Page 40 - DIY Investor Magazine | Issue 30

A PLACE IN THE SUN: THE INVESTMENT CASE FOR SOLAR ENERGY
By Jane Edmondson, Co-founder of the
Solar Energy UCITS ETF
Though the move towards renewable energy, and in particular Solar Energy, may feel like a recent trend, the advent of our working relationship with the Sun goes back several millennia.
Records dating as far back as 7th century B.C. detail humans using the sunlight to light fire with magnifying glass materials and though we have not looked back since, it is only now that Solar looks set to truly catch fire.
‘THE CASE FOR SOLAR ENERGY INVESTING IS MORE COMPELLING THAN EVER’
As the renewable energy revolution enters an important inflection point this decade, the case for solar energy investing is more compelling than ever amid two potential catalysts: the commitment from many countries to promote a clean-energy future and the significant decline in renewable energy costs.
Together, these factors may lead to increased adoption of solar and other clean energy sources.
On the policy side, governments of more than 100 countries have pledged to achieve net-zero carbon emissions by 2050 due to climate-change mitigation and economic considerations. Affordable and clean energy technologies will have meaningful benefits for the world over the long term, according to the International Energy Agency (IEA).
These benefits include improved energy security among countries through reliance on an indigenous, inexhaustible, and mostly import-independent resource, enhanced sustainability, reduced pollution, as well as lower costs of alleviating global warming and keeping fossil fuel prices lower.
As countries pivot towards clean energy in a bid to meet their net-zero carbon emission goals, over $15 trillion is expected
to be invested globally in new power capacity (an average of $486 billion per year) between 2020-2050. Solar is expected to account for 28% of all renewable energy investment globally, suggesting that over $4 trillion ($135 billion per year on average) will be invested in the energy source.
Many countries are expected to prioritise converting or substituting dirty-energy powered utilities for clean-energy alternatives. For example, U.S. President Joe Biden has set a goal of zero emissions from electric utilities by 2035 and a broader goal of net-zero greenhouse gas emissions by 2050.
Approximately 50% of all U.S. carbon emissions come from utilities [see chart below], while the rest come from sectors like transportation and industries where technologies may be slower to evolve from dirty energy to clean energy (i.e., airlines still need to fly on jet fuel, not electric vehicle technology).
GLOBAL ELECTRICITY AND HEAT PRODUCERS: LARGEST CONTRIBUTORS TO CARBON EMISSIONS
Sources: IEA and Morgan Stanley Research, November 2020; Based on IEA data collected from countries.
DIY Investor Magazine | Sept 2021 40