Green Energy

According to a recent study, if emissions continue to rise and are not controlled, the atmosphere will warm by approximately 2.7 degrees Fahrenheit above pre-industrial levels by 2040 (Stark, 2019).

It takes time to replace non-renewable energy resources with renewables. The alternative sources of non-renewable energy come from renewables.Fossil fuels are limited, and they have unpredictable costs. Technological advancements have helped in the production of various energy services with renewable energy sources. Moreover, the governments of many countries have started investing in the renewable energy sector. All these activities have increased growth opportunities in this sector.

Government policies regarding climate change and the use of renewable energy are becoming stringent. The future looks green.

In 2017, the global renewable energy market was valued at $928 billion. It is expected to be around $1.5 trillion by 2025, at an annual growth rate of 6.1%. Astudy by Bloomberg New Energy Finance shows that this industry will receive an investment worth $5.1 trillion by 2030. Further, renewable energy sources will produce over 60% of 5,579 GW of new energy capacity

The study also says that the market share of fossil fuels is likely to fall by approximately 46%. Large-scale hydropower will rise as a part of green energy resources. Similarly, the combined share of solar and wind energy will increase from 3% to 16% by 2030.

Rooftop solar panel installations will rise, and their costs will reduce. They will be a significant source of electricity in houses and buildings. Moreover, there will be a rise in on- and off-shore wind power plants for energy generation. CO2 and other emissions will reduce with an increase in the use of renewable energy sources.

Many nations have spent huge sums on green energy projects. The Bloomberg study says that some developed European countries will spend around $967 billion on green energy by 2030.

Renewable energy market has seen impressive growth in the past years. Even though fossil fuels are still the primary energy source, renewable energy has become a big part of the energy sector, especially in the last couple of years. It is also because of the rising concerns of climate change that people have started looking for alternative energy sources.

There is no doubt that the future of renewable energy is bright. It is good news for investors. Investing and holding the stocks of renewable-energy-based companies can pay handsome returns in the future.

Renewable Energy ETFs

Investing in an ETF (exchange-traded fund) like the Invesco WilderHill Clean Energy (PBW) is the easiest way for investors to contribute to the green energy sector. The Invesco WilderHill Clean Energy ETF invests in indexes with stocks of publicly-traded companies in the United States that are engaged in the advancement of cleaner energy and conservation. Even though the return of PBW has not been as promised in the past ten years, it still has a lot of growth potential in the future.

The NAV (net asset value) chart shows that the value of the ETF is growing. But due to the Covid-19 pandemic, it has gone down slightly in the past few months. This particular ETF includes stocks of 39 companies involved in the clean energy sector, including top holdings of companies like Enphase Energy Inc. (ENPH), Tesla Inc. (TSLA), and Sunnova Energy International Inc. (NOVA).

Another similar ETF that invests in green energy companies is the iShare Global Clean Energy (ICLN). It has invested in 42 companies involved in this sector. Its top holdings include ENPH, SolarEdge Technologies Inc. (SEDG), and Vestas Wind Systems (VWS).