Surfing the Renewable Energy Investment Wave

The State of Hawaii and the U.S. Department of Energy have teamed to form the Hawaii Clean Energy Initiative, the goal of which is to move from being the most fossil-fuel dependent state in the nation to achieving 100% clean energy by 2045. They plan to harness the state’s abundant natural resources – including sunshine, trade winds, ocean waves, and the earth’s internal heat – to produce solar, wind, wave, and geothermal energy, thus keeping over $5 billion dollars working in the state’s economy, rather than spending it on imported oil. Since 2011, when university students, mostly for moral reasons, began insisting that their institutions voluntarily reduce the fossil fuel investments in their portfolios, divestment has been about public relations more than profits, according to Bruce Watson, in his February 2016 article in The Guardian. But with the value of fossil fuel investments rapidly falling, while the profitability of renewable investments grows, a cold, hard look at profits and losses are leading investment funds around the world to move to sustainable, renewable energy for its economic value. Both fossil fuel power plants and wind or solar farms require significant initial investments, as explained by several experts at the January 2016 United Nations Investor Summit on Climate Risk. But while coal, oil, and natural gas plants require extensive continuous expenditures to extract, transport, and burn fuel, the wind blows for free to turn turbine blades, and the sun doesn’t charge to shine on solar panels. One of the speakers at the Summit, former Vice President Al Gore, said if the current trend of the price of solar power continues to drop 10% per year, then its price is going to fall, in a few short years, “significantly below the price of electricity from burning any kind of fossil fuel.” In an article for Greentech Media, outlining investment options in clean energy, Tam Hunt, owner of Community Renewables Solutions, reminds us that the two key things to consider with any investment are risk tolerance and investment horizon. He calls direct investment in renewable energy projects ‘low-risk,’ as long as there is a contract in place to sell the power, because, he says, not much can go wrong once a solar facility is installed and operational. An advisor told Hunt in 2014 to “figure out the big waves you want to ride in the long term, and position your surfboard accordingly. The renewables revolution is a very big wave in the distance, and more and more people are lining up to catch it.” As long as the sun shines, the wind blows, the earth’s core smolders, and the waves roll, we tend to agree.

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