Renewable Energy Investments

The vast majority of fossil fuels whose burning is the single biggest source of harmful greenhouse gasses, are used in the production of energy. International efforts to reduce these emissions levels and the fact that reserves of fossil fuels which are financially viable to extract, are running low, is stimulating sustainable investment capital to be directed towards renewable energy.

The EU is the most proactive region in this regard with an official commitment in place to achieve 20% of all energy used on its territory to be from renewable sources by 2020. In order to achieve this goal, various subsidies and other stimulations have been put in place to attract sustainable investment from the private sector. The result is that renewable energy capacity, through private capital investing in solar, wind, wave etc. electricity generation is slowly but surely moving in the direction of meeting this target.

Although not usually associated with a positive, proactive approach towards sustainable investment in a low-carbon economy, China is also one of the most active regions in this regard. 2009/10 saw China make massive domestic investment in renewable energy capacity, especially wind-generated electricity capacity.

The major hurdle to be overcome in replacing fossil fuels with renewable, low carbon sources of electricity production is price competitiveness. Electricity produced by coal-burning power plants is still significantly cheaper than renewable alternatives. However, ongoing sustainable investment in renewable energy technology means that the gap is closing. Advancements in solar power technologies, such as the efficiency of photovoltaic cells, means that the cost of producing electricity from solar, is getting close to being competitive with fossil fuels.

Feed-in tariffs fixing the price that electricity produced from renewable technology, and ensuring off-take are in place across the EU. This is designed to stimulate sustainable investment by providing security and predictability which large-scale investment in renewable energy requires.

Investments in renewable energies were, like many other forms of sustainable investments, performed comparatively resiliently over the recession of 2007/08, and have since rallied impressively. By 2009 investment levels in renewable energy returned to almost pre-recession levels with $4.1 billion invested. When statistics for 2010/11 are available, it is expected that investment will have reached a new record high.

Sustainable investments levels across the renewable energies sector show solar to be the most popular recipient of capital, followed by wind and biofuels. Enough solar energy reaches earth over one hour to, if harnessed, power our energy needs for a whole year. This in itself would make sustainable investment in solar attractive as a concept. As luck would have it electricity produced by solar is very carbon efficient.

The fact that technology in solar is also the most cost-efficient in the sector is a further attraction which attracts investment. At the current rate of development of solar technology, it should be price competitive with coal-burning power stations in the not to distant future, without government fixing of feed-in tariffs.

For private investors exploring sustainable investment opportunities in renewable energies, solar is also the most accessible option. The average private household can invest in domestic roof-top solar panels, saving on energy bills and selling energy produced to the grid, which offers good, secure returns.