable energy could boost the economy by creating jobs in rural areas and lowering fuel imports.

Find out more: Guide to ethical investing

How to invest in renewable energy

There are several ways to invest in renewable energy. These range from buying shares in individual companies to investing in funds where the returns replicate the performance of a specialist stock market index related to clean energy.

Some of the possibilities for investment are as follows:

1. Direct investment in renewable energy projects

Taking a stake in a new wind farm or solar energy project offers a very clear link between your money and the benefits it provides.

Ethical finance firms such as Abundance and Triodos offer investors a chance to fund developments such as solar panels for schools or ground-mounted solar farms.

These tend to be very long-term energy investments. And because they involve putting your money into one project, rather than spreading it around, you take the risk of not getting your money back if the project fails.

Some of these investments can be held in an ISA so that the returns are tax free.

Before you invest in a project, make sure that the firm you invest through is regulated by the Financial Conduct Authority (FCA). This gives you some protection against mis-selling.

You can check that a company is authorised on the FCA’s financial services register, using the address and name of the firm’s registered office.

(Video) Investing in renewable energy in developing countries | Heidi Finskas | TEDxSkift

2. Invest in exchange-traded funds

Exchange-traded funds (ETFs) mimic the price movement of certain baskets of stocks, such as the FTSE 100. They allow you to gain exposure to a diverse portfolio of stocks and are also very liquid, meaning you can buy and sell them easily.

In the renewable energy sector, there are ETFs that track a number of indices such as:

  • The S&P Global Clean Energy index, which consists of a basket of cleanenergy stocks from around the world
  • The Nasdaq Clean Edge Green Energyindex, whose 50-plus constituent companies, including Tesla, are publiclytraded in the US.

While ETFs can be a very easy way to get exposure to these types of companies,it is important to understand what the charges are and exactly what the ETF istracking before you invest.

Some ETFs own the stocks they track (physically-backed ETFs) while others are what are known as “synthetic” ETFs. These may not track an index exactly as they rely on financial instruments and a number of counterparties to try to replicate performance.

Your own individual risk tolerance and view of fund charges will determine what you are comfortable with in this case.

3. Buy renewable energy stocks

Investing in renewable energy in individual shares is another way to get exposure to this sector. These may be companies that produce energy via wind turbines or solar cells, or they may make the metals and other commodities needed to ensure that these products can be developed.

Buying stakes in companies listed on the stock market is relatively easy, and they are easy to sell again too. You can also invest within your stocks and shares ISA.

However, they should be seen as a long-term investment and it is also important not to put all your eggs in one basket because the fortunes and share prices of individual companies can be volatile.

Instead, they should be part of a diversified portfolio so that you spread your risk.

Shares in companies can go down as well as up. So ensure you read a company’s balance sheet and understand the risks before you invest.

Find out more: How to invest £10,000

Top rated self-invested stocks & shares ISAs

(Video) Solar Energy 101: How to Invest in Renewable Energy

The future of renewable investing

While renewable energy already makes up a large proportion of the UK’s energy supply, there is still plenty of scope for this to grow, increasing the viability of renewable energy investment.

Recently, there have been new commitments to green energy targets including reducing fossil fuels from nations including the UK ahead of the COP26 climate-change summit in Glasgow in November.

These include the EU’s objective to achieve carbon neutrality by 2050 and the US’s return to the Paris Agreement on climate change.

In order to meet these targets for radically reducing emissions, investment in renewable energy will need to continue. It could therefore be a sustainable investment strategy for anyone looking for long-term returns.

(Video) How to Invest in Renewable Energy stocks on the ASX

FAQs

How do you invest in renewable energy? ›

The easiest way to invest in green energy is to find a mutual fund or index fund that invests in a wide basket of renewable energy securities. There are many such funds, each managed according to a different strategy or targeting a different renewable energy index.

Why renewable energy is a good investment? ›

Over 10 years, renewable energy outperformed fossil fuel, generating returns of 192.3% compared to 97.2%. In the past 5 years, the renewable energy investment continued to yield higher returns in addition to being less volatile than the fossil fuel portfolio.

What is a good thesis statement for renewable energy? ›

Thesis Statement: Renewable energy is a great invention because it is cheaper and more environment-friendly than oil. It is the dawn of a new age with less pollutants and healthy for our new generation. There are many people that may say that renewable energy is unstable because it depends on the weather.

Who is investing the most in renewable energy? ›

Next, the U.S. invested $114 billion in clean energy last year, up 17% from 2020.
...
Energy Transition Investment by Country.
Country2021 Energy Transition Investment (US$)% of World Total
China$266B35.2%
U.S.$114B15.1%
Germany$47B6.2%
U.K.$31B4.1%
7 more rows
7 Feb 2022

Are we investing in renewable energy? ›

Renewables, grids and storage now account for more than 80% of total power sector investment. Spending on solar PV, batteries and electric vehicles is now growing at rates consistent with reaching global net zero emissions by 2050.

What kind of energy should we be investing in for the future and why? ›

Atomic energy, solar energy, and energy from wind and bio fuels are just a few of the promising alternatives for a cleaner and greener future. Other relatively new sources of energy such as fuel cells, geothermal energy, and ocean energy are also being explored.

Is now a good time to invest in energy? ›

After the long run-up from 2020, investors might choose to be patient and see if the current market decline will pull the energy sector down a bit more and present a good dip-buying opportunity. Strength despite general market weakness suggests energy may well emerge as a big winner in the next major bull market.

Is renewable energy profitable? ›

No area of energy is growing faster than renewable energy. After struggling for years, some of the biggest names in renewable energy are now profitable. As ESG investing grows, these stocks should continue to rise.

What energy is in solar panels? ›

Solar technologies convert sunlight into electrical energy either through photovoltaic (PV) panels or through mirrors that concentrate solar radiation. This energy can be used to generate electricity or be stored in batteries or thermal storage.

What is a thesis statement in an essay examples? ›

A thesis statement should show exactly what your paper will be about, and will help you keep your paper to a manageable topic. For example, if you're writing a seven-to-ten page paper on hunger, you might say: World hunger has many causes and effects. This is a weak thesis statement for two major reasons.

What is the best thing to invest in? ›

12 best investments
  • High-yield savings accounts.
  • Certificates of deposit (CDs)
  • Money market funds.
  • Government bonds.
  • Corporate bonds.
  • Mutual funds.
  • Index funds.
  • Exchange-traded funds (ETFs)

Which country leads in renewable energy? ›

The production and use of renewable energy are rising, and almost 30% of the electricity consumed on the planet comes from renewable energies. Norway is the largest clean energy producer, as 98.4% of its energy production comes from renewable sources.

Which renewable energy is the best? ›

Wind power is the leading renewable energy source, bringing in 8% of the energy of the United States. This renewable energy source isn't as quiet as solar power, but it does pack a solid efficiency rating and is generally environmentally friendly.

Where I can invest my money? ›

If you are wondering where to invest money, here are a few types of investment that you can choose from:
  • Stocks. Stocks represent a share of ownership in a company or an entity. ...
  • Fixed deposit. ...
  • Mutual funds. ...
  • Senior citizen savings scheme. ...
  • Public provident fund. ...
  • NPS. ...
  • Real Estate. ...
  • Gold Bonds.

Where should I invest to get the best return? ›

Best short-term investment options in India
  • Savings accounts. Recently, the falling repo rate regime has brought the savings account interest rates to an average of 2-4%. ...
  • Liquid funds. ...
  • Short-term and ultra-short-term funds. ...
  • Equity Linked Saving Schemes (ELSS) ...
  • Fixed deposit. ...
  • Fixed maturity plans (FMPs) ...
  • Treasury bills. ...
  • Gold.

What is the future of renewable energy? ›

Renewable energy in the future is predicted that by 2024, solar capacity in the world will grow by 600 gigawatts (GW), almost double the installed total electricity capacity of Japan. Overall, renewable electricity is predicted to grow by 1 200 GW by 2024, the equivalent of the total electricity capacity of the US.

Why renewable energy is important for the future? ›

The reduction of pollution and climate impacts alone could save the world up to $4.2 trillion per year by 2030. Moreover, efficient, reliable renewable technologies can create a system less prone to market shocks and improve resilience and energy security by diversifying power supply options.

How renewable energy can save the world? ›

Renewable power could cover up to four-fifths of global electricity supply by 2050 – drastically reducing carbon emissions and helping to mitigate climate change. However, strategies are needed to fully integrate the variable renewables, solar and wind energy.

What is the best renewable energy source for the future? ›

It is generally accepted that wind and solar energy are the ideal options when it comes to clean and sustainable sources of energy. They are the fastest-growing, the cheapest and do much less damage to nature and wildlife surrounding their sites as opposed to fossil fuels.

Can renewable energy save the world in future? ›

Renewable energy can save the natural world – but if we're not careful, it will also hurt it. A vast transition from fossil fuels to renewable energy is crucial to slowing climate change. But building solar panels, wind turbines and other renewable energy infrastructure requires mining for materials.

Which power share is best? ›

Best Power Stocks to Buy – Compare Top 10 Power Shares to Buy in...
  • NTPC – Top Power Companies in India.
  • Tata Power Company Limited – Power Share Price.
  • JSW Energy – Top 10 Power Stocks.
  • Adani Power – Best Power Stocks to Buy.
  • NHPC – Top Power Stocks to Buy.
  • Torrent Power – Best Energy Stocks to Buy.

What are the best stocks to invest in August 2022? ›

Best-performing S&P 500 stocks of 2022
CompanyTickerPrice change – 2022 through Aug. 30
Marathon Petroleum Corp.MPC, +1.38%58.6%
Exxon Mobil Corp.XOM, -0.42%57.4%
Valero Energy Corp.VLO, +1.95%57.1%
Enphase Energy Inc.
4 more rows
31 Aug 2022

What is the energy investment? ›

Global energy investment, 2017-2021

Investment is measured as the ongoing capital spending in energy supply capacity (fuel production, power generation and energy infrastructure) and energy end-use and efficiency sectors (buildings, transport and industry).

How do renewable energy companies make money? ›

The primary and the most obvious way of making money as a solar company is by installing solar panels. The profit margin is quite low but it does exist, which is enough to keep the company afloat.

What is the cheapest source of renewable energy? ›

What is the cheapest renewable energy source? Hydroelectric power is currently the cheapest renewable energy source, costing $0.05 per kilowatt-hour on average. Hydroelectric power is the cheapest because the infrastructure has been in place for a long time, and it produces electricity consistently.

Is renewable energy a growing industry? ›

Increase in demand for renewable energy, surge in legislative and financial initiatives, and rise in electricity consumption drive the growth of the global renewable energy market. However, huge investments hinder the market growth.

Do solar panels work at night? ›

The short answer is: no, solar energy systems only operate during the day. This is because the power from the sun is key to how a solar panel turns light into electricity.

How much money can you make from solar panels? ›

Solar farms pay between $1200 and $1300 per month per acre, so a 2-acre farm could generate up to $2500 per month.

Why solar energy is important? ›

The sun provides more than enough energy to meet the whole world's energy needs, and unlike fossil fuels, it won't run out anytime soon. As a renewable energy source, the only limitation of solar power is our ability to turn it into electricity in an efficient and cost-effective way.

What is the conclusion of solar energy? ›

7. Conclusions. Solar energy is a clean, pollution free and renewable source of energy. Development of this source of energy requires an accurate detailed long-term knowledge of the potential taking into account seasonal variations.

What is the introduction of solar energy? ›

Solar energy is the energy obtained by capturing heat and light from the Sun. Energy from the Sun is referred to as solar energy. Technology has provided a number of ways to utilize this abundant resource. It is considered a green technology because it does not emit greenhouse gases.

How do you write a good introduction? ›

Your essay introduction should include three main things, in this order: An opening hook to catch the reader's attention. Relevant background information that the reader needs to know. A thesis statement that presents your main point or argument.

How do you start writing a thesis? ›

One way to begin to segment is to write a detailed subject outline of the thesis. Get right down to the subsection level – the part that takes only a page or two. First make a topic outline for the entire work. Then make a thesis outline; tell what your thesis (argument) will be for each subsection.

How do you write a claim for an argumentative essay? ›

A claim must be arguable but stated as a fact. It must be debatable with inquiry and evidence; it is not a personal opinion or feeling. A claim defines your writing's goals, direction, and scope. A good claim is specific and asserts a focused argument.

What is the safest investment? ›

For example, certificates of deposit (CDs), money market accounts, municipal bonds and Treasury Inflation-Protected Securities (TIPS) are among the safest types of investments.

What investment has the highest return? ›

The U.S. stock market has long been considered the source of the greatest returns for investors, outperforming all other types of investments including financial securities, real estate, commodities, and art collectibles over the past century.

What is the safest investment right now? ›

9 Safe Investments With the Highest Returns
  • Certificates of Deposit.
  • Money Market Accounts.
  • Treasury Bonds.
  • Treasury Inflation-Protected Securities.
  • Municipal Bonds.
  • Corporate Bonds.
  • S&P 500 Index Fund/ETF.
  • Dividend Stocks.
7 Sept 2022

What countries are 100% renewable? ›

Albania, Iceland, and Paraguay obtain essentially all of their electricity from renewable sources (Albania and Paraguay 100% from hydroelectricity, Iceland 72% hydro and 28% geothermal). Norway obtains nearly all of its electricity from renewable sources (97 percent from hydropower).

What country uses the least renewable energy? ›

Lowest Percentages of Alternative Energy By Country
RankCountryAlternative/Nuclear Energy Usage (% of Total)
1United Arab Emirates0.00 %
2Benin0.00 %
3Bahrain0.00 %
4Botswana0.00 %
21 more rows

Which country is most energy efficient? ›

Germany is the most energy efficient economy in the world, followed by Italy, the European Union, China, and France. This is according to the International Energy Efficiency Scorecard published by American Council for an Energy-Efficient Economy (ACEEE), a Washington based non-profit.

Which renewable energy is growing the fastest? ›

Solar generation (including distributed), which made up 3.3 percent of total U.S. generation in 2020, is the fastest-growing electricity source.

What is the world's largest renewable energy source? ›

Globally we see that hydropower is by far the largest modern renewable source [since traditional biomass is not included here]. But we also see wind and solar power are both growing rapidly.

Why is renewable energy important? ›

Benefits of Renewable Energy

Generating energy that produces no greenhouse gas emissions from fossil fuels and reduces some types of air pollution. Diversifying energy supply and reducing dependence on imported fuels. Creating economic development and jobs in manufacturing, installation, and more.

How do I invest in green? ›

Investors can support green initiatives by buying green mutual funds, green index funds, green exchange-traded funds (ETFs), green bonds, or by holding stock in environmentally friendly companies. Pure play green investments are investments in which most or all revenues come from green activities.

How do you invest in solar farms? ›

The easy way to invest in a solar farm, or renewable energy company, is to just buy a stock of a company like Brookfield Renewable Partners. Brookfield operates one of the world's largest renewable power platforms. We've discussed Brookfield as a company and stock investment in other posts.

How do renewable energy companies make money? ›

Installation. The first way that they make money is by installing solar panels. There is a bit of a profit margin when the installation is being done, and when people buy panels. Obviously, this isn't a huge profit margin, but it is often enough to keep the company in business.

What is the best thing to invest in? ›

12 best investments
  • High-yield savings accounts.
  • Certificates of deposit (CDs)
  • Money market funds.
  • Government bonds.
  • Corporate bonds.
  • Mutual funds.
  • Index funds.
  • Exchange-traded funds (ETFs)

What can we do to invest in our planet? ›

7 Ways to Invest in Our Planet
  1. Invest in renewables and energy efficiency. ...
  2. Invest in clean transportation. ...
  3. Invest in food and agriculture innovation. ...
  4. Invest in nature-based solutions — including the ocean. ...
  5. Invest in Indigenous communities. ...
  6. Invest in girls and women. ...
  7. Invest in peace.
20 Apr 2022

What are examples of sustainable investments? ›

Examples include: Individuals who invest—as part of their savings or retirement plans—in mutual funds that specialize in seeking companies with good labor and environmental practices. Credit unions and community development banks that have a specific mission of serving low- and middle-income communities.

Is it worth investing in solar energy? ›

On average, homeowners can expect to save around $1,400 a year on their bill after switching to solar. The rising cost of electricity, combined with the declining cost of solar panels and systems the last few years, makes investing in solar energy a no-brainer for homeowners.

Do solar farms make money? ›

Solar farms typically cost between $0.89 to $1.01 per watt to install. The average 1 MW farm can earn roughly $43,500 a year by selling its electricity to utilities. Landowners who lease their land out for a solar farm can earn between $250-$3,000 per acre/year.

Do renewables save money? ›

The renewable projects added last year will reduce costs in the electricity sector by at least USD 6 billion per year in emerging countries, relative to adding the same amount of fossil fuel-fired generation. Two-thirds of these savings will come from onshore wind, followed by hydropower and solar PV.

Can you make money in renewable energy? ›

Solar renewable energy credits (SRECs) allow you to earn additional income from solar electricity generation. As a solar homeowner, you can earn one SREC for every megawatt hour (MWh), or 1,000 kilowatt hours (kWhs), of electricity your solar system produces.

What is the best wind energy stock? ›

Best Value Wind Energy Stocks
Price ($)12-Month Trailing P/E Ratio
Iberdrola SA (IBDRY)42.7414.4
Northland Power Inc. (NPI.TO)CA$42.6930.4
TransAlta Renewables Inc. (RNW.TO)CA$18.0538.4

Who is the leading company in wind energy? ›

Vestas is a market leader in the North American wind industry with 42,000 MW installed and 38,000+ MW under service in the U.S. and Canada.

How much does it cost to invest in a windmill? ›

What's the cost of a wind turbine in 2021? $1,300,000 USD per megawatt. The typical wind turbine is 2-3 MW in power, so most turbines cost in the $2-4 million dollar range. Operation and maintenance runs an additional $42,000-$48,000 per year according to research on wind turbine operational cost.

Videos

1. How To Invest In Renewable & Green Energy Stocks
(AmplifyME)
2. How to EASILY Invest in Renewable Energy for INCOME! 5 Green Energy ETFs Compared & Reviewed!
(Passive Income Investing)
3. The Simplest Way To Invest In Renewable Energy
(Follow the Money)
4. Green energy stocks in India to invest in 2022 | Best sector for Investment in 2022 |(Hindi)
(Swinglist)
5. Renewable Energy Project Finance Basics with Josh Pearson ’97
(Irving Institute)
6. JIF Class "Harnessing Renewable Energy Investment in Jakarta”
(Jakarta Investment Centre)

Top Articles

Latest Posts

Article information

Author: Ms. Lucile Johns

Last Updated: 12/20/2022

Views: 6467

Rating: 4 / 5 (61 voted)

Reviews: 92% of readers found this page helpful

Author information

Name: Ms. Lucile Johns

Birthday: 1999-11-16

Address: Suite 237 56046 Walsh Coves, West Enid, VT 46557

Phone: +59115435987187

Job: Education Supervisor

Hobby: Genealogy, Stone skipping, Skydiving, Nordic skating, Couponing, Coloring, Gardening

Introduction: My name is Ms. Lucile Johns, I am a successful, friendly, friendly, homely, adventurous, handsome, delightful person who loves writing and wants to share my knowledge and understanding with you.