Today, the whole world is pursuing the development of renewable energies as a global objective to benefit the entire population. Driven by political support, more power is obtained from regenerative sources every year. This unstoppable megatrend is also influencing financial markets.
Decreasing electricity production costs are allowing renewable energy facilities to be able to compete with fossil fuel power plants. Under the pressure of global climate change, governments are also continuing to put in place incentives for investment. Professional investors are consciously changing direction, away from coal, oil and gas, towards clean energy – and one of their objectives in doing so is to achieve higher returns.
Protection against the economic risks of fossil energies
In addition to better results in the low-interest environment, it is also increasingly important to protect against “stranded assets” (economically failed capital), as huge declines in value are expected in companies whose business models are based on the exploitation of fossil reserves. The current Russia-Ukraine war has also pushed the question of increased differentiation and independence of energy supply onto the political agenda throughout the EU. The trend toward 100 percent renewable energies is unstoppable.
Record investments in sun, wind and hydropower
According to a study by the financial information service Bloomberg, around $501.3 billion was invested in renewable energy projects worldwide in 2020 – more than all investments in new conventional power plants put together. In addition to investments in e-mobility and storage systems, the majority went into the expansion of renewable energies, which exceeded the $300 billion mark for the seventh year in a row. A total output of 256 gigawatts was financed. Photovoltaic plants (139 gigawatts) and wind power plants (93 gigawatts) were the primary new sources of power going into the network. This took place in the context of decreasing production costs, particularly in the wind and solar energy sectors.
Market forecast for 2040
The rapidly decreasing costs of solar wind energy, as well as a growing role for batteries – including in electric vehicles – mean that renewable energies continue to gain in importance.
Around three quarters of global investments for power production will go into renewable energy plants in 2040; this will facilitate global carbon emissions being 4% lower than in 2016. With a share of 48% by 2040, wind and solar energy plants will have replaced conventional coal-powered fire stations as the main source of global power production – even with power requirements continuing to increase by around 2% a year.
Analysts at the Bloomberg financial information service (BNEF) use these figures as a basis in their published New Energy Outlook 2040.