The renewable energy industry is growing rapidly as governments seek to meet their commitments to reducing CO2 output and dependence on fossil fuels. In order to achieve these aims many governments are incentivising renewables.
This makes the renewable energy sector a very GOOD investment opportunity.
What type of renewable energy should you invest in?
However the sheer range of different technologies and types of energy sources currently being developed can make it difficult for the individual to know how and where they should put their investment.
Energy can be produced in a renewable manner in a variety of ways. No single technology is perfect, each having drawbacks as well as benefits. For example:
- Solar and Wind energy are obviously reliant on weather conditions.
- Biomass is reliant upon the availability of affordable raw materials (materials which will be increasingly expensive as more countries use biomass plants to generate electricity).
- Tidal power generation is still in its infancy, prohibitively expensive and not yet fully developed as a technology.
There are several factors an individual should take into account when deciding what technology to invest in and what location to invest it.
Is location important?
The country you decide to make your investment in will naturally influence what renewable energy source you will be investing in. For example one would be hesitant to invest in solar power in a country such as Scotland… not known for its sunny climate.
Therefore, Wind Power would be a far better fit.
Scotland has the highest wind capacity in Europe. Indeed some estimates calculate that Scotland contains 25% of the European Union’s entire potential wind capacity.
Furthermore Scottish wind turbines are more productive than turbines elsewhere in Europe.
On average wind turbines in the European Union produce 25% of their maximum rated power whereas in Scotland turbines, on average, produce 40% or more of their maximum rated power. It follows then, that if one was planning to invest in Scottish Renewables, one would gain a higher return by investing in Wind Power.
Another matter to consider is the position of a country’s government on the Renewable Energy sector.
Is the Government seeking to stimulate growth?
In the case of Scotland, the recently elected SNP (Scottish National Party) government has set a target of generating 100% of the country’s energy needs from renewables by 2020. From this target, the individual investor can see that Scotland is committed to finding renewable energy sources.
The Scottish government has also introduced a series of feed-in tariffs to encourage development. These feed-in tariffs pay operators not only to generate electricity for their own use, but also pay for any excess energy that can be re-absorbed into the National Grid.
This twin incentive demonstrates Scotland’s commitment to unlocking its wind potential and the opportunity available to the investor.
What kind of guarantees are available for renewable energy investments?
It cannot be guaranteed that the wind will always blow. It can, however, be guaranteed that wind energy is not subject to the variable and at times extremely prohibitive fuel costs that underpin many forms (including some renewable likes biomass) of energy generation.
At a time when the price of traditional fossil fuels is skyrocketing, it is reassuring to know that your investment is not only insulated from this but also offers an alternative.
Whilst we would naturally argue for investment in wind energy there are a multitude of differing options available. What form of renewable energy would you invest in?