The Investment Opportunities in the Next Decade
In portfolio construction, environmental risks are becoming increasingly important.
The reason is that this ethical approach allows you to invest according to your values and principles.
Recent years have seen the transition from traditional fossil fuel to sustainable energy security accelerate rapidly.
Three main pillars are supporting this effort, battery technology advancements, emissions-reduction policies, and regulations and standards that promote energy efficiency
Battery storage, hydrogen power, wind and solar power are among the areas that are expected to have a significant impact on the future of our planet and the environment.
For example, solar power is one of the most promising areas of clean energy development.
Solar panel installations are rising worldwide due to the rise in energy costs caused by the disruption of the war in Ukraine.
Also, the cost of solar panels has been reducing in recent years, which has made them more accessible for households and businesses.
Renewable energy is one of the cheapest sources of electricity that has the potential to make a global impact.
The renewable energy market could boost the economy by creating jobs in rural areas and lowering fuel imports.
For example, in the wake of the invasion of Ukraine, we learn to become independent in the energy sector and not rely on countries like Russia for energy production.
As technology advances, solar panels and other equipment will become more energy efficient and effective at producing clean energy per square metre.
Companies that are working in this sector are more likely to grow significantly in the next few years.
This is supported by a wide range of policies and people’s preference for renewable energy over fossil fuels is also growing.
Energy storage is one of the most important technological advancements that could drive the industry’s growth to a significant level. This enables us to store energy in batteries to use them later.
Manufacturers have been recycling materials and using green energy products for manufacturing products.
What Does the Collective Future of Renewable Energy Look Like?
The sector is at the forefront of technological development. Globally, the renewable energy market was valued at $928 billion in 2017 and is expected to reach $1.5 trillion by 2025.Bloomberg New Energy Finance estimates that by 2030, this industry will receive $5.1 trillion in investment.
That will provide enormous investment opportunities for companies that are working in the sector to grow massively in the next few years.
Which Countries are Investing in Renewable Energy?
In 2019, China invested $83.4 billion in research and development of clean energy followed by the U.S., which invested $55.5 billion, and Japan $16.5 billion.
We believe investing in renewable energy and climate-friendly energy technologies is appropriate if you want a better future for our planet to help reduce greenhouse gas emissions and achieve net-zero emissions by 2050.
However, the sector is in the developing phase as there are only a few green energy companies to invest in.
The Science Breakthrough of Nuclear Fusion
According to Visual Capitalist, nuclear fusion powers the sun and the stars, where immense forces compress and heat hydrogen plasma to about 100 million degrees Celsius.
At this temperature, the lighter particles fuse into helium, releasing enormous amounts of energy.
U.S. scientists have recently made a major discovery at the National Ignition Facility (NIF) which may revolutionise energy generation and use.
Scientists have succeeded in producing more energy than used from nuclear fusion for the first time.
In addition to power generation, fusion is expected to be used in other markets, such as space propulsion, marine propulsion, and medical and industrial heat.
Why Invest in Renewable Energy?
Bloomberg Intelligence estimates the fusion market will eventually be worth $40 trillion.
Technology is expected to grow in the future and demand is expected to rise. Companies involved in the sector will hugely benefit from the secular trend.
With a combined asset value of $56 trillion, Pension funds worldwide are beginning to invest in the sector.
Renewable energy is one of the cheapest sources of generating electricity. Its production has the potential to make a global impact as technology continues to improve and cost continues to decrease.
The YFS Intelligent Wealth Fund is committed to investing in highly ethical, social and environmental companies that have a material positive impact on our society and environment.
We are convinced that transitioning to renewable energy sources will result in more dependable and robust production.
This is partly because we believe investing sustainably is the right thing to do for our planet and will help safeguard the future that will create a better world.
However, our sustainability objectives don’t mean we sacrifice return but empower companies to achieve their sustainability goals.
Awet Ghirmay, Head of Investment Research
If you’re interested in learning more about this topic, please find the link here.
More information about the fund can be found here: Hargreaves Lansdown or AJ Bell
Fund is authorised in the United Kingdom and regulated by the Financial Conduct Authority (FCA) Firm Reference Number:754570.
Risk warnings
*The value of investments and the income derived from them may fall as well as rise. You may not get back what you invest. This communication is for general information only and is not intended to be individual advice. You are recommended to seek competent professional advice before taking any action. All statements concerning the tax treatment of products and their benefits are based on our understanding of current tax law and HM Revenue and Customs practice. Levels and bases of tax relief are subject to change. This blog is based on my own observations and opinions.
