Ongoing concerns about climate change and the growing global demand for energy are forcing many governments worldwide to change their energy policies toward renewable energy sources. According to some estimates, $13.3 trillion will be invested in energy production by 2050, 77% of which will come from renewable energy sources!
Renewable energy is energy derived from sources considered naturally renewable and virtually inexhaustible. Other names for renewable energy are “green energy” and “clean energy.”
An example of renewable energy would be the sun because it will continue to shine, although its availability depends on the season and weather. The same can be said for wind and waves.
Types of renewable energy
The most popular types of renewable energy sources:
- Hydropower
- Wind power
- Geothermal energy
- Biomass energy
- Tidal energy
- Solar energy
Hydropower is the most popular source of clean energy worldwide. The global installed capacity of hydropower exceeds 1,295 GW, representing over 18% of the world’s total installed capacity for energy production and over 54% of the global capacity for energy production. Renewable energy sources.
According to the estimates of DNV GL, the world’s largest certification center for the energy sector, global energy consumption will increase by about 10% by 2050. Green companies will be responsible for generating the electricity: 80% of all electricity will be produced from renewable sources by that time. In particular, 40% will be solar and another 30% wind power. These two together make up only 9% of the world’s electricity.
The world’s energy companies are actively switching to ecological programs. For example, Royal Dutch Shell plans to cut oil and gas production costs by 40% and annually invest $6 bln in renewable energy. Total France invests $2 bln in green energy annually and plans to increase investments up to $3 bln in the near future. BP has similar plans and announced increasing “green” investments up to $5 bln.
When you invest in renewable energy through the stock markets, you get:
- Exposure to one of the fastest-growing industries in the world
- Exposure to innovation
- Environmental, social, and governance (ESG) investments – investments that seek positive returns and long-term impact on society, the environment, and business outcomes.
- Protection of existing capital from inflation
- Opportunities for capital appreciation and financial goals
- Opportunities for portfolio diversification
- Opportunities to build a stream of passive profitability through dividends
- Very high liquidity of assets (you can buy and sell your assets in seconds)
Due to increased liquidity, you can take advantage of low investment costs (spreads and commissions)
How to invest in renewable energy?
Remember that you need the right tools and competitive conditions to invest in renewable energy. But let’s look at what trading and investment tools you can use.
The first step is to learn Stock Trading. It’s not rocket science, but still, you should know at least basic principles and patterns.
Secondly, open a real account with a regulated investment intermediary, choosing from the best forex brokers in Nigeria. Then you’ll need to find a financial market trading platform that gives you access to renewable energy stocks.
Now that you have an intermediary and a trading and investment platform, it’s time to look at various financial instruments that can give you access to the renewable energy industry. They include:
Renewable energy company stocks
Contracts for difference (CFDs) stocks for renewable energy
Exchange-traded funds (ETFs) for renewable energy
Each option has advantages and disadvantages, and each investor must individually select suitable instruments based on capabilities, personal financial goals, and risk tolerance.
Ultimately, suppose renewable energy demand continues to grow at its current rate. In that case, green energy stocks will be attractive, especially to long-term investors who plan to stay in the market for the long term. Investing in publicly traded alternative energy companies could yield above-market returns due to increased demand for green energy, a surge in legislative and financial initiatives, and increased energy consumption.
