Non-renewable source of energy are going to deplete within some time and the future lies with use of renewable energy sources. However, before you start considering making investment in renewable energy, let us look at some of the points, which highlight the present position of this industry and future growth potential.
Things to be aware of about investing in renewable energy
Renewable Energy is Cheap:
Many believe that renewable energy such as wind and solar energy are costlier than the conventional energy sources. On the contrary, it is instead cheaper and at many places, it would be economically viable to use solar as well as wind energy. In the coming years more and more people will start installing solar panels in their houses as it would mean better financial sense over the long run.
Prices for solar panels have already gone down by a third from what they were in 2008 and further reduction is expected in future. It is also estimated that by the year 2030, as much as seven percent of world electricity requirement will be met by these renewable sources of energy.
Obstacles to Investment:
In many countries, governments are not taking the initiative to support use of renewable energy. The topic has been politicized than required and there is not stable policy created which supports use of renewable energy. There are skewed tax reliefs, retroactive changes in incentives for renewable and higher subsidies on non-renewable energy sources which are which are holding back the investors.
Role Models:
We have South Africa, Denmark and Germany as role models where use of renewable energy has been successful. The main behind this success is the large as well as diverse ownership base in these three countries. As for example, there are more than eight hundred renewable energy co-operatives in Germany and the government has created strong incentives for the use of renewable.
Similarly, in Denmark different communities have gained right of investing as well as profiting from wind energy programs. Lastly, if we look at South Africa, recently it asked for tenders from companies interested in providing solar as well as wind energy to the government at the lowest prices. It was clear approach from the government, which will increase competition, help the prices to go down as well as create jobs.
Initiative Taken by Businesses:
Businesses are taking steps about energy procurement. They are attempting to procure renewable energy directly to lower their reliance on government policies. This will also help them to mitigate the risk of disruption of their business as well as keep them isolated from effects of price volatilities.
Public Support for Renewable Energy:
There is considerable public support for use of renewable sources of energy and what is required now is investment by large institutional investors. Another option is crowdfunding that can help people to get associated with any project, which are going to provide reasonable returns.
Role of Developing Nations:
In some years, developing countries may lead in innovations and some examples are already available of how it is happening. One example is of innovation in energy sector with the help of mobile technology.
In Africa, use of concept such as M-PESA has helped the renewable energy industry grow at a fast rate. Companies like “Off.Grid:Electric” have made use of service based concept and selling solar energy on the basis of pay-as-you-go concept where users can make daily payments by using mobile money and it similar to establishing a micro-utility.
Summary:
The prospects of investment in renewable energy sector are bright but at many places, government policies are holding back the industry from achieving the kind of growth rate it is capable of reaching.