Guide to becoming a part of renewable energy investment boom
Money talks and, as shown by Preqin investment think tank, funds which are focusing solely on renewable energy (RE) infrastructure raised $42.3bn of capital in 2018, which is two times more than in 2017. Industry outlooks are projecting up to $2tn such investment in the next 15 years meaning more and more investors will be lured by the green energy. In this article, we will try to explain the reasons for this boom and demonstrate how Grinvest helps to fuel this investment.
- First, climate regulation became a huge incentive to prompt governments to take action and support renewable projects, often in the form of subsidies and tax incentives, making RE projects very attractive for private capital. Although many governments are now abandoning those measures, falling generation cost is still making such investments justified and commercially viable.
No wonder that new BNEF research showed the biggest drop in energy investment in 2018 happening in China, where government policy ditched subsidies for solar projects this summer. However, because of the falling costs of RE, the YOY additions of projects have increased and this is likely to be the case for 2019 meaning every year industry has to run faster to stand still.
- The second reason for green energy investment boom is a widespread low carbon footprint movement. Renewable energy assets are becoming prominent in portfolio selection of pension schemes and insurance companies and this trend continues to escalate.
Investors are demanding more corporate accountability for environmental, social and governance (ESG) issues to make sure that their investments coincide with their personal or organizational values.
- But most importantly, sustainable investing is competitive on an IRR and risk-return basis and can propel long-term returns. Hefty evidence shows that ESG factors have a positive or at least neutral effect on returns.
Since the 1990s the MSCI KLD 400 Social index, which includes sustainable activity companies, has outpaced the S&P 500, with returns of 11.2 percent versus 10.7 percent.
So what does it mean for you? Unfortunately, there is a mismatch between the abilities of conventional investors and the requirements of investments funds which have a high investment threshold. Therefore, those, wishing to capitalize on the green energy-momentum, are usually constrained to do so.
We at Grinvest strive to stimulate and develop the market — making sure that a proper vehicle for private capital of any size to invest in RE exists all over the world. We give investors, big and small, a simple way to earn money by investing directly in operating solar projects while earning yields from 6% and above.
Grinvest launch is expected in June 2019. Follow us on our incredible journey and join us on Instagram, Medium, Facebook and Telegram to get more information on what we do. Let’s grinvest together!
