In Focus: Investing in Renewable Energy
Besides being good for the planet, investing in renewable energyis a rapidly emerging trend among the world’s biggest investors. What if I told you the world’s third-richest man, one of the biggest investment banks in the world, and the country with the largest national economy in Europe all have huge investments in renewable energy sectors? It is great to invest in things you care about with the hope of improving the world, but it doesn’t hurt to follow smart money when doing so.
Warren Buffet, the third-richest man in the world, seeks investments in undervalued sectors that deliver consistent returns over long investment periods. Late last year, Buffet invested billions of dollars in two solar farms located in Arizona. The two farms will generate enough electricity to power more than 200,000 homes, but trust me when I say Buffet did not make the move simply because it was “the right thing to do.” His enormous investment in these projects highlights his investment thesis that solar energy will produce consistent annual returns as energy prices continue to rise.
Goldman Sachs, the fifth-largest bank in the world, called renewable energy sectors “one of the biggest profit opportunities since its economists got excited about emerging markets in 2001.” And they aren’t the only ones who think this market shows enormous potential. Last year, U.S. investors led the world with $56 billion invested in renewable energy (a 33% increase from 2010). Goldman Sachs, not looking to miss an opportunity, has pledged to invest $40 billion in renewable energy projects over the next decade.
Lastly, Germany, with the largest national economy in Europe and the fourth largest in the world, recently reached a historic milestone regarding renewable energy and solar energy in particular. Last month, half of Germany was powered by solar. You read that right—50% of Germany’s midday electric needs were met by 22 gigawatts of solar power (equivalent to 20 nuclear power stations running full blast). “Never before anywhere has a country produced as much photovoltaic electricity,” said Norbert Allnoch, director of the Institute of the Renewable Energy Industry. This is a historic step towards Germany’s goal of using 100% renewable power by 2050. Imagine the potential in the U.S.; we receive 3900% more sun than Germany, yet Germany currently produces 6000% more solar power.
Clearly, there is enormous room for growth in renewable energy sectors both in the U.S. and abroad. So when considering investments that will have the greatest impact, don’t forget about return on investment. You and I want to help the world, but there is no reason we shouldn’t seek reasonable financial returns while we’re at it. Renewable energy may prove to be the perfect nexus between creating social / environmental progress and earning consistent financial returns on your investment.
Mosaic is an online marketplace for investing in clean energy infrastructure.They are on a mission to open up clean energy investing to the public and fundamentally change the way energy is financed. Learn more and start investing at www.joinmosaic.com
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