Congratulations on your interest in investing in clean and renewable energy! We hope that you find and invest in a company, product, or project that can generate profit for you.
Energy Transition
Energy transition is a process of transforming the global energy sector from fossil-based to renewable energy and efficiency. One of the main reasons for this is the need to reduce CO2-related energy emissions to combat climate change.
The concept of the energy transition is nothing new. Throughout history, the energy sector has seen energy transitions associated with mass electrification, oil, natural gas, or nuclear power. Now we witness the era of renewable energy. The difference between this and previous transformations is that the current global human population and energy demand are a lot greater and continue to grow rapidly. The process has thus expanded opportunities for investors.
Renewable energy resources will increase in terms of electricity generation, fueling road transport, and heat generation.
According to estimates, shares of RES in electricity generation by 2040 will be around 33% in the globe (about 50% in the European Union), 7% in road transport, and 15% in heat generation (WEO 2015).
As a result, RES investments will cover every element in different industries: transportation, construction, etc. Depending on the region, the potential for investment varies. In this context, it is worth mentioning that the major drivers of energy demand in the context of current changes open plenty of opportunities for investors. The majority of the growth in energy demand is mostly in non-OECD countries, but keep in mind that the objectives of each country’s energy policies are also important factors.
| Major drivers of energy demand | What is going on? | What to analyze? |
|---|---|---|
| Policy | National energy transition policies with RES market development plans | National targets, regulations, and funds to stimulate renewable energy market development |
| Human population and economic activity | According to the medium variant projection: – 8.5 billion in 2030 – 9.7 billion in 2050 – 10.9 billion in 2100 | Increased demand for renewable energy and consequently increased investment in renewable energy |
| Energy prices | Fee systems increase the cost of producing energy from fossil fuels | Increase the attractiveness of renewable energy sources |
| Technological developments | Reducing the cost of producing energy from renewable sources | Increasing demand for renewable energy technologies |
Energy policies can vary significantly from state to state and region to region! This also applies to the starting point of the energy transition, for example, the level of current coal consumption in a country. Coal consumption level combined with a country’s RES, extensive RES support regulations, and financing programs can be good indicators of renewable energy market development.
However, there are major differences between countries on energy transition. In some, declarations are not plans and in others, subsidy programs for RES projects have timeframes. Therefore, when analyzing a project, company, region, or market, take into account that energy transition is a multifaceted process, thus it is advisable to stay informed and updated.
Clean Energy – Where Can You Invest?
Energy transformation spans the globe. However, different regions have different rates of change. The greatest pace and investment potential are in the US, Europe, and Asia (especially China, India, Japan, South Korea) and Australia.
Clean Energy – What Can You Invest In?
Renewable energy markets can be divided according to the level of technological development of selected energy sources. The level is at a different stage in the market of photovoltaic panel manufacturers, and at a different stage in the market of green hydrogen and green ammonia.
Renewable energy companies can be divided by energy type and place in the value chain.
The major types of sources of clean and renewable energy:
- Solar energy
- Geothermal energy
- Wind energy
- Hydrogen
- Biogas / Biomethane
- Biomass
- Hydropower
Analyzing national energy strategies, one can conclude that particular investment attention may be drawn to the solar, wind, biomass, biogas, biomethane, and hydrogen markets.
What to invest in:
- Renewable energy system manufacturers
- Installation and service companies
- Renewable energy products
- Renewable energy power plants
- Renewable energy system component companies
- Renewable energy power plant investment companies
Clean Energy – How To Invest?
You can invest in clean energy in several ways:
- You can buy renewable energy shares e.g. through brokerage companies. At FenixWing, you can analyze broker and clean energy stocks. For research purposes, you can gain knowledge from our helpful databases, infographics and/or send us your research inquiries
- You can also invest in clean energy by installing photovoltaic panels, getting a heat pump, or opting for an electric or hydrogen car. The market for renewable energy products is another niche that continues to develop.
- You can invest in clean energy projects through dedicated investing platforms.
Risks
Remember to keep your risk acceptance level in mind when making your decision. Investing always involves risks, they can be very high, as in the case of trading share CFDs, or low as in the case of investing in your own photovoltaic installation. Evaluate each form of investment in renewable energy companies or projects considering risks.
Keep in mind that energy transformation and consequently the development of renewable energy companies and projects takes place with a high degree of political participation. Politics as a factor in energy market regulation and its energy strategies can either support the development of renewable energy or inhibit its development.
As a result, in different countries, at different times, there may be a boom for a particular renewable energy technology or solution and, as a result, an increase in the value of the companies involved in that technology.