The global economy is on the verge of switching power sources which are primarily directed towards a cleaner and renewable alternatives. Any form of renewable energy is considered as one of the most significant emerging changes in the utility market. That shift will sooner of later disrupt a great part of the market. A smart investor is the one who takes the opportunity of this kind of situation and books the profit for him/her beforehand.
Some of the green energy sources include:
- Wind energy
- Solar energy
- Hydro energy
- Ocean waves and currents
Investing in renewable energy is a decision that can fetch you satisfactory returns eventually.
At what speed is renewable energy growing?
Renewable energy has grown by leaps and bounds in the last few years. As per a report shared by the International Energy Agency (IEA), its sources reached 25% of global electricity generation capacity in the year 2018. Not only that, the IEA predicts the renewable energy generating capacity growing by another 50% through 2024 under its least capacity scenario, with even faster growth possible if governments continue to put the right policies and financial incentives in place.
Top Reasons to Invest in Renewable Energy Stocks
Rate of return
The top reason which can drive someone to go for stocks is the high yield and rate of return of these stocks. As the government is backing this initiative globally and increasing official installation targets for renewable energy, these stocks are expected to give a good rate of return in the coming years.
Currently, the average rate of return on a renewable energy stock is 6-8%, and it can be predicted that this rate will go up to 10-15% in the next five years. By the year 2040, around 49% of the total electricity will be produced by using renewable energy sources; this surely counts as the best reason to keep renewable energy stocks for the future. This reason is good enough to start your stock market trading journey with stocks and see your returns grow.
Support of the Government
Our government is continuously making efforts by implementing laws and policies and giving a strong budget for the renewable energy sector. The prospect of the renewable energy sector can be mapped by these efforts by the Government,
The government has realized the need to get more renewable energy sources. With the passing time, more and more people will also understand this need and the government will increase its budget towards this sector. If you have shares or stocks of a company belonging to this sector at a time when the industry is at its peak will, it’s a no brainer that it will let you earn massive profits.
As we all know that the renewable energy sector is quite new in the market, there is a huge scope of technological progress in this industry. Every day, new technologies are being invented to reduce the effective cost of installment, so that more people, including the rural areas, can afford renewable energy sources. Apart from this, as mentioned, the government is also constantly working to encourage the use of these energy resources; one such example is the usage of electric vehicles to decrease pollution.
With the advancements in technology and the future scope of new technologies within the sector, you can easily consider investing and keeping the shares as long as possible. One best thing about these shares is these share prices are continually rising and will rise without any doubt in the near future.
Major Investment could lead to 63 million new jobs by 2050 in this sector
Currently, there are more than 11 million people working in the renewable energy sector globally, while a total of 3.3 million people work in the energy efficiency industry across the United States and Europe alone. According to the International Energy Agency, most of the jobs related to the energy-efficiency sector directly create local employment opportunities within small- and medium-sized businesses.
One more compelling reason to invest in renewable energy stocks is the stability of returns this sector provides to an investor. The major reason behind this is because wind and solar energy are not seasonal and are available throughout the year, and to everyone. The government also encourages its usage by providing regular incentives and subsidies to anyone who uses these resources, and utilizing this means its increase in the value of the companies of this sector.
For example, if we consider the electricity price, it will only rise in the future as water sources are going extinct. Everyone on this planet will start looking for other sources to fulfill their energy requirements, and this is when renewable energy stocks come into the scene. If you are currently holding shares of this sector, you should consider preserving these shares for the future as this sector is the future of our earth. And if you don’t have shares in this sector, then you should definitely give it a thought, as it’s the time when everyone is thinking of switching to renewable energy sources.
Why invest in renewable sector stocks now?
There has been an exponential rise in countries and companies investing in renewables in recent years. With the Renewable Energy stocks increasing by 80% since the year 2014 as compared with the FTSE World/ Oil and Gas increasing by just under 20%. It is obvious that investing in any form of energy infrastructure is uncertain, as a lot of companies are relying on government funding to keep going for the time being.
There is still a long way to go for complete green-living but globally, we are definitely making great efforts towards utilizing these energy resources. Very, soon, the human race will breathe in a planet that thrives on renewable energy – and as far as investments go, it’s definitely a sector worth considering.