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Real Economic Competition Is Coming to the Clean Energy Space
The first box is being checked, leading to increasing adoption. The second appears poised to get its own check mark, and that could be significant for patient investors.
“Prices for wind and solar have collapsed in the past three years, meaning that by the end of the decade, 90% will be economically competitive with fossil fuels, according to a report by U.K.-based think tank Carbontracker,” reports Leslie Norton for Barron’s. “Already, some 60% of global solar resources and 15% of wind are competitive. By 2030, that will be all of solar and more than half of wind, the report says.”
Renewable Energy Opportunities May Lie Far Beyond the U.S.
Investors, Americans and otherwise, notoriously possess a strong home country bias, and renewable energy is seen as a industry that can be moved by political decisions and outcomes. However, investing in this arena offers more international diversification and opportunity than many investors may initially realize.
“As national and regional economies continue to recover from the recessions induced by the COVID-19 pandemic, more than 800 power generation projects, dominated by renewables, are now in the Asian pipeline outside China, representing at least $316 billion in investment opportunities, according to a recent EY report,” notes IHS Markit.
Renewable energy funds like the
ALPS Clean Energy ETF (ACES)have benefited from positive political implications, but with the Biden Administration’s infrastructure plan taking some time to come to life, investors may feel the need to head to the sidelines.
Some experts believe that would be a mistake, as there’s still significant upside opportunities with renewable energy equities regardless of what happens in Washington, D.C.
Uncertainty around the Biden effort “has unfortunately contributed to U.S. institutional investors’ inaction on tackling climate change. In a major study of more than 100 large global institutional chief investment officers, we found that only 47% of North American investors are actively incorporating climate considerations into their portfolio: an important missed opportunity,” writes PGIM COO Taimur Hyat in a commentary piece for
April 5, 2021
Some of the air came out of the clean energy trade in the first quarter, but with the Biden Administration prepared to spend big on this issue, renewable energy funds like the
ACES follows the CIBC Atlas Clean Energy Index. That benchmark is comprised of U.S.- and Canada-based companies that primarily operate in the clean energy sector. Constituents are companies focused on renewables and other clean technologies that enable the evolution of a more sustainable energy sector.
Some researchers are forecasting a massive amount of cash heading to renewable energy stocks in the coming years – a scenario that should benefit ACES.