Beginner’s Guide To Investing In Renewable Energy
Many people around the world are realizing how important it is to be making the change to use green and renewable energy. Because of this, technologies and companies in this sector are popping up almost daily and growth is continually expanding. This gives you a big selection of opportunities for investing in renewable energy.
Investing in green energy gives renewable energy companies the support needed to continue research and development. As they grow, so do the job opportunities they bring to the area they’re located in. Plus as an investor, you’re getting in on hot trends that are almost certainly going to continue to grow. But what kind of investment opportunities are there for you in the renewable energy industry?
Natural gas and crude oil are almost the two foremost things that come to mind, but that’s only the beginning. In fact, 8 percent of energy use worldwide comes from renewable energy sources.
Investing in Wind Energy
While there aren’t many publicly traded wind energy companies, it’s gaining more attention and traction in the industry. There are more wind farms now than ever, which are where the enormous wind machines are found that produce wind energy. If you’ve never seen one, these wind machines are similar to a windmill. You can visit the American Wind Energy Association to learn about different private wind energy companies that could end up being publicly traded in the future.
Investing in Ethanol
You may not have heard of this one, but in Brazil ethanol is the primary source of fuel for automobiles. Ethanol is an alcohol fuel that has been getting more attention in the US and consists of wheat, corn, sugar and similar agriculture products, which makes it a viable energy alternative that can be homegrown. The three major ethanol refiners in the US are Valero (VLO), Archers Daniels Midland (ADM) and The Andersons (ANDE).
Investing in Solar Energy
Solar energy is very popular and one that you’ve probably heard plenty about. Solar energy is simply the process of taking energy from the sun and channeling into energy that we can use, such as electricity or heat. There are many technologies already in place for it, but more are being developed everyday – which means this one to seriously consider investing in. There are two different forms of harnessing solar power:
Solar thermal energy – Flat solar panels are often used to process solar thermal energy. The sun’s energy is gathered and transformed into heat. This heat can be used for heating water or even heating your home or the inside of any structure.
Even big dogs like GE are getting on board for solar thermal energy. As recently as August of 2011, GE announced that they are investing up to $40 million in California’s eSolar. Google has invested $280 million into the SolarCity Fund for solar energy in private homes.
Solar photovoltaic energy – This is the form of solar energy that’s used to produce electricity from the sun’s energy.
The US Department of Energy is investing $50 million in the SUNPATH program, which stands for Scaling Up Nascent PV At Home. Their goal is to help the US gain back its competitive edge in solar manufacturing.
Investing in Renewable Energy Funds
Another option is to invest in renewable energy funds. Each fund holds stock in different companies that produce solar, wind or other renewable energy resources or ones that manufacture products to generate renewable energy. You can invest in exchange traded funds (ETF’s) or mutual funds.
US Stock Broad Based ETF – These own stock across all major renewable resources. You have two to choose from that invest in clean energy stocks: First Trust NASDAQ Clean Edge US Liquied ETF (QCLN) and Power Shares Clean Energy ETF (PBW). PBW normally carries a larger inventory and volume.
Sector Focused EGF’s – This is a good option for you if you want to invest a certain type of clean, renewable energy. For instance, if you want to invest in wind energy, there is First Trust ISE Global Wind Energy ETF (FAN) and Power Shares Global Wind Energy Portfolio (PWND).
If you want to invest in solar energy, there is Market Vectors Solar Energy ETF (KWT) and Claymore/MAC Global Solar Energy Index ETF (TAN).
Global Broad Based ETF’s – There are some excellent energy stocks found worldwide, since renewable and alternative energy is a global business. Three ETF’s that focus on a global audience are: Power Shares Global clean Energy Portfolio (PBD), iShares S&P Global Clean Energy Index (ICLN) and Van Eck Global Alternative Energy Fund (GEX).
There were eight mutual funds dedicated to renewable energy at the end of 2010. The best of the three were Winslow Green Growth Fund, Gabelli SRI Green Fund and New Alternatives Fund.
Investing in renewable energy can help encourage governments to give grants and incentives to investors. This is important, because green energy is still in its infancy and investing gives the resources needed for continuing research and development. If you choose to get started investing in alternative energy sources, you’ll probably see enormous returns in the future, too. The green industry as a whole is rapidly growing. Just look at the growth of green contracting and the many courses that students are partaking in. It doesn’t matter if you’re a big-time investor or just getting started. The renewable energy industry has investment options for just about anyone who wants in.