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There Are Opportunities for Growth in Renewable Energy

Renewable energy has gained popularity since most developed countries are rooting for reduced carbon emissions. In Europe, the government gave a 30% target in renewable energy use by 2020. This means that renewable energy has to meet 30% of the electricity demand for the country. This target is yet to be achieved.

What investment opportunities does renewable energy present?

When this strategy was announced, it was met with a lot of ridicule. The people thought this was a hard-to-achieve ambition. The target seemed unrealistic. Subsidies needed for these plants’ success were the major pain point for taxpayers, who believed this target would cost them big-time. During the past decade, things have significantly changed, and the target is achievable without a doubt. By 2010, the use of renewable energy had risen by 7%.

Most of these plants don’t need subsidies anymore. Furthermore, the supply of energy from these sources has risen to 45% of the total electricity supply in 2020. This has resulted in reduced carbon emissions. The cost of buying and installing renewable energy equipment has fallen. These include solar plants and onshore windmills. This fall has, in turn, reduced the subsidy required to sustain these plants.

For investors, the creation of the renewable energy sector within investments has come with some advantages. Shares in the stock market are trading at a 20% premium to the net asset value. Electricity costs have been rising in 2020 in the United Kingdom. This is due to the rising demand caused by the lockdowns imposed to control the spread of Covid-19. However, in general, electricity cost has gone down since 2005.

With a nuclear plant being built in Sizewell (Sizewell C), nuclear energy will supplement renewable energy. This will maintain the market share at 20%. Renewable energy will be contending with gas-powered generation to meet the UK’s energy demands. Sizewell C is expected to be complete and functional by 2031. Renewable energy investment is attractive. Most of the funds have assets in the European Union as well. There isn’t much room for growth in the UK and the larger EU since the renewable energy sector is developed. In the US, there could be a real chance for investors to grow in this sector.

However, investments may be affected by large-scale expenditure without tangible returns. This is because of the growing zeal for greener energy shown by most developed countries. The shift from fossil fuels to renewable energy may give investors a chance to experience sustainable growth. By 2050, the UK targets to have a net-zero carbon emission. This will require about 400 GW of wind and solar power generation capacity. Recent negotiations have shown that offshore wind assets have doubled their initial capital. Investors can view this as a good deal in the renewable energy sector. In summary, investors should not shy away from investing in renewable energy. Most of them are appealing. The notion that utilities in this sector are unattractive is wrong. There is a real opportunity for investors in renewable energy.

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