Renewable Energy Investing in the Age of Fossil Fuel Extinction
Ignore Solar If You Hate Money
The hate mail was abundant when I suggested that renewable energy was on its way to replacing fossil fuels.
This was back in 2006, when the mere mention of the word "solar" made most energy analysts cringe with disgust. But not me. I knew the industry in which I was investing was one that was about to grow to epic proportions.
And, of course, those who listened to my advice made a lot of money in the process.
But I’m not here today to talk about the money you could’ve made in the renewable energy space. Instead, I’m here to talk to you about the money you can still make in the renewable energy space — if you play your cards right.
7 Truths About Renewable Energy
About 10 years ago, I met a man by the name of Michael Liebreich.
Liebreich is the founder of Bloomberg’s New Energy Finance, and his analysis of the clean energy industry is the most accurate you can find. So every year, when the latest New Energy Finance “New Energy Outlook” is released, I rush to get my hands on it. This year was no different.
This year’s outlook is chock-full of valuable intel that further substantiates my claim that renewable energy is still on its way to replacing fossil fuels. And it’s even happening a lot faster than I initially thought.
Here are some highlights from this year’s report:
Solar and wind dominate the future of electricity: 72% of the $10.2 trillion spent on new power generation worldwide to 2040 will be invested in new wind and solar PV plants.
Solar energy’s challenge to coal gets broader: Solar is already at least as cheap as coal in Germany, Australia, the U.S., Spain, and Italy. The levelized cost of electricity from solar is set to drop another 66% by 2040. By 2021, it will be cheaper than coal in China, India, Mexico, the UK, and Brazil as well.
Onshore wind costs fall fast, and offshore falls faster: Onshore wind levelized costs will fall 47% by 2040, thanks to cheaper, more efficient turbines and advanced OPEX regimes. In the same period, offshore wind costs will slide a whopping 71%, helped by experience, competition, and economies of scale.
China and India lead in energy investment: They account for 28% and 11% of all investment in power generation to 2040. Just under a third of Asia Pacific’s investment in energy will go to wind, a third to solar, 18% to nuclear, and 10% to coal and gas.
Batteries and flexibility bolster the reach of renewables: Utility-scale batteries increasingly compete with natural gas to provide system flexibility at times of peak demand. In conjunction with small-scale batteries, this will help renewable energy reach 74% penetration in Germany, 38% in the U.S., 55% in China, and 49% in India by 2040.
Homeowners’ love of solar grows: By 2040, rooftop PV will account for as much as 24% of electricity in Australia, 20% in Brazil, 15% in Germany, 12% in Japan, and 5% in the U.S. and India. This, combined with the growth of large-scale renewables, reduces the need for existing large-scale coal and gas plants.
Coal’s point of no return: Sluggish demand, cheap renewables, and coal-gas fuel switching will slash coal use by 87% in Europe and 45% in the U.S. by 2040, while coal generation will continue to grow in China but reach its peak in 2026. A mere 18% of planned new coal power plants will ever get built. That means 369 GW of projects stand to be cancelled.
The Trend is Your Friend
Making money in the energy game is really just about understanding the trends.
The trend today is simple: The combined forces of renewable energy, new energy technologies, and energy storage are starting to take market share from fossil fuels and nuclear. This is not just some random opinion, either. This is a fact, and the data prove it.
Now, I’m not saying you should dump everything into renewable energy, but I am saying that only a fool would not have some portion of his portfolio dedicated to renewable energy as this trend continues to grow.
Truth is, a savvy investor always has some exposure to the latest trends. Certainly this is the reason I personally have exposure to the legal cannabis market. After all, this is without a doubt one of the greatest investment opportunities of the 21st century. And it’s definitely a trend growing faster than anything else — including renewable energy.
In fact, last year, sales from the North American cannabis industry came in around $6.7 billion. By 2021, they will exceed $20 billion. That’s a compound annual growth rate of about 25%. That’s bigger and faster than what we saw back in the dot-com days. And it’s bigger than anything else you can get into today.
You can actually check out the numbers for yourself in this recently published investors' note.
My team has also put together a short “Beginner’s Guide to Cannabis Investing” video, which you can check out here.
The bottom line is that whether it’s digital currency, renewable energy, or legal cannabis, the trend is always your friend — as long as you get in before that trend peters out. And right now, there is no better time to take advantage of the early stages of this legal cannabis trend, which is why I strongly urge you to at least take a few moments to learn about this incredibly profitable trend in this video.
To a new way of life and a new generation of wealth...
@JeffSiegel on Twitter
Jeff is the founder and managing editor of Green Chip Stocks, a private investment community that capitalizes on opportunities in alternative energy, organic food markets, legal cannabis, and socially responsible investing. He has been a featured guest on Fox, CNBC, and Bloomberg Asia, and is the author of the best-selling book, Investing in Renewable Energy: Making Money on Green Chip Stocks. For more on Jeff, go to his editor's page.
Energy Demand will Increase 58% Over the Next 25 Years
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