10 Reasons Green Investments are a Great Idea
By Richard Franks
Green investments are all the rage these days. And they don’t just posit a good return on your money: they promise to give you a warm glow inside.
To know what to look out for in the rapidly expanding world of green energy investment could not only earn you money but could also save the planet.
Read on to find out how…
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A great swathe of renewable energies is coming of age. Thanks to consistent reminders of the sorry plight of Planet Earth it is no longer a secret that we’re in dire straits. And here are just some of the environmental ailments we have caused over the years (and are still causing):
- Loss of Biodiversity: Human over-population has caused and continues to cause massive destruction of natural habitat. Our use of forests, lakes, tundra and deserts for industrial purposes has leached nutrients from the ground and caused native wildlife to disperse.
- Loss of Marine Life: It isn’t just plastics that contaminate Earth’s oceans these days. A higher concentration of carbon than ever before is causing microscopic sea creatures to die. In turn this has a serious effect on animals further up the food chain.
- Loss of Ozone: For decades we have been aware of the depletion of the ozone layer. Although our reducing the poisonous emissions of manufacturing has slowed the widening of the hole in the ozone, there is more that can be done to prevent it worsening.
- Household and Industrial Waste: Over-use of non-recyclable materials (such as plastic) is causing a waste pandemic across the globe. Most countries cannot recycle all of their waste which leads to it being transferred around the world and usually added to landfill sites and unregulated oceanic dumps.
- Acid Rain: Mostly a result of the emissions from manufacturing (although from volcanoes too), acid rain is a subtle yet deadly by-product of our interference in the global bio-system. Acid rain spoils crops, leaches nutrients from the soil and contaminates water courses.
That is just five of the major environmental challenges faced by us today but the list of other problems is endless, and even First World countries are hard-pressed to stop the rot.
What can be done?
Take a look at some of these renewable energy projects. These are the kinds of enterprise that actively seek out green energy investors, like you. They are entrepreneurs with not just a want to earn a living but also to make a viable and real change to the state of the Earth.
- Torrs Hydro: A community-owned micro-hydroelectric scheme based in Derbyshire. Located on the River Goyt in the foothills of the Peak District in central England, the hydro plant consists of a 2.4-metre diameter steel trough turbine. It generates up to 63 kW of electricity.
- Lodge Farm Anaerobic Digester: Generates 160kW of electricity and 200kW heat from waste products. Some of the electricity and heat is redirected onsite but any surplus energy is exported to the UK’s National Grid.
- Underground rocks: At the nadir of the UK’s deepest ever borehole in Cornwall is being built an underground power station. The heat from hot rocks will power a geothermal process that developers hopes will generate a substantial amount of zero-carbon electricity.
They are creative, ambitious and above all environmentally conscious.
What’s more there are more than 460 community energy schemes in the UK that have generated energy equivalent to the power needed for around 60,000 homes.
And their number is growing.
A recent survey by trade organisation Community Energy England revealed the capital value of the UK’s community-led renewable energy businesses to be about £50m. In combination, and using a mixture of solar, wind and hydro capture, renewable energy schemes can at present deliver similar quantities of energy as some offshore wind farms.
What sorts of eco investment returns can I expect?
As well as helping the planet, schemes such as these have the potential to generate substantial profit for eco investors. Eco-enterprises seek out investments as part of their development strategy and can often pay a handsome return.
Some businesses offer returns of up to 13% per annum but on average investors can expect between 4% and 8% plus a tax relief.
Green investment is after all the lifeblood of the eco sector, for without well-meaning angels there can be no business to speak of, and no change to the current rate of usage of fossil fuels.
In order to bring about the much-needed energy transition – not just in the UK but worldwide – investors need to come forward and do something that goes beyond a mere business interest.
Socially responsible energy projects will revolutionise the energy market if the investment is there. It is estimated that developed Europe will spend roughly $67 billion on new green energy capacity by 2030.
That being said, although the figures for renewable investment are tempting, especially at a time of great uncertainty, investors should be prepared to take a risk. Most community eco energy schemes are not covered by the Financial Services Compensation Scheme.
10 reasons to invest green
- Renewable energy is on a crest of a gathering wave. Fossil fuels are running low and in response to their depletion the price of fossil derivatives is fast increasing. There will eventually be no alternative other than to use green energy. At which point your investment will already be yielding healthy returns.
- Green investments are about putting your money to work in projects that will benefit the environment rather than harm it. To do so will benefit your company’s reputation as well. What’s more, the environment is a near worldwide concern; to invest in positive change will benefit you and your business.
- Most green energy investment projects rely on their investors to know exactly what they are investing in. The forecasts are transparent, and the way in which your money is used is highlighted throughout the process.
- Renewable energy investment is a growing trend. According to the Ethical Investment Research Service (EIRIS), ‘the amount of money invested in Britain’s green and ethical retail funds reached a record height last year of £ 11.3bn, and over the last decade, the number of ethical investors has tripled, from 250,000 to three-quarters of a million.’
- Socially responsible investments are creative, thoughtful and worthy. Some investments in sustainable produce may even assist in the reduction of the poverty of under-developed countries.
- You are able to use funds from your private pension to pay for an eco investment. That money is legally permitted to be directed to a socially responsible investment, allowing a flexibility of investment.
- You can make a big difference to the planet by taking small steps. You can’t save the world by throwing money at a project to suddenly bring fresh water to a thirsty African village, but a careful investment in a project that is either culturally or environmentally beneficial adds to what can be a life-saver (or Earth-saver) of the future.
- Green energy investments may carry some risk but are not intrinsically high risk. After all, eco projects are one of the few sectors that are more or less recession proof. And as the years go by the call for renewable energy increases.
- There is a wide variety of businesses for you to choose from, and not just in the UK. Invest in companies that are undertaking projects close to your heart or that will benefit your community; there are long term and short term opportunities too. Ethical funds are also an option: The term ‘ethical’ describes funds managed with social, environmental or other responsible motivations at heart.
- Look at some of the problems facing the world today. Not all of them are to do with the environment. Socially responsible investments encompass projects that are countering issues of poverty, old age and starvation not just resource sparsity.
Rising market share
The future is bright for green energy investors elsewhere in the world too. The United States is set to receive nearly $ 5.1 trillion worth of investment in new power plants by 2030, according to a report by Bloomberg New Energy Finance.
By that year it is estimated that, ‘renewable energy sources will account for over 60% of the 5,579 gigawatts of new generation capacity and 65% of the $7.7 trillion in power investment.’
The majority of the US’s green investments are expected to be in hydro-electric power generation. However solar and wind energy will follow suit and will have a combined share of global power generation of around 16%, according to the Bloomberg report.
Most of the increase in solar power generation will be because of the stepping up of installation of rooftop solar arrays and utility solar power plants, especially in the poorer parts of the world.
Many countries still lack the geo-political stability that is needed to form a grid-like infrastructure. It is places such as these (especially Latin America and India) that will see the greatest growth in solar generated power. Bloomberg’s analysts estimate that, ‘Latin America will add nearly 102 GW worth of rooftop solar arrays during the study’s time period’.
Adding infrastructure to enable nations to generate solar power will also benefit the coffers of their governments, with less money being paid to import expensive fossil-based produce.
For someone who is looking for a project to invest in, one that can benefit their income as well as benefit the Bigger Picture, an eco-investment would on the face of it appear to be the way forward.
Eco projects are growing in number and the success of a relative few is an indictment of how keen we are to at last reduce the impact we have had on the environment over the last century or more.
There is money to be had but there is risk as well. But in essence an investor must take a risk no matter what the project is they are investing in. Of renewable energies there is an added factor: the sense of doing something right and reputable, and doing it with worthy intention.
The impressive growth in renewable energies is not something to be ignored and may very well prove to be as valuable a commodity for an investment portfolio as it could be for the preservation of the environment.