3 experts share renewable energy investment tips before the coming green revolution - Energy transformation is one of the great challenges for the future. The economies of tomorrow are already being cemented with plans aimed at generating electricity as green as possible.

Proof of this are the plans of Biden or the funds of the European Union Next Generation, focused largely on this progress towards sustainability.

With an environment that is inevitably moving towards greater responsibility with an ecological approach, the debate about the possibility of investing in renewable energies has emerged. Especially, hoping to achieve stable returns in the long term in the heat of this transformative reality.

The source has contacted several experts who explain why it is attractive to invest in renewable energy, what are the catalysts that the sector has, how a retailer can access this area to invest and what are the main risks to consider.

For Andrea Barber, CEO of Rated Power, the renewable sector has a very promising future. "Public policies of energy transition and decarbonization— together with private initiative-support the promotion of renewables, especially in markets such as the European Union,” he points out.

3 experts share renewable energy investment tips

In this sense, the funds of the European Union come to promote those strategic issues that, although they are fundamental for the expansion of renewables to succeed, are not such a round business.

The region has committed to decarbonization in 2050. As a direct consequence, there is an exponential growth in renewable energy, driven by a context in which the demand and need for new technological alternatives will be unprecedented.

According to Nacho Bautista, co-founder and CEO of Fundeen, to give an example in this field, green hydrogen is called to occupy a decisive position in the future, since it is the ideal non-polluting fuel to decarbonize those sectors where electrification is unviable, such as industry, aviation or large-tonnage vehicles. "However, this technology is not as developed as photovoltaic or wind, so it requires public funds to continue evolving and, thus, be able to be competitive on its own tomorrow,” he says.

3 experts share renewable energy investment tips: In the same line we could talk about the electrification of the Spanish vehicle fleet, with the arrival of the electric car, a transformation that will only come to fruition if we generate enough clean energy and have the necessary recharge infrastructures. ” So the Next Generation funds will serve to underpin these types of issues strategies that favor the electrification of the country and increase the demand for renewables, " says Bautista about the influence of the measures intended to be applied in the European Union.

Therefore, the profitability of the sector is an opportunity to diversify investment portfolios. ” Spain is a leading renewable market, with a large solar and wind resource, in which profitability levels are higher for the renewable investor than in other countries in Europe, " says Barber.

In the opinion of Rafael Ojeda, macro analyst at Fortage Funds, it is increasingly being demonstrated that investment in renewable energy does not have to undermine the profitability obtained. “The great discussion that has been years ago was that it was often thought that by betting on this sector Alpha was lost, but now there are studies that have shown that this is not the case, that you can obtain an even higher return by investing in environmental issues”, he says.

3 experts share renewable energy investment tips

Renewables offer returns that, depending on the phase of the project in which the investment entry occurs, can exceed double digit, as Bautista says. “In our case, we seek to enter the projects in a state of high maturity, with a much more controlled risk, but also with a little less performance,” he explains.

This ability to generate profit depends on the type of asset. On the one hand, there are physical green energy projects (a photovoltaic plant or a wind farm, for example). On the other hand, financial investments in companies in the sector —listed or not—.

"The former have historically had double-digit returns. At present, they are around 7% per annum (...) Unlike the latter, they have stable and predictable cash flows,” says Barber.

3 experts share renewable energy investment tips: In the long term, this investment makes more sense because while it is true that at present you can already obtain profitability in renewable energies, it is clear that in 20 years the bet of alternative assets that focus on renewable energies can generate more capital gains, according to Ojeda. ” There are technological advances that invite us to think that from here to the future green energies will be optimal and will offer better yields, " adds the expert from Fortage Funds.

Either way, these assets offer a very striking return compared to stock market investment and other traditional investment products, such as government bonds. ” The fundamental question is how a small saver can participate, because the truth is that this sector has not always been within their reach, " says Bautista.

The enigma to solve which ways a retail investor has to invest in renewable energy. Thus, the reality is that it is difficult to talk about an optimal method because every investment involves risks, and renewables are not exempt from them.

” In the end, the best method is always prudence and the analysis of the opportunities that arise, always resorting to the spreadsheet and testing possible future scenarios without cheating the solitaire, " says Bautista.

3 experts share renewable energy investment tips

From here, a retail investor does not have as many options at their disposal to participate in the renewable sector.

Simply put, the investor has some methodologies at their disposal. The first, to acquire or build a renewable installation by itself, assuming the day-to-day management of the plant and all the eventualities that arise, which offers freedom of decision on the project, but it will require certain knowledge and a very important initial investment.

Barber concrete that can also be done through investment funds. "Risk is usually diversified between different projects, but the decision-making power of the retail investor is very low ( ... ) Very high minimum tickets are required to invest," he says.

Likewise, it can be done by betting on listed companies in the sector, which usually offer greater liquidity with minimum amounts accessible to minority investors, but with returns marked by the results of the financial markets.

” Finally, there are collaborative platforms such as Fundeen, which allow investing in renewable projects with a minimum ticket that is much more accessible, " says Bautista.

3 experts share renewable energy investment tips

As an investor in renewables, what are the main tips? Experts in the sector say that, above all, you need to know the sector, its risks and the financial and technological aspects of the projects.

“If you invest in projects in the development phase, you will obtain greater returns, although they will have greater risks; but if you bet on more advanced projects, ready to Build (those known as” Ready to Build”), the risk of development is eliminated, but the risk of construction and operation continues, " Barber develops.

Another point is that the strategy of the companies in which they invest must be carefully studied. ” The best positioned to capitalize on renewable growth will be those that present greater geographical diversification (that allow reducing exposure to increasingly competitive auctions to obtain power) and greater technological integration (on and offshore wind, solar, etc.)", analyzes the CEO of Rated Power.

From Bautista's point of view, the investor has to understand that this sector requires maintaining long-term positions and that, in that sense, a serious and committed team behind the opportunities is important.

“For example, you can skimp on buying a series of solar panels and that will allow you to offer a better profitability (...) Now, those equipment will have to work for 30 years and, if they give problems, you can count on the maintenance costs and the eventual stoppages in production will have an impact on that profitability,” he says.

# 3 experts share renewable energy investment tips #