Wednesday, June 17, 2015

Investing in Renewable Energy

Renewable energy investments are attracting a lot of attention. Historically this has focused on hydro and off shore wind, however, solar PV is an increasingly important part of the mix as Individual, institutional and corporate investors look to diversify their renewable energy portfolios.

Solar is particularly interesting when compared against volatility in the wind sector. According to Allianz wind can fluctuate by as much as 25 percent on a year on year basis while solar PV has an annual deviation of between 3 and 5 percent.

Fueled in part by the fossil fuel divestment movement, investment in renewables in gaining steam. This is illustrated by KLP's recent divestment from fossil fuels and reinvestment in renewables. Now that the G7 has made it clear that they are going fossil free, renewable energy investments are that much more attractive. The growth of renewable energy investment is poised to explode. A November 2013 report published by Ernst & Young found that most of pension and insurance funds had no renewable energy investments yet almost a third of respondents expected their allocation to the sector to increase in the next three years.

The long term investors control $71 trillion in assets. Renewable energy has a long asset life and as such it is a great investment for those with long term time horizons. enewables not only have low carbon characteristics, they also have a long asset lifetime and predictable returns.

Long life cycle, predictable returns, tax and branding benefits all make investing in renewables a smart choice.

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