How to invest in renewable energy – What you need to know
Renewable energy has evolved positively over the last 15 years, not only due to technological developments and reduced production costs but also due to the government’s interest in sustainability. This has made renewable energy investments an interesting opportunity for the Growth Of Green Energy Stocks. We will explain more about the reasons below.
What are renewable energies?
First of all, we need to ask ourselves what renewable energies are and to find out more it is very helpful to read reviews about energy companies. There are several types:
- Solar energy
- Photovoltaic solar: take advantage of sunlight
- Solar thermal: take advantage of the heat of the sun
- Wind energy: obtained from wind
- Hydraulic energy: obtained from rivers and freshwater streams
- Biomass: extracted from organic matter
- Geothermal energy: it is contained inside the Earth
- Tidal energy: obtained from the tide
- Wave energy: obtained from waves
- Green hydrogen: obtained by electrolysis. It is a chemical process that uses electricity to separate hydrogen from oxygen in the water. To do this, the electricity must come from renewable sources.
Why invest in renewable energy?
Our carbon economy is unsustainable. Fossil fuels are limited, and their volatility increases with uncertainty. Well, it is essential to look for a less harmful, more stable, and sustainable alternative.
Investing in renewable energy is an economic opportunity and is a decision that investors around the world are making more and more in the last decade.
Renewable sources have the potential to grow. According to research conducted by McKinsey & Company, 77% of the new global energy generation capacity by 2050 will come from wind and solar energy.
How to invest in renewable energy?
The financial products we can find are the following:
- Fixed income: green bonds
- Investment funds
First of all, to participate in this new green revolution, we can invest in companies that are fully engaged in these new renewable energies through shares, we can hold a small share in the company.
One way to invest in renewable energy is to buy shares in companies that produce clean energy, such as companies that produce photovoltaic panels and wind turbines, those that install and develop projects, etc.
We can also invest in a fund or ETF. It depends on whether we opt for active or passive management. Actively managed funds are controlled by a management team that makes investment decisions, while an ETF is indexed and therefore more market dependent.
Some platforms allow small investors to participate in renewable energy without excessive initial investments and with interesting returns. Subsequently, these projects are published on the platform, so that users can decide how much and where to invest.