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In recent years, there has been an awareness campaign about the impact that humans have on our planet. This campaign aims to reduce the pollution we generate on a daily basis. One of the main goals is to reduce carbon dioxide emissions through renewable energy sources as a sustainable energy source.
Of all the renewable energy sources, solar energy is the fastest growing and has the best prospects for the future. Want to know why? Do you know how to invest in solar energy?
What is Solar Energy?
Photovoltaic solar energy is the process by which energy is produced by transforming solar radiation into electricity through photovoltaic panels. It is one of the main sources of renewable energy.
Where can you invest?
The energy sector consists of three main sections: Production, transmission and distribution / sale of electricity.
When considering an investment in solar energy or photovoltaic solar energy, it must be taken into account whether the investment is intended for solar energy companies or companies that produce the products essential for the exploitation of this energy source, mainly photovoltaic panels.
Solar Energy - History and characteristics
Historically, the energy sector is a sector characterized by the existence of very few or a single company. In many countries, this is either a public company or a large state-owned enterprise.
This situation stems from the need for the state to guarantee energy supply on the national territory. Consequently, it is considered a strategic and vital sector for the development of the country's activities.
In addition, large-scale investment is needed to produce, transport and distribute electricity, in particular to create the necessary infrastructure.
These types of industries are considered network industries and there is usually a phenomenon of natural monopoly, in which it is more cost effective for a single company to handle the whole process than to have competition.
The European Union has also sought to liberalize network industries by introducing directives that require Member States to ensure full competition in the "non-network" parts of the sector, namely energy generation and distribution / trade.
At European level, the European Union has considered the development of the renewable energy sector as a priority and a way to achieve several objectives, such as:
Increasing competition in this sector
Implement expansionary fiscal policy plans to help redistribute single market revenues.
Reducing energy dependence on countries such as Russia.
The European Union's commitment has been strengthened by the signing of the Paris agreements.
Various international organizations and central governments are also working on plans to promote and develop sectors such as solar energy.
This global momentum has generated competition in this sector. As a result of global industrial development, companies in this sector benefit from low costs due to technological progress and the size of production.
These features have improved the process of generating energy, reducing its price and transforming the industry so that it can compete with traditional energy sources.
Solar Energy - Current situation and future prospects
In its annual report, the International Renewable Energy Agency (IRENA) indicates that in 2019, the renewable energy sector had the capacity to produce 2537 GW globally.
Solar energy represents approximately 23% of this figure, reaching an installed capacity of 586 GW, which represents an increase of 98 GW compared to the installed capacity in 2018, respectively an increase of 20%.
Analyzing these trends and comparing them with the rest of the renewable energy sector, it can be concluded that investments in solar energy are by far the fastest growing, which has led to an increase in installed capacity; in fact, more than 50% of the new renewable energy capacity installed in 2019 is solar energy.
Depending on the country, China, the United States, Japan, Germany and India are the five largest producers of solar energy in the world.
However, there are small differences if we analyze the ranking of countries according to their installed capacity. It can be seen that the United States, although with a lower installed capacity than Japan, produces a greater amount of solar energy.
Regarding the production of solar energy, in 2018 approximately 562 thousand GW were produced, the equivalent of 8.5% of the total renewable energy production, which reached 6.6 million GW.
If we analyze the global energy demand, in 2019 over 22 million GW were consumed. According to data provided by the consulting firm Enerdata, energy consumption has increased by an average of 3% per year since 2000.
Globally, renewable energy accounts for 27% of global energy consumption, and globally, solar energy accounts for 2.3% of total energy consumption.
The Paris agreements include a collective annual investment target of $ 100 billion between 2020 and 2025 to reduce greenhouse gas emissions from burning fossil fuels, which currently account for about 60% of final energy consumption. .
In Europe, the European Union, central governments and supranational institutions, such as the European Investment Bank (EIB), are the bodies responsible for providing resources for the favorable financing of such projects.
In conclusion, any investment decision involves a risk and, from the point of view of return on investment, it is not clear whether it is worth investing in solar energy or whether the investment in solar energy is profitable.
However, in principle, the sector is very well developed and has realistic prospects for significant growth at least until 2030.
How to Invest in Solar Energy
Direct investment
You can invest directly in solar energy, which means that the investor must have a greater risk tolerance and a longer time horizon. There are two direct investment models:
You take on the whole project on an individual level. It is possible to invest in photovoltaic energy by installing panels on your home or on land you own to start generating energy. This investment possibility involves a detailed study of the legislation in force, as well as the elaboration of a feasibility study to determine if this option is really useful. As I mentioned, this investment involves an increased risk, especially if you are not an expert in the field.
Another possibility of direct investment is through a group or a partnership. One of the participants will finance a larger project to invest in solar energy. However, this form of investment will require the establishment of a company, and these companies are generally not listed on the stock exchange and may therefore diminish the control exercised by the owners of the company, while increasing opacity.
Actions
A perhaps more realistic option is to buy shares in the field of solar energy through listed companies in this sector. To do this, it will be necessary to define in which type of companies it would be interesting to invest: in companies whose main activity is the generation of solar energy or in those that deal with the manufacture of components for solar energy, ie panels photovoltaic.
Investing through stocks is a very common option. It is possible to buy and sell selected listed company shares. Invest through funds, which will invest in these actions using a manager and fulfilling a number of requirements in exchange for a fee or commission. It is also possible to use an intermediate option and invest through exchange traded funds, ETFs.
If you want to start investing in renewable energy products, Admirals is the place where you can trade shares of the largest companies in the world.
With the Invest.MT5 account, you can buy shares in over 2,300 listed companies and invest in over 180 ETFs, but there are other benefits:
You can open an account with a minimum deposit of only 1 euro.
You have free access to real-time market data at no extra cost.
Use the world-renowned MetaTrader 5 multi-asset trading platform.
Of all the renewable energy sources, solar energy is the fastest growing and has the best prospects for the future. Want to know why? Do you know how to invest in solar energy?
What is Solar Energy?
Photovoltaic solar energy is the process by which energy is produced by transforming solar radiation into electricity through photovoltaic panels. It is one of the main sources of renewable energy.
Where can you invest?
The energy sector consists of three main sections: Production, transmission and distribution / sale of electricity.
When considering an investment in solar energy or photovoltaic solar energy, it must be taken into account whether the investment is intended for solar energy companies or companies that produce the products essential for the exploitation of this energy source, mainly photovoltaic panels.
Solar Energy - History and characteristics
Historically, the energy sector is a sector characterized by the existence of very few or a single company. In many countries, this is either a public company or a large state-owned enterprise.
This situation stems from the need for the state to guarantee energy supply on the national territory. Consequently, it is considered a strategic and vital sector for the development of the country's activities.
In addition, large-scale investment is needed to produce, transport and distribute electricity, in particular to create the necessary infrastructure.
These types of industries are considered network industries and there is usually a phenomenon of natural monopoly, in which it is more cost effective for a single company to handle the whole process than to have competition.
The European Union has also sought to liberalize network industries by introducing directives that require Member States to ensure full competition in the "non-network" parts of the sector, namely energy generation and distribution / trade.
At European level, the European Union has considered the development of the renewable energy sector as a priority and a way to achieve several objectives, such as:
Increasing competition in this sector
Implement expansionary fiscal policy plans to help redistribute single market revenues.
Reducing energy dependence on countries such as Russia.
The European Union's commitment has been strengthened by the signing of the Paris agreements.
Various international organizations and central governments are also working on plans to promote and develop sectors such as solar energy.
This global momentum has generated competition in this sector. As a result of global industrial development, companies in this sector benefit from low costs due to technological progress and the size of production.
These features have improved the process of generating energy, reducing its price and transforming the industry so that it can compete with traditional energy sources.
Solar Energy - Current situation and future prospects
In its annual report, the International Renewable Energy Agency (IRENA) indicates that in 2019, the renewable energy sector had the capacity to produce 2537 GW globally.
Solar energy represents approximately 23% of this figure, reaching an installed capacity of 586 GW, which represents an increase of 98 GW compared to the installed capacity in 2018, respectively an increase of 20%.
Analyzing these trends and comparing them with the rest of the renewable energy sector, it can be concluded that investments in solar energy are by far the fastest growing, which has led to an increase in installed capacity; in fact, more than 50% of the new renewable energy capacity installed in 2019 is solar energy.
Depending on the country, China, the United States, Japan, Germany and India are the five largest producers of solar energy in the world.
However, there are small differences if we analyze the ranking of countries according to their installed capacity. It can be seen that the United States, although with a lower installed capacity than Japan, produces a greater amount of solar energy.
Regarding the production of solar energy, in 2018 approximately 562 thousand GW were produced, the equivalent of 8.5% of the total renewable energy production, which reached 6.6 million GW.
If we analyze the global energy demand, in 2019 over 22 million GW were consumed. According to data provided by the consulting firm Enerdata, energy consumption has increased by an average of 3% per year since 2000.
Globally, renewable energy accounts for 27% of global energy consumption, and globally, solar energy accounts for 2.3% of total energy consumption.
The Paris agreements include a collective annual investment target of $ 100 billion between 2020 and 2025 to reduce greenhouse gas emissions from burning fossil fuels, which currently account for about 60% of final energy consumption. .
In Europe, the European Union, central governments and supranational institutions, such as the European Investment Bank (EIB), are the bodies responsible for providing resources for the favorable financing of such projects.
In conclusion, any investment decision involves a risk and, from the point of view of return on investment, it is not clear whether it is worth investing in solar energy or whether the investment in solar energy is profitable.
However, in principle, the sector is very well developed and has realistic prospects for significant growth at least until 2030.
How to Invest in Solar Energy
Direct investment
You can invest directly in solar energy, which means that the investor must have a greater risk tolerance and a longer time horizon. There are two direct investment models:
You take on the whole project on an individual level. It is possible to invest in photovoltaic energy by installing panels on your home or on land you own to start generating energy. This investment possibility involves a detailed study of the legislation in force, as well as the elaboration of a feasibility study to determine if this option is really useful. As I mentioned, this investment involves an increased risk, especially if you are not an expert in the field.
Another possibility of direct investment is through a group or a partnership. One of the participants will finance a larger project to invest in solar energy. However, this form of investment will require the establishment of a company, and these companies are generally not listed on the stock exchange and may therefore diminish the control exercised by the owners of the company, while increasing opacity.
Actions
A perhaps more realistic option is to buy shares in the field of solar energy through listed companies in this sector. To do this, it will be necessary to define in which type of companies it would be interesting to invest: in companies whose main activity is the generation of solar energy or in those that deal with the manufacture of components for solar energy, ie panels photovoltaic.
Investing through stocks is a very common option. It is possible to buy and sell selected listed company shares. Invest through funds, which will invest in these actions using a manager and fulfilling a number of requirements in exchange for a fee or commission. It is also possible to use an intermediate option and invest through exchange traded funds, ETFs.
If you want to start investing in renewable energy products, Admirals is the place where you can trade shares of the largest companies in the world.
With the Invest.MT5 account, you can buy shares in over 2,300 listed companies and invest in over 180 ETFs, but there are other benefits:
You can open an account with a minimum deposit of only 1 euro.
You have free access to real-time market data at no extra cost.
Use the world-renowned MetaTrader 5 multi-asset trading platform.
