Investing in renewable energy has been one of the booming industries over the past years and is still prospering. One of the obvious reasons why investing in renewable energy is worth it is that it can mitigate the effects of global warming and environmental destruction by preserving fossil fuels.
Like investing in a property or in a stock market, investing in green technology has advantages and disadvantages. You have to weigh the pros and cons to know if it is worth investing. The goal is to help in the preservation of fossil fuels through the use of sustainable energy. This sector allows the investment of your hard-earned money for a long-term return of investment. Know more information on how to invest in renewable energy and have a glimpse of its advantages and disadvantages.
Why Investing in Renewable Energy Worth It?
- Increase in job creation: When there is an increased investment in this sector, there will be an increase in green jobs It is expected that more people will be involved in the production of renewable energy. There will be more rural areas that will slowly progress into an urbanized area. An increase in job opportunities will help improve other people’s status, and it will also boost the global economy.
- Instability of fossil fuel: During this pandemic, almost all industries were affected. Since the need for electricity, water, and gas is constant, this sector is still continuously operational. Based on research, there is a recognizable growth in the financial aspects of renewable energy.
- Speed of technological growth: As technological advancements are fast-growing, the use of renewable sources is also becoming more efficient, reliable, and cost-effective.
- Ethical investing: From an ethical standpoint, investing in renewable energy is the best thing to do since fossil fuels are rapidly depleting with the increase in demand. When people support the rise of renewable energy, it will cause far-reaching positive.
- Energy security: If a country has the means of generating its own resources through renewable sources, the less chances of importing energy from different countries. No need to observe the price volatility of energy sources, and the country can store enough energy for future use.
Ways to Invest in Renewable Energy
There are different ways by which an individual or a corporation can invest in renewable energy. The different ways to invest in renewable energy would depend on the preference of the investor. These are efficient ways on how to invest in renewable energy.
1. Direct Investment in Renewable Energy Projects
Investing in an ongoing renewable energy project is known to be a low-risk investment. One of the popular direct investments is those that are related to solar power investments. Studies show that investing in solar power operations is unlikely to go wrong because it’s operational. Solar projects are also involved in creating jobs for planning, construction, and maintenance.
2. Choose to Invest in Exchange Traded Funds
This is known to be a slightly riskier approach. Large industries usually invest in exchange-traded funds where individual stocks are combined. It mimics the process of trading in major markets, but exchange-traded funds for renewable energy have lower holding costs.
3. Buy Shares of Renewable Energy Companies
There are established companies that became listed on stock exchanges. These companies usually sell some parts of their stocks, especially when the trend is moving upwards. Buying shares poses more risks. However, it is one of the ways of investing in renewable energy that has the most potential for high returns.
Disadvantages of Renewable Energy Investing
- Requires a Huge Upfront Capital
Acquiring green technology is expensive, but it can help in saving money and energy in the long run. If you decide to invest in it, you must have huge capital. Whether you will buy shares from a certain company or you will take part in an existing renewable energy project, you must take the risk. It may take weeks, months, or even years for you to enjoy a return on investment.
- Low-efficiency level
Even though it has been years since Renewable energy made a name into the market, but it still considered significantly new. It still lacks the much-needed efficiency, especially that not all people are aware of its existence. There were studies conducted about the possible profit that an investor may get when they invest in renewable energy. Since it still has a low-efficiency level, it may take longer to get a return of investment than other industries where you can invest.
In countries like the U.S., U.K., and Europe, investing in renewable energy is becoming the trend of corporations and even individuals concerned with the worsening effects of climate change. Not all people know about the possible effects of renewable energy when there is a complete shift in its usage. Investing in green technology also serves as a campaign to influence other people to take part in protecting the Earth.