Nobody wants to see a disastrous oil spill. But when there’s a large solar energy spill, we just call it a nice day. 😀
Investing in green energy has been a tough sell in the past because it wasn’t economically viable. But we have reached an inflection point where the a risk vs reward for renewable energy has become an attractive option for investors looking for relatively safe, and long term returns. 🙂 Renewable energy comes from a source that is not depleted when used. There are many forms of renewable energy such as solar, wind, and hydro.
People have harnessed the power of the wind for thousands of years, using sail boats propelled by wind energy for transportation. For centuries we’ve also used wind mills on farm to pump water for irrigating crops. And now it’s time for wind power to go mainstream and become a bigger part of our society. 🙂
European countries are the leaders in the space of renewables. Last year UK wind power smashed annual records generating 28 terawatt-hours of electricity, which is enough to supply the needs of more than 6.7 million UK households. Renewables also provide Germany with a lot of clean energy. According to Berlin-based think tank, Agora Energiewende, nearly 26% of Germany’s power generation comes from clean sources like wind. 😀 Electricity output from renewables has grown 700% in that country since 1990. As Europe’s largest economy, it’s a pretty big deal to see Germany’s government and its people invest so much into green technology. Then there’s Denmark, getting 40% of it’s overall electricity from renewable energy sources. The latest figures put the country well on track to meet its 2020 goal of getting 50% of its power from clean sources. Denmark has long been a pioneer in wind power, having installed its first turbines in the mid-1970s, and has even more ambitious aims in sight, including a 100% renewable country by 2050. Now that’s ambitious! But it’s totally possible. Last year, onshore wind was also declared the cheapest form of energy in Denmark.
Wind energy is growing in more than 90 countries around the world at an average annual rate of more than 25% because governments, citizens and electricity system operators alike have all decided to support a reliable, clean, and safe form of energy, especially now since the cost of producing wind power is not has prohibitive as it once was.
Solar power is the conversion of sunlight into electricity, either directly using photovoltaic (PV) cells aligned into a solar panel, or indirectly using concentrated solar power (CSP).
Solar power is the mother of all energy on earth. Every other type of renewable and non-renewable resource we use today from oil and gas to wind and lumber exist all thanks to the sun’s energy. 🙂 Explaining Tesla’s strategy of using solar power, Elon Musk said: “We have this handy fusion reactor in the sky, called the sun. You don’t have to do anything; it just works.“
Hydro electricity is generated by the gravitational force of falling or flowing water. It is the most widely used form of renewable energy, accounting for 16% of global electricity generation – 3,500 terawatt-hours of electricity production a year, and is expected to increase about 3% each year for the next 25 years.
Presently, 65% of electricity generated in Canada comes from renewable sources, according to Statistics Canada. Most of this source comes from hydro electricity. Most Canadians are already familiar with names such as Ontario Hydro, Hydro Quebec, and BC Hydro. 😉 All of them provide clean and affordable electricity to the grid. Canada is the 6th largest consumer of electricity in the world. We are making great use of hydro power, but we can do a lot better when it comes to wind and solar.
Canada’s long coastlines and vast land mass give us some of the best wind and solar resources. We should take advantage of our geography by expanding our usage of solar and wind technology. Luckily the government is providing incentives for us to do this. 🙂 Next post I’ll write about the investment opportunities in the clean energy space.
Random Useless Fact
From your NW update: “…use my money to help make this world more environmentally friendly by investing in green technologies and renewable energy companies.”
Please explain how buying stocks will positively effect the environment.
Hi Anon. That’s a great question. Please check back on Tuesday as I plan to write a new post with a more detailed answer. But here’s a simple explanation for now. Wind-powered electric generation facilities are operated by companies such as Brookfield Renewable Energy Partners, which trades as BEP.UN in Canada. Many of its wind farms are in the U.S. where burning coal makes up 40% of all electricity production. More wind farms means less reliance on dirty coal, and helps the environment. 🙂 One wind turbine costs about $3 million to construct so BEP.UN requires money in order to expand and build new wind farms. It can raise this money in two ways. 1) Offering new shares. The higher its stock is worth the more capital it can raise without over dilution. 2) Debt financing. It borrows money from the bank under a long term loan contract so it can build the wind turbine first, and then slowly pay back the loan over time. The better the stock performs the more financially stable the company will be, and the cheaper the interest rate it will pay for its loans which makes financing more affordable. If the share price of… Read more »
re: “This is where investors come in. By purchasing shares of this company it increases the demand and raises the price of the stock. If there are more buyers than sellers, the stock price should remain strong. This helps the company raise money more effectively so it can expand its operations more quickly.”
I’ll admit, the question was a set up. There is a very common misconception that buying a stock sends money straight to the underlying company, i.e. direct investment in the actual company. Of course, this is false. Thanks for being a PF blogger who understands this process and being patient enough to spell it out for your readers and new investors.
Have you researched direct investment into private equity opportunities such as Ontario’s Solar Income Fund (http://www.solarincomefund.com/)?
*phew* glad I passed the test. 😉
I have looked into Solar Income Fund and will put $10,000 into it. I’m just waiting for my EMD broker to finalize my payments with Canadian Western Trust, which is where I’ll be holding the funds. 😀
Hi Peter. Good luck with your fundraising.
I love renewable energy. I am a unit holder of BEP.UN since April 2012. It is very low risk and high yeild stock.
I have a bit of concern of its limited partnership structure. Would you please add some information about the limited partnership structure and how it affects investment returns?
I cannot wait to see your post as I am waiting to load up some BEP.UN units. It is down a bit from recent high
Hey FJ. I am thinking about buying some BEP.UN as well. It seems like a good investment.
The LP structure is kind of weird. I’m not sure how it affects the investment returns. All I know is that about 25% of the income is taxed as capital gains, about 45% is eligible dividends which makes use of the dividend tax credit. Another 21% is foreign dividend and interest income. And the remaining income is taxed as Canadian interest. But it changes every quarter, lol. Anyway, as you can see it’s complicated. What I’d probably do with BEP.UN is what I typically do with all my investment trust companies (symbols ending in “UN”.) I put them in my RRSP if I have the contribution room so taxation is simple. If it’s in a non-registered account, your broker should provide you with a T5013 tax form that breaks down all the details.
Thank you so much Liquid for the details.
I hold the BEP.UN and BIP.UN units in my TFSA. I almost receive full payment every 3 months 🙂 .
I hold both in my TFSA as well now. 🙂
I too hold a few shares of BEP.UN, and for some time now… has not been doing so great this year, but more of a stable go getter… excluding the interest it generates my investment in it is up about 20% over the past 2 years. I hold it in my TFSA because of the tax benefit… Good luck with the renewable energy investment, as they do not have a great track record of generating those higher returns we crave. I think from a renewable resource investment your farmland is actually better – Cheers.
Thanks Phil. I just bought some more BEP.UN recently and how have 79 units in total in my TFSA, which should be enough to take advantage of the DRIP. It’s a really well-run business and I hope it continues to distribute high returns for investors like us. 🙂
[…] week I blogged about how renewable energy is the cat’s jammies right now. It’s growing rapidly all over the world and may be […]
[…] think given the strong track record of the management team, and the increasing demand for green energy the pros of investing in BEP outweigh the potential risks. I believe Brookfield Renewable will […]