Renewable energy investment – The complete guide

Introduction

There are several ways of investment in renewable energy which will provide huge returns. Investors have a lot of options if they are willing to invest in sustainable energy. This will add diversification to their stocks ETFs and provide opportunities for new investors to invest in this industry. The investment to control climate change and develop climate-change awareness is increasing rapidly. According to Jodie Gunzberg, the managing director and chief institutional investment strategist at Morgan Stanley Wealth Management says that investors can adopt several investment strategies to play their role in climate change and fossil fuel awareness sectors. Not only investors can benefit financially through this, but it will also be a critical factor in improving the global environmental situation.

What is Renewable Energy?

Any energy that originates from natural resources is known as renewable energy. Another term for renewable energy is clean energy. For instance, sun and wind can be used as a source of energy, even though its working depends on weather and time, but it will still keep working eventually. People think that renewable energy is a new concept, but the reality is renewable energy has been around since the beginning of time. People used to use nature’s power for their benefit. For instance, in the front, the power of the wind was used to sailboats in the sea. Sun was used to provide warmth in the daytime. But for the last 500 years, humanity started to attract dirtier and cheaper energy resources instead of using clean and natural power sources.

Renewable energy is becoming popular in many resources as humankind developed ways to capture the power from the sun and wind in less expensive ways. It is one of the important power sources. This sector is also used on commercial and individual levels. People are installing rooftop solar panels to capture the sun’s power to generate power supply for their homes. Some of the rural communities are entirely running on sun and wind sources.

Types of Renewable Energy Sources

Energy can be harnessed from several natural resources, which are cheaper to generate power for various purposes, but it is also suitable for the environment. Following are the popular renewable energy sources:

Solar Energy

The power of the sun is used to generate thermal or electrical energy. This is known as solar energy. This is one of the most environmentally friendly and widely available energy sources. There are several ways in which solar energy can be utilized, such as generating electricity, providing light, and heating purposes on industrial and individual levels.

Solar energy can be captured in three ways: photovoltaic, solar heating and cooling, and concentrating solar power. Electricity can be generated directly through an electronic process while using photovoltaics. We can see the use of this energy in solar-powered calculators, road signs, and homes. SHC and CSP power plants are used to generate thermal energy from solar power. It can also be used to run traditional energy-generated turbines.

Wind Energy

The process of generating electrical or mechanical energy with the use of wind is known as wind energy. The turbines are used to convert kinetic energy in the wind to mechanical or kinetic energy. The energy generated with wind energy can be used for several water pumping or generating electricity. The air rotates around wind turbines, which moves the wind turbines, and this rotation of turbines can be used to generate electricity.

The size of a wind turbine depends on the amount of energy required in a specific sector. The energy produced from wind turbines can be used in private sectors and can also be exported. The most economical way to use wind energy is to design turbines that match the load required. For providing energy for a single home, a 10 kW wind turbine is enough to generate the necessary energy. In addition, for commercial areas, mid-size turbines are enough to generate the energy which can keep these sectors running. For utility-scale projects, the suitable machines are utility-scale. Before constructing a wind energy plant, it is essential to get utility approvals and grip-impact studies.

Biomass Energy

Any organic material that can be obtained from plants and animals is known as biomass. It can be derived from waste wood, crops, and trees. On burning biomass, heat energy is produced, which can be later utilized to generate steam for running turbines to produce electricity. There is a misconception that biomass energy is a greener and renewable alternative to fossil fuels. But, according to recent studies, carbon emission from several types of biomass is more than that of fossil fuels.

Geothermal Energy

The heat that comes from the sub-surface of the earth is known as geothermal. This heat can be found in the rocks and fluid that are present beneath the earth’s crust. Deep holes are constructed to access the underground reservoirs of extreme heat. This heat can then be used to drive turbines that generate electricity. Dry steam, flash, and Binary are the three types of geothermal power plants.

The oldest form of the geothermal power plant is dry steam, in which steam is taken out of the ground directly to move the turbines. High-pressure hot water is converted into cool, low-pressure water in flash power plants. In binary plants, another liquid with a low boiling point is used along with the hot water. Hot water is passed through this liquid, which generates the steam that can be utilized to run the turbines.

Renewable Energy Industry Potential

The global renewable energy market is estimated to have a worth of $1089 million in 2019 and is expected to reach the market value of $1911 Million by 2026. In other words, the CAGR (Compound Annual Growth Rate) of the global renewable market is 8.3% from 2019 to 2026.

Renewable Energy Impact

Renewable energy has a positive impact on several sectors such as:

GDP

According to analysts, if the investment in renewable energy is doubled by 2030, it will increase the global GDP by 1.1% or $1.3 trillion. The reports show that in the coming decade, the global GDP will increase between 0.6% to 1.1% or $700 billion to $1.3 trillion because of the growth in the renewable energy sector. The main reason for the increased GDP will be the increased investment in renewable energy projects. Doubling the shares of renewable energy projects will have a positive impact on the world’s economy.

Welfare

GDP will be affected, but there will be an unmatching positive impact on human well-being and welfare. There will be far more benefits of renewable energy investment than just economic growth. IF the shares are doubled, then by 2030, 2.7% growth in the global welfare sector. It can even rise to 3.7% if renewable energy is used appropriately. Improvement in welfare relies on the following factors:

  • Consumption and investment will play their part in economic growth.
  • Health and Education will have a positive impact on social growth.
  • There will be less environmental pollution, and the emission of toxic gasses will also be reduced.

Jobs

Increased investment in renewable energy will increase job opportunities directly and indirectly. The employment will increase by 24.4 million by 2030. There will be job opportunities available across several technological fields associated with renewable energy. Some of the sectors such as bioenergy, hydropower, and solar will create a significant number of vacancies. Most of the jobs will be in sectors such as fuel supply, installation, and equipment manufacturing.

Trade

The trade sector will also benefit from renewable energy. There will be increased trade of equipment and fossil fuels. As the development in the power sector will increase, the trade of service goods and equipment will also increase. However, this will decrease the trade of other energy sources such as fossil fuels. The increased investment in renewable energy will increase both the import and export business of fuel. Those importers who are trading fossil fuels will switch it with renewable energy sources. This will be highly favourable for them, considering the ripple effects of the economy. Import of renewable energy sources will also be safer to trade because this type of fuel has longer life. As explained earlier, the Global GDP will also increase, which means that the export business will benefit from it. Those countries that are already good exporters of fossil fuel will switch to the new market and benefit from it in the coming years.

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What Drives Renewable Energy Growth?

The growth of renewable energy is driven by several factors such as public interest, government, social acceptability, job creation, community support, public confidence, and private sector involvement. One of the major factors that will contribute to the growth of renewable energy is the social factor. That is how people are more willing to pay for the electricity generated by renewable energy sources than the traditional power plants. This encourages renewable energy sectors to develop and set up more plants to generate cleaner and greener energy.

Investing in renewable energy

There are many ways to invest in renewable energy, but we are going to focus on the following:

Renewable energy Stocks 

You can invest in any renewable energy sector via stock investment. It means that you can buy shares of a particular company that you think has the potential to grow in the future. In this way, you will be making a profit from the company as the company grows. You can explore all the most relevant renewable energy stocks via eToro best renewable energy stocks

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Pre-IPO

Pre- IPO (Initial Public Offering) is investing in a company by  units of stocks. The companies offer this selling of the stocks before the stocks are made public. Because you will be buying huge blocks of stocks, it means more risk is involved in this. That’s why companies offer a discount for the buyers in Pre-IPO placement.

You can Invest through trusted online pre-platforms such as Equitybee, Sharespost, and EquityZen.

Investing in pre IPO companies is risky yet beneficial. If you choose wisely and make the right investment, you can make huge money through pre IPO investment.

Renewable Energy Copyportfolio – Top Green energy funds

Copyportfolio is one of the premium services by eToro. This is an advanced version of copy trading. The Renewable Energy Copyportfolio by eToro is specifically designed for investing in clean energy companies. The main aim of this is to reduce the risk and benefit the current market. The Copyportfolio is rebalanced every quarter to adapt to the best investing strategies. Each instrument in Copyportfolio is counted as a single trader, and each trade depends on the percentage of funds you have. It is similar to copying another trader.

The minimum investment starts from $1000, invest in eToro renewable energy funds today.

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Market growth for renewable energy

By the end of 2020, eToro “renewable energy” yielded a 71% profit. This is a consistent number, when compared to an average 25% gain year return during the 2016-2020 period.

Renewable Energy Copyportfolio

Summary

Renewable energy will be critical to the success of a large number of  sectors that capitalize on the next decade’s key investment megatrends. This is expected to generate up to USD 1.3 trillion in new economic output by 2030.

Renewable energy sector offers investors significant upside potential over the next decade. When investing in renewable stocks, it’s critical to maintain a diverse portfolio and keep an eye on the long-term potential these fast-growing companies possess as they help keep the digital world safe.

Investing in this industry can be done in several ways, notably through Copyportfolio investment, ETF or stock investment.

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